Sylvain Fabre is a research director in Gartner's carrier network infrastructure group
LTE will change face of mobile broadband
With LTE rollouts well underway around the world, one thing is certain: 4G will change the future of the mobile broadband experience for consumers and business users alike.
Only by understanding the trends and potential issues of this evolving technology and learning from existing best practices will operators be able to take advantage of the huge opportunities that 4G technology offers.
Gartner estimates the worldwide LTE infrastructure market for radio and core service architecture evolution equipment will grow from $4.1 billion (€3.2 billion) in 2012 to $21.1 billion in 2016. LTE is expected to be the fastest-growing segment within mobile network infrastructure, accounting for 7% of all mobile connections in 2016.
To give you an idea of the growth, 72 LTE operators [had] launched commercial services as of May, with 25 networks launched this year [alone], according to the GSMA. Commercial LTE services are now available in 37 countries around the world.
Gartner analysts believe operators are likely to charge a premium for accessing LTE data - at least at the early stages of the commercial launch. This will make data ARPU for LTE services higher than other data ARPU over the coming three to four years. As competition and LTE handset access increases, however, Gartner believes that prices for LTE will decline and align with 3G access over time. Price will depend on the maturity of the LTE market, availability of LTE handsets and number of operators offering LTE services.
What is the business incentive for operators to even try and keep up with subscriber demand for mobile data by providing an improved access network? After all, there is clear expenditure with diminishing returns. Indeed, across all regions, there is increased pressure to consolidate to gain the scale needed to maintain profitability, because significant additional network expenditure is required.
Although carriers are generally more cautious in terms of LTE rollouts than they might have been for 3G, Gartner expects a steady increase in the number of commercial LTE networks launched.
LTE/4G provides more than a step change in mobile connectivity. Very low latency combined with much faster data rates will make the impact of 4G felt across not only the telecom industry, but also other industries such as transportation, e-health and energy. However, this much-improved network comes at an increased cost, and operators may find themselves under increased pressure to consolidate to remain in this game profitably.
In addition, 4G will be one of the key enablers of mass connectivity, whereby not just information is connected, but also people, machines, things, places and context. This will have massive implications for the amount of data being moved across mobile networks, as well as the signaling load because the majority of connections will be wireless rather than fixed. This is a unique opportunity for operators to provide the necessary wireless connectivity using 4G.
With strong demand for mobile broadband modems and embedded connected devices, fuelled in large part by LTE rollouts, Gartner expects mobile broadband connections to grow 36% annually until 2015.
In addition to dealing with capacity issues caused by surging data usage, operators are facing network stress due to uneven and less predictable usage patterns. This means the cost of delivery will remain at the forefront of operators' minds for a long time.
The rising network cost is creating a dilemma for operators: provide ever-larger bundles or throttle back speeds and/or apply surcharges after overage, which is unpopular. Most are moving away from unlimited plans to tiered pricing packages based on usage volume and speed, or a combination of both. There is also a great deal of variability in pricing because 4G data is priced the same as, or lower than, 3G in the competitive US market and the regulated South Korean market, but in some European markets operators are charging a premium for 4G data services.
Initially, most operators are focusing on data-only on LTE/4G networks. If voice is available, it will be offered only as a circuit-switched fall back. This means for a voice call, 4G mobile devices would fall back to the 3G layer to perform a circuit-switched call. However, Gartner analysts believe voice will be provisioned as voice over IP over LTE in a couple of years.