RoI key to LTE's success

Despite the much-hyped higher surfing speeds that LTE looks set to bring, the clear case for the technology from an operators’ point of view lies in the potential opportunity to reduce the cost per bit.
The LTE wave in the Asia Pacific is being led by Japan, Hong Kong, South Korea and Australia, which will each see at least one commercial rollout by the year-end.
However, the technology’s progress in the rest of the region could be hampered by simple economics, says Foong King Yew, a principal analyst at Gartner.
“The pace of change is very rapid, with carriers expected to deploy new technologies within a shorter span of time. Think the early transitions from WAP to GRPS to EDGE to 3G and now, LTE,” says Foong. “Each change involves investment. How can they ensure they get reasonable returns?”
Carrier’s potential LTE woes could also stem from the ‘uncertainty of the charging mechanism’, says Foong. “With many carriers now expected to give away more for less due to competition, many may have to take another look at flat rate data plans for mobile broadband, as this will have a direct impact on the decision to invest in LTE.”
While much of an operator’s existing infrastructure can be reused, technical challenges exist for 2G/2.5G/3G providers to maintain the quality of service on their networks while upgrading.
“Carriers need to put in place the necessary bandwidth in the backhaul, with the high data usage expected from LTE networks,” says IDC’s senior research manager Alex Chau.
Spectrum allocation is one other issue operators have to contend with. “Markets such as Australia have enough existing spectrum that can be re-farmed for LTE. But this is not the case for other markets and operators will have to wait for regulators to issue new spectrum at either 2.6Ghz or 700Mhz.”
The delay in spectrum allocation is a key reason why LTE isn’t being rolled out as fast in Asia Pacific compared to Europe and the US, Ovum analyst Nicole McCormick says.
How fast LTE could gain ground in a market may simply lie in how heavily carriers are willing to subsidize compatible devices, said Foong. “With several carriers having spent considerable sums on iPhone subsidies, carriers may be somewhat reluctant to get onboard too soon.”