Tuesday, June 29, 2010

Why is LTE going to be a success?

Success of a technology is expressed in terms of its adoption by customers in existing and new market segments. In the following we present the key factors that in our opinion will lead LTE to be a successful technology.

- Trend of the mobile data traffic and LTE performance

Over the last year, global mobile data traffic has increased by 160 percent and is growing faster than expected five years ago. The rapid consumer adoption of smart phones, netbooks, e-readers and Web-ready video cameras as well as machine-to-machine applications like eHealth monitoring and asset-tracking systems, is continuing to place unprecedented demands on mobile networks. In spite of the economic downturn, the demand for mobile services has remained high, posing both challenges and opportunities for service providers worldwide. The Cisco Visual Networking Index (VNI) Global Mobile Data Traffic Forecast update of 2010, predicts that mobile data traffic will double every year through 2014, increasing 39 times between 2009 and 2014. Mobile data traffic will reach 3.6 exabytes per month by 2014 when almost 66 percent of the world’s mobile data traffic will be video. Figure 7 shows the Cisco forecast for mobile data traffic.

Figure 7: Cisco VNI forecast for mobile data traffic

According to this forecast, in the next years user will require high throughput to support mobile video, along with low latency to support real-time applications such as VoIP, gaming and video-conference. Pre-commercial trials of LTE has already shown the capacity of this technology to fulfill such high requirements and a wide adoption of this technology by the mobile user will be an easy consequence.

- Advantages for service providers

From a service provider point of view, there are several motivations that would convince it into adopting the LTE technology:

  • Lower operational expenditure (OPEX) to operate the network, made possible by the incorporation of self-organizing network capabilities in the LTE standard;
  • High spectral efficiency and reduced cost of delivery per bit as compared to legacy wireless technologies;
  • Promising performances allowing the user to use several applications and real-time services;
  • Co-existence with legacy systems and standards;
  • Tendency of the world’s major wireless service providers to show their commitment to LTE;
  • Be part of a global ecosystem.

- Provision of interoperability with legacy systems

The interoperability capability of a new technology with legacy systems is a driver for its adoption. LTE will allow smooth and seamless service handover in areas where there is no LTE service (i.e. have HSPA, WCDMA, GSM, CDMA or 1xEV-DO coverage). Furthermore, provisions in LTE to be deployed as overlay network on existing non-3GPP systems (i.e. CDMA or 1xEV-DO) is attractive to such providers as this will allow them to roll-out their LTE network in several phases without interrupting their existing services.

- Collaboration with service providers and network vendors

A technology solving real customer problems has better chances of getting adopted widely. The LTE development saw participation and collaboration by various strong service providers and network vendors. These companies brought their experience and innovation to realize a list of requirements and recommendation (administered through the NGMN alliance) for 4G mobile communication systems and they participated in technology trials under the LSTI initiative. The LTE standard incorporated the service providers’ requirements in the standard and therefore achieved confidence of the service provider community in the technology. Since members of the NGMN alliance represent well over one half of the total mobile subscriber base world-wide, sponsors of the NGMN alliance account for more than 90% of the global footprint of mobile network development, and LTSI membership includes 26 vendors and 13 service providers, the collaboration between 3GPP and these support organizations assures a widely adoption of the LTE technology in the following years.

- Low royalty for IPR licenses

LTE technology IPR is owned by various companies involved in the technology development and their collaboration via the NGMN and LSTI alliances enabled them to agree on low royalty for IPR licenses to each other. This is unlike CDMA technology where IPRs were mostly owned by a single company (i.e Qualcomm). Thanks to the low royalty for IPR licenses, small companies can easily set up to be a service provider, increasing competition in the market with the result of a lower final price of the service for the user. Also the price of the complementary products (e.g. USB adapters) will be more accessible for the final user.

- Pre-commercial trials

TeliaSonera was the first operator in the world with the launch of commercial 4G services to customers in Stockholm, Sweden, and in Oslo, Norway, in December 2009. During 2010, the extensive network roll out continues in 25 cities and recreation areas in Sweden and in 4 in Norway. TeliaSonera has secured deliveries for 4G modems with support for 3G and 2G during the second quarter 2010 and it will launch 4G services to Danish customers during the spring 2011. The whole world had its eyes fixed on Sweden and Norway for the first period of deployment and this contributes to build confidence of customers on the feasibility, and performances of this technology, giving the feeling of a coming wide adoption.

- Success of previous 3GPP standards

LTE standard has been developed by 3GPP which is the progenitor of the widest adopted standards in cellular networks (i.e. GSM, UMTS, and following enhancements). For this reason, LTE is seen as the “natural evolution” of UMTS and this will bring to a wide migrations of GMS/UMTS users to LTE technology.

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