LTE will bridge the digital divide

Mobile technology is making broadband Internet access personal and pervasive. By the end of this year there will be more broadband Internet connections globally with HSPA and EV-DO Rev. A than with all wired, fibred and fixed wireless technologies combined.  Since fixed connections tend to be shared over LANs and WLANs it will be another few years before most individuals are connected via mobile broadband. WiMAX sales volumes will peak around the middle of the decade. LTE will be the leading technology for new and replacement connections well before the end of the decade with extensive deployments in FDD and TDD modes.

Supplementary and primary broadband access

Broadband wireless access--including WiMAX, HSPA and LTE--will have most impact in regions where wired Internet access is scarce. Mobile broadband will be highly complementary to DSL, cable modem and fiber-to-the home services that will provide higher speeds and lower costs per megabyte in developed nations and in many urban areas elsewhere worldwide. In developing nations, including those in Eastern Europe where mobile infrastructure construction since the 1990s has preempted the build-out of universal wireline service coverage, wireless will be the primary means of providing broadband Internet to the masses. Qualcomm's widely reported intention to bid in auction for unpaired 2.3 GHz spectrum and build an LTE-TDD network across India graphically illustrates the potential. At the Mobile Asia Congress in Hong Kong last November, Manoj Kohli, CEO of Bharti Airtel, said mobile data and mobile broadband will be even more significant than mobile voice among India's 1.1 billion poorly Internet-connected inhabitants.

Wireless and satellite success arrested wireline deployments

Whereas broadband Internet access has been a great supplementary service for telephone and cable companies, the demise of wireline telephony and cable TV monopolies in the face of mobile telephony and satellite TV has stalled costly infrastructure expansion that could have made broadband wireline access much more widespread. Even though DSL is the most common method of broadband Internet access, including 162 million connections in the 30 OECD nations in 2008, it is only available to the global minority who are within wireline reach. Cable TV connections that can instead provide broadband access via cable modems are even scarcer, with deployments stalling due to the development of satellite TV services since the 1980s. Market entry and success of BSkyB and others undermined the business case for cable network expansion. For example, around one half of U.K. homes do not have the option of cable TV or cable modem services because their homes have not been "passed" by cable. France and Italy have very little cable infrastructure.

Ironically, it was success of cellular that held back the development of the wireline networks during reconstruction of regions such as Eastern Europe since the 1990s. In these nations, mobile penetration surpassed wireline by around 2003. The gulf is large and has steadily increased.  As wireline cash cows have declined, telephone companies have been more interested in reversing revenue declines on existing lines than in expanding geographic coverage with costly new lines. Priority has been to add broadband services with DSL technology where access lines already exist.

The table compares wireline with wireless penetration for a selection of European nations. The relatively low levels of fixed line penetration in Eastern Europe and parts of Scandinavia reflects the popularity of mobile and the lower availability of wireline services. In low-income nations the disparity between wired and wireless is even more extreme: whereas fixed line teledensities in India and Nigeria are 3.2 per cent and considerably less than 1 per cent in 2008, mobile phone penetration was 30 per cent and 45 per cent respectively.

Phone penetration (connections per 100 population) for selected nations in and around Europe

Source: UNdata for fixed, Wireless Intelligence for mobile

With the availability of cellular technology, it was no longer necessary to undertake the costly civil works required to bring phone lines to virtually every home, including those in remote regions. This opportunity was exploited in sparsely populated areas, such as in Spain's northwestern Galicia region in the 1990s. Fixed line figures probably include these connections because they were not regarded as mobile. Mobile technologies have also provided universal service to those living or holidaying in remote northern areas of Scandinavia with NMT450 analogue technology in the 1980s and 1990s.

Limited reach for DSL and cable modems

DSL availability is further constrained than wireline telephony by additional technical factors including quality of the lines and distance between exchanges and subscribers.

