The attraction of LTE

LTE is quickly gaining momentum across Asia with developments in Hong Kong, Japan, Taiwan and China leading the revolution in the region.

Japan's NTT DoCoMo is expected to be the first operator in Asia to launch commercial LTE services in December. The company is banking on video services to boost income and expects the introduction of its LTE platform to increase data traffic from 42% to more than 50% of network capacity.

On the other hand, KDDI in Japan is only planning to launch commercial LTE services in December 2012, two years after NTT DoCoMo's expected launch.

KDDI's plan is to initially deploy LTE as an overlay of the existing 3G network, covering only those areas where the traffic pressure from its current mobile users is high, and not the entire 3G service area.

KDDI will then gradually replace the existing 3G network with LTE services, which KDDI assumes will take some years. KDDI's approach represents the strategy of the majority of operators in Japan - small-scale LTE deployments servicing only larger cities.

3G fuels competition

Following the restructuring of the telecom industry and the issuance of 3G licenses in China, market competition has intensified exponentially.

China Mobile has accelerated its TD-LTE development plans to combat these competitive forces and address limitations in its existing 3G TD-SCDMA services - namely the need for custom handsets, which have dual- or multi-mode connectivity to allow for global roaming.

In partnership with ZTE, China Mobile completed an indoor MIMO network performance test at the end of Q1 in Beijing. China Mobile also started its first experimental TD-LTE network at the site of the 2010 Shanghai World Expo.

This move will provide China Mobile with an opportunity to leapfrog the competition and emerge as the first operator to deploy LTE in China, thereby representing a significant competitive advantage.

Mobile operators in Hong Kong are also actively evaluating LTE strategies to address growing capacity requirements driven by continuously expanding data traffic on their networks. Data service revenue is growing strongly as a result of the increasing popularity of smartphones.

There are opportunities to attract new subscribers through improved performance, but the overall market share gains would be marginal. SmarTone-Vodafone and CSL remain the most proactive operators on the LTE front, viewing this technology as a means of increasing their market share by differentiating their offering among savvy subscribers of premium mobile services.

CSL completed LTE trials earlier this year while SmarTone-Vodafone will start LTE trials in 2010.

Taiwan's National Communications Commission (NCC) revealed at this year's Wimax Forum Congress Asia that it will take three years before the 700-MHz spectrum band is reclaimed from the military and police.

The regulator estimates that after that, it will take another two years to conclude the LTE licensing process, and another two years for commercial services to be built out.

But this timeline has done little to deter operators from jumping on the LTE bandwagon. Chunghwa Telecom was due to start LTE trials in Q2. FarEasTone, another Wimax license holder, has signed an MoU with China Mobile to jointly build a test network based on TD-LTE technology.

Although mobile operators in Korea have announced their migration to LTE, we believe that LTE will not be deployed in Korea in the immediate future as the operators have yet to decide whether to obtain the new spectrum license from the Korean government or re-implement the existing frequency bands.

Even SKT has revealed that it will not offer LTE service until 2012 and will weigh political, business and technological considerations in its 4G LTE decisions. By the time LTE is deployed in Korea, WiBro will continue to enjoy its early market entry advantage. Considering the investments made by KT and SKT in WiBro, we expect that for a certain amount of time, both mobile Wimax and LTE will co-exist in Korea.

LTE in Asia is also expected to receive a big boost if Qualcomm successfully secures spectrum in India. If it wins the spectrum auction, Qualcomm plans to partner with an India-based operator to build a TD-LTE network, with the ultimate goal of creating a TD-LTE infrastructure and device ecosystem.

Basharat Ashai is a market analyst for APAC & MEA at Maravedis

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