LTE gets VZW nod

VERIZON WIRELESS LAST WEEK confirmed what executives from its parent companies have been hinting at for some time: the carrier will move away from CDMA technology for its next-generation network, and embrace the OFDM-based Long Term Evolution technology. In essence, the service provider concluded LTE will be the de facto choice for carriers around the world-opening up new markets and new potential revenue streams from consumer-electronics devices.
The technology announcement augmented the carrier’s earlier declaration that it will allow open access to its network for devices and applications, so long as they meet minimum technological requirements.
“We see 4G really being the enablement of consumer electronics devices on our network,” said Verizon Wireless CTO Dick Lynch. “We really, really feel strongly about that, and we feel there is a new paradigm coming, so consequently we need a network that is supportive of these open devices and we need a network that is considered worldwide-so that the consumer-electronics industry can have comfort that when they design products that include enabling wireless, it’s going to work no matter where in the world they sell it.”
Lynch added that the company could have waited to announce its choice of LTE as its 4G network technology, but “wanted to make clear our path to an open device environment of the future.”
Lynch said that as Verizon Wireless considered choices for next-generation technology, his team knew that such a network would need to handle more bandwidth and have lower latency. He said that the various choices for 4G technology offered many similarities-OFDM-based, relying on antennas for enhancement, and available within a year or two of one another. He said there were no significant technological advantages, so the team ultimately “concluded . that LTE will be the de facto choice of much of the GSM community” and that both CDMA and GSM carriers would be asked to switch to OFDM technology.
“We felt that the consumer-electronics vision pushed us to a common technology across the world, unless there was a dramatic technological difference-and there isn’t. So it makes sense from a pragmatic business standpoint to go to LTE,” Lynch said.
Lynch said that the open-access announcement was important because some consumer-electronics manufacturers may well decide to start working on 3G devices for the network now, rather than wait until the availability of LTE by 2010 or 2011-and he said that the company expects future growth from new devices being enabled on the 3G side as well as in 4G.
Lynch described a future for the wireless carrier that includes 2G-or-3G-only devices, 4G-only devices, and dual-mode devices-and emphasized that Verizon Wireless’ network as it stands now will continue to operate for the foreseeable future.
“Customers have a variety of different requirements,” Lynch said. “Those requirements evolve, they don’t just dramatically change.” So, he said, Verizon Wireless expects that even after the availability of LTE, as far out as 2012 to 2015, “the vast majority of customers we expect will still come in looking for voice and basic data services. . Our 3G network is still going to be there and still provide those customers with a very effective level of service.”
As far as building the LTE network, Lynch said that work will range from software upgrades to existing base stations to additional equipment that will sit next to current network equipment. Much depends on the equipment vendors, Lynch added, but the carrier will be able to utilize its existing IP core network assets.
“Backhaul is one of the biggest things that’s going to change,” Lynch said, “The amount of bits is going to just overwhelm the capacity requirements of the existing 3G network, even as we grow it out into the future. We’ve got to put fiber into our cell sites. . Secondarily, Ethernet microwave would clearly be another way to go.”
Lynch noted the company had picked up a sizable amount of spectrum in the advanced wireless services auction last year that it plans to use for LTE, and it “may or may not” utilize 700 MHz spectrum as well, depending on the outcome of the auction.
Lynch added that Verizon Wireless and its co-parent Vodafone Group plc had been working independently on 4G paths, and the companies “surprised each other in one of our regularly scheduled meetings” with the discovery that the two carriers had “independently and simultaneously [come] to the conclusion that LTE was the right choice.”
The two companies plan to work together on trials of the technology.
“They’re getting off of a small ecosystem around what they have right now, and moving to what’s going to be the dominant 4G technology worldwide,” said Phil Solis, principal analyst, mobile broadband for ABI Research. He said that the ability for worldwide roaming offers significant advantages to Verizon Wireless, as well as offer both Verizon Wireless and Vodafone the ability to negotiate better prices for equipment and handsets.
“This announcement looks like what Sprint has been saying, only 18 months later,” Solis said. “Verizon is saying they’re choosing LTE, but the reason is similar to what Sprint said [about WiMAX]: to open up to new devices and especially consumer-electronics devices.” However, he added, “Sprint is taking a risk by going with a riskier technology-Verizon is going with technology that will eventually be more supported worldwide.”
And, Solis noted, Verizon Wireless isn’t facing the kind of pressure from the financial community that Sprint Nextel is right now, due to the company’s poor performance. AT&T Mobility also is expected to choose LTE for the evolution of its network.
Although the company has not given any guidance on the capital investment that LTE will require, Lynch said that LTE is not expected to cost more than the company’s 3G network. Analyst Maynard Um of UBS estimated that the company’s spend in the first two years to be $1 billion to $2 billion.