As a result of not expanding wireline infrastructure, broadband penetration in Eastern Europe significantly lags Western Europe. Magyar Telekom also saw its retail DSL and cable broadband subscriber totals rise in 2009, by 7.6 per cent and 19.7 per cent to 435,558 and 152,878 respectively. This is significant growth; however, the combination still only represents broadband penetration of 6 per cent of Hungary's 9.9 million population. The company enjoyed its TV subscriber total grow by 38 per cent to 630,413 due to new satellite connections, despite reduced subscribers on its cable network. OECD figures estimate a total of 1.69 million broadband subscribers--corresponding to a penetration rate of 16.8 per cent in Hungary-including 8.2 per cent in DSL, 7.6 per cent in cable and 1 per cent in fibre. Penetration rates elsewhere are 18.1 per cent in the Czech Republic including a uniquely high 6.3 per cent with fixed wireless access used in rural areas, 12.6 per cent in the Slovak Republic, 11.3 per cent in Poland and 8.7 per cent in Turkey. Broadband penetration rates for world leaders are 38.1 per cent for the Netherlands, 37 per cent for Denmark and 34.5 per cent for Norway.

Whereas penetration will continues to rise significantly in all nations, growth will ultimately be more constrained by the limited reach of the fixed telephone and cable networks in post-1990 developing regions including Eastern Europe.

From shared and occasional access to all the time and everywhere

Despite the relatively low fixed line and broadband Internet penetration rates in Eastern Europe and in many other developing nations worldwide, 1.73 billion people, equivalent to 25.5 per cent of the world's population, use the Internet according to Internet World Stats. This includes narrowband, shared and occasional access at work, school and in Internet cafes where the Internet is not available at home. Whereas it is a major achievement that so many people are accessing the Internet somehow and sometimes, there is a much bigger opportunity to connect people with higher speeds on a much more pervasive basis, at home and when they are on the go with portable computers and through small devices such as smartphones.

Fixed and mobile wireless converge with FDD and TDD in the same chip

WiMAX has been successful in serving outlying geographies and by providing fixed wireless access in places where there is no wireline phone line (i.e., for  DSL) or cable TV infrastructure. LTE is now set to take over this market segment by exploiting joint experience curve effects and economies of scale in technical and commercial development with both FDD and TDD modes.

It is the availability of new spectrum that ushers in new wireless technologies, as it was with GSM at 900 MHz and 1800 MHz and with WCDMA at 2100 MHz in Europe. Similarly, LTE is making its debut in Europe with new spectrum for wireless and mobile services at 2.6 GHz in Scandinavia and at 700 MHz in the USA.

I have explained in previously published articles that satisfying exponential demand growth for mobile broadband will be a major capacity challenge. This will be most acute in metropolitan and urban areas with dense population densities. Fortunately, this is where broadband wireline, fiber and WLAN Intenet access already exist and can be used to offload mobile network demands. In rural and sparsely populated areas, wireless technologies can more easily provide the required network capacity required. Speeds from 10 Mps to 100 Mbs and more are possible with new technologies such as WiMAX, HSPA, LTE and LTE Advanced.

LTE will lead

Whereas WiMAX has made some good progress with many fixed wireless installations worldwide by focusing the technology on relatively cheap unpaired spectrum, it suffers significantly from insufficient sales volumes versus GSM and 3GPP technologies.  WiMAX never presented a serious challenge for full-mobility services and never will.  It lacks support from the ecosystem that provides LTE compatibility with GSM, HSPA and EV-DO including 4.8 billion subscribers, extensive network coverage and roaming worldwide.

LTE's competitive advantage will be its ability to span a converging market for fixed and mobile broadband. The same silicon, much of the same intellectual property and standardization will be embodied in most LTE chipsets. WiMAX will be in terminal decline long before LTE overtakes HSPA and HSPA+ towards the end of the decade. LTE and its successor, LTE Advanced, will become the leading broadband Internet access technologies for the global population, most of whom will continue to live out of range from a copper or fiber access line.

It shouldn't be surprising to learn that HSPA and its successor LTE will lead in broadband access ahead of wireline and other fixed wireless technologies. That's precisely what's already happened in voice and text with GSM and WCDMA. These technologies were cheaper and more versatile than those for fixed networks using wireline or wireless technology. I'll be publishing some detailed forecasts on all this very soon.

Keith Mallinson is a leading industry expert, analyst and consultant. Solving business problems in wireless and mobile communications, he founded consulting firm WiseHarbor in 2007.