Editor’s Note: RCR Wireless News has teamed up with the Yankee Group to conduct a series of market surveys of RCR Wireless News’ subscribers to gauge their thoughts on technology issues impacting the wireless ecosystem.
Those of you who respond to the survey will get an executive summary of the results and are eligible to win an American Express gift certificate. Congratulations to this week’s winner, Bruce Rodin at Bell Mobility.
The migration of mobile networks to 4G is driven primarily by un-served latent demand for personal and mobile broadband services. As the industry shifts from a communications to a media- centric network design, service delivery requirements demand high-performance networks. Mobile WiMAX and LTE are emerging as the primary candidate radio technologies. Key questions include:
–How do service providers decide between these two technologies?
–What are the key factors influencing their migration decisions?
–What is timing of commercial WiMAX and LTE deployments?
–How will mobile service providers position WiMAX and LTE relative to 3G?
RCR Wireless News and Yankee Group conducted a recent survey to better understand mobile operator’s decisions surrounding their migration paths to 4G. Decisions differ both regionally and by service provider type. Mobile operators in North America and Western Europe are drawn to LTE, while WiMAX has greater support in emerging countries where a 3G license may not be available and operators need to create a parallel broadband network to support data services. Fixed players and cable MSOs, which are looking to use 4G to add wireless and mobility to their convergence bundles, have different points of views. It is important to note that this survey is predominantly both a mobile operator and a North American perspective. The respondents were heavily weighted to North America with only small representation in EMEA, and Latin America.
Survey responses demonstrate that mobile operator migration decisions, whether WiMAX or LTE, are influenced primarily by technology availability, closely followed by business model. Operators need to know they have chosen the right technology, that it is available now and has a vendor ecosystem is in place. Mobile operators are well aware of nominating the wrong technology. The situation is further complicated with some players seeking convergence between WIMAX and LTE .
Change in business model
For operators in highly competitive markets or new wireless players, such as cable MSOs or fixed-line operators, it is more about a new business model. They perceive 4G more as a means to gain a competitive service advantage