Most European operators will trail significantly behind major commercial LTE deployments elsewhere. Transition to the mainstream 3GPP technology track for non-HSPA operators and new spectrum availability are the driving forces for LTE front-runners in America, Asia and Scandinavia.
Next generation network implementation plans vary enormously worldwide. For example, India has yet to auction spectrum for legacy 3G technologies, while Verizon Wireless in the U.S. will start its transition from CDMA2000 to the dominant 3GPP technology track with LTE on its newly acquired spectrum in commercial deployments next year. While travelling west and east to chair conference tracks on mobile broadband at Informa's LTE Americas in Dallas and GSMA's Mobile Asia Congress in Hong Kong this month, I've been able to assess LTE strategies and deployment plans first hand with a total of 11 operators in my panel sessions, while quizzing and listening to several more.
Europe created GSM and deployed it first. Japan blazed the trial with WCDMA for a couple of years before European pioneering deployments began in earnest by 3 in the U.K. and Italy with market entry using new spectrum. This time around with the LTE transition, the most fertile conditions for adoption are mostly in China, Japan and the U.S. With the exception of Scandinavia where TeleSonera and Telenor are likely to launch commercial services in Norway and Sweden next year, these conditions do not yet exist in most of Europe. Major European multinational operators Vodafone, Telefonica and T-Mobile will do little more than just trials during 2010 and seek fresh spectrum for most of their national operators.
Migration from 3GPP2 to 3GPP in the U.S.
In the U.S., LTE provides the timeliest opportunity for CDMA operators Verizon Wireless, Metro PCS and Leap to get onto the mainstream in network technology. Flush with new spectrum from 1700 MHz and 700 MHz auctions, these operators will deploy LTE in allocations that are currently unoccupied by cellular technologies. There are no preexisting mobile devices with any technology for the 700 MHz band. Whereas Verizon Wireless plans to launch and rollout LTE aggressively in 2010 and cover virtually all its current nationwide 3G footprint by yearend 2013, America's other top-two operator, AT&T, will use its new stash of 700 MHz and 1700 MHz spectrum to follow with its deployment approximately starting one year later.
Leapfrogging 3G in China
China Mobile is the wild card among LTE early-movers. The operator drew the short straw in this year's 3G technology allocations with a requirement to implement the immature TD-SCDMA technology. China Unicom and China Telecom were awarded WCDMA and CDMA2000 respectively. It is already too late for much ever to come of TD-SCDMA. Whereas the TD-SCDMA mandate serves as a face-saver for China, the opportunity to establish China Mobile as a world leader in next generation technology is with LTE in its TDD form. This technology has some valuable commonalities with TD-SCDMA including the frame structure. Huawei was boasting a van drive demo for TD-LTE at the Hong Kong show. The vendor will also benefit from resurgent interest in TDD technology outside of China following its lackluster adoption as a UMTS technology in the rest of the world.
PCCW in the dynamic Hong Kong market is eager to use its paired "LTE spectrum" recently obtained in auction and will likely launch FDD-based LTE commercially in a couple of years time.
Refarming 2G in Japan
Japan has world-leading mobile data use at around 40 percent of ARPU and with 90 percent of subscribers already using 3G technologies. Success in 3G with such heavy use in this densely populated nation makes the case to trade up to LTE is most compelling. In addition to new spectrum allocations for LTE, plans to close down 2G PDC within the next year or so will ensure significant additional spectrum to refarm for use with LTE.
DoCoMo suffered by going it alone for several years with WCDMA but is undeterred in its desire to lead with LTE. Among other difficulties with WCDMA early on from 2001 until the middle of the decade, DoCoMo's FOMA customers had poor coverage due to absence of backward compatibility with 2G PDC. Meanwhile KDDI performed better in 3G with CDMA2000, benefitting from volume shipments in the US, Korea and from backward compatible with cdmaOne. In Japan and elsewhere worldwide, multimode devices with backward compatibility to legacy 3G technologies will prevail with LTE.
Waiting game in Europe
Whereas European 3G operators can cautiously upgrade all the way to HSPA+ in existing 3G spectrum, LTE will in practice require separate allocations that are not yet generally available. Although it is theoretically possible to substitute LTE for GSM or HSPA spectrum usage, that is unappealing at this stage and some operators have already undertaken to reallocate some 900 MHz spectrum to UMTS with HSPA. With the exception of limited new allocations, such as in Scandinavia, European operators are waiting for 2.5/2.6 GHz and the so called digital dividend spectrum in the 800 MHz band. It will be years before the latter is allocated and generally available for use.
It is no tragedy for the rest of Europe that the U.S. and Asian operators will be driving early LTE volumes, supplemented by deployments in the relatively small Scandinavian region. Front-runners have the new spectrum resources to make the change efficiently and some have a particular desire to switch technology that makes LTE deployment urgent. The early years of 3G were unpleasant for European operators with onerous spectrum fees, clunky and costly terminals with disappointing performance. European operators will benefit from LTE technology and terminal improvements in commercial use elsewhere because most do not yet have the additional spectrum to deploy commercially themselves. Meanwhile, HSPA and HSPA+ provide the natural upgrade path on existing spectrum.