Aircom: Expensive LTE deployments require more creativity

Mobile network consultantancy firm Aircom International released new figures that show how much it would cost network operators to roll out Long Term Evolution (LTE) networks in different parts of the world.

Aircom pegs capex for a U.S. tier 1 operator at $1.78 billion in the first year of an LTE deployment; $880 million in capex for a European operator and $337 million in capex for the Middle East. The Asia-Pacific region comes in at $232 million.

Aircom said the estimates are based on assumptions about spectrum availability, cell site location, cell site density and backhaul capacity requirements. Capex in the U.S. comes in so high primarily because of the cost of spectrum and Aircom's assumption that 60 percent of the backhaul transport capacity needs to be upgraded and at least 6,000 cell sites would need to be deployed across eight to 10 markets in order to have a marketable service in place. In addition, the cost

For an operator like Verizon Wireless, which is launching LTE in the 700 MHz band, $1.78 billion is a fraction of its total capex, which was $17.2 billion in 2008, but Aircom CEO Margaret Rice-Jones says that amount of capex "requires quite a lot of borrowing in a borrowing-constrained world." So in the current economic slump, operators could feel more pain when it comes to finding credit to fund the LTE investment.

"This is the first time we've faced a major rollout at a time when banks aren't being so cooperative with lending," she said. As such, operator may have to rethink their business cases and look for ways to cut costs.

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