Mallinson: European LTE demand driven by fixed-line replacement

Keith Mallinson

The latest edition of Ericsson's Mobility Report provides fresh insights by quantifying some significant differences among regions and nations. In addition, more widely reported headlines include forecasts for global growth to 2019 with 10 times more smartphone traffic, 5.6 billion smartphone subscriptions and 9.3 billion total mobile subscriptions.

My column this month uses Ericsson's figures and forecasts to assess where Europe stands in supporting demanding applications such as streaming video over mobile broadband on smartphones and other devices. Europe includes some leading examples of LTE deployment in a couple of Scandinavian cities where the technology was the first in the world to be deployed, but Europe overall significantly lags major leaders such as South Korea and North America. This is problematic because European nations are significantly more dependent on mobile for broadband connections than fibre-rich South Korea and the widely-cabled United States, for example.  Europe cannot afford to wait for "5G." It needs to accelerate its laggardly 3G and 4G deployments forthwith.

European LTE is mostly for PCs and tablets

Europe, in particular, needs mobile broadband for fixed network substitution--including in places such as large parts of rural Eastern Europe where there are no fixed connections. I recall that European USB modem sales significantly exceeded those in the U.S. from the outset in the mid-to-late-2000s. In contrast to other regions, European mobile broadband is used more for PCs, tablets and mobile routers than for mobile phones, as illustrated in the first of three graphics I have reproduced from Ericsson's report. This is because mobile broadband, first with HSDPA and since 2010 with LTE, has been strongly promoted in many places as an alternative to poor or non-existent DSL-based connections.  Services such as Vodafone's "zu Hause," for example, is targeted at Germany's so-called "white spot" areas including rural regions and remote parts of the former East Germany. Remarkably, Ericsson forecasts that data traffic on mobile phones, uniquely in Western Europe, will not exceed demand for all the other above categories combined until after 2019 at the earliest. The forecast that mobile phone data will exceed data on the other devices in Eastern Europe by then is presumably because penetration of PCs and tablets is reckoned to remain significantly lower than in Western Europe, where penetration for these devices is clearly among the highest levels in the world due to income effects.

 

 

 

 

 

 

 

 

 

 

 

 

 



Source: Ericsson

The significance of PCs, tablets and mobile routers is not in the number of such devices, but in the traffic they generate, as illustrated below.

Mobile Subscriptions and Monthly Data Traffic

 

2012

2013

2019 Forecast

Worldwide mobile subscriptions (millions)

6,300

6,700

9,300

Smartphone subscriptions (millions)

1,300

1,900

5,600

Mobile PC, tablet and router subscriptions (millions)

250

300

750

Monthly data traffic per smartphone  (MB)

450

600

2,200

Monthly data traffic per PC (MB)

2,500

3,300

13,000

Monthly data traffic per tablet (MB)

750

1,000

4,500

Source: Ericsson Mobility Report, November 2013

Consequently, European mobile networks must be engineered and dimensioned to support these relatively high data traffic demand levels. That has implications for total capacity, and also for the network speeds that need to be provided. PC and tablet use tends to lean toward more bandwidth-intensive services such as video. If one has no fixed network connection, the only place to access on-demand video content is via mobile broadband. The second graphic from Ericsson's report implies that the only places one can stream video with adequate performance are a few particular cities: Copenhagen, Oslo and Seoul. However, an English language promotional video for Vodafone's zu Hause states "wireless Internet access at home, faster than ever before… it delivers extremely rapid transmission speeds. It delivers at least 3 Mbps, even in rural areas…  even a full high-definition film can be downloaded in a flash."  Fixed wireless implementations enable the use of outdoor and even rooftop antenna systems for terminals that can markedly improve radio performance over what can be achieved on a standalone smartphone PC or tablet. This may provide some explanation of the different assessments. Nevertheless, consumer expectations, forged by predominantly fixed network connection experiences elsewhere, are escalating to several tens of megabits per second access speeds for home Internet access these days. Network loading versus total capacity will also significantly affect performance levels actually achieved.

 

 

 

 

 

 

 

 

 

 

 

 

Source: Ericsson

Speeding the evolution from 2G to '5G' in Europe

The demand for mobile as the primary rather than merely a supplementary broadband access makes it particularly important that the Europe's operators keep up with world leaders in rolling out next generation technologies. Operators in the UK and France have recently been reprimanded for not even meeting their 3G coverage requirements. These ought to be relatively easy to achieve given that they are based on where people actually live. However, people increasingly want broadband access in trains and the passenger seats of cars. Mobile broadband data coverage of the rail and road networks continues to be as patchy or diabolical as it was couple of years ago in many cases. 

Common excuses for Europe being behind in adoption for LTE are that North America's CDMA operators wanted or needed to switch to another technology, and that European operators could adequately satisfy demand with 3G HSPA.  A naïve and apparently false inference, in reply comments to one of my previous columns, is that Europe will catch up within a few years or so.  According to Ericsson's LTE subscription forecast, in the third graphic I have taken from its report, the gap will, disconcertingly, be even wider in 2019 than it is in 2013.  Eastern Europe will have a smaller proportion of LTE in 2019 than the U.S. does today.

 

 

 

 

 

 

 

 

 

Source: Ericsson

Europe is trying to position itself to recover global leadership in mobile communications with the introduction of "5G" starting around 2020. There was some contention between the European Commissioner for the Digital Agenda, Neelie Kroes, and the Director General of the GSMA, Anne Bouverot, about whether Europe might somehow leapfrog 4G to achieve leadership in 5G. Let there be no doubt: Europeans, in particular, need current-generation mobile technologies as a major, primary or even the only means of Internet access in many cases. They need it now and they need it much better that it is currently available in many places. And, as I explained last month, a 5G ecosystem including European technology suppliers needs to be created on the basis of leading, not following, 3G and 4G developments and usage in the region.

Opportunities in the boondocks

It is without doubt that the mobile broadband revolution has been predominantly driven by the widespread adoption of smartphones in recent years. These are supplements to the predominantly fixed, including Wi-Fi-based, access we use with PCs and increasingly TVs and games consoles across most developed nations. Nevertheless, it was connecting PCs with data cards and dongles that got things started with the introduction of HSDPA in the mid-2000s. In developing nations where average incomes are low, smartphones are also set to be the predominant means of Internet access because they can be purchased at affordable prices which are already down to around $100. In the middle ground, where consumers have the spending power to build substantial PC and tablet market penetration, but outside urban areas where fixed network infrastructure is poor or non-existent, mobile broadband including LTE in particular will also be most significant beyond smartphones.

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. WiseHarbor publishes an Extended Mobile Broadband Forecast. This includes network equipment, devices and carrier services to 2025. Further details are available at: http://www.wiseharbor.com/forecast.html. Find WiseHarbor on Twitter @WiseHarbor.

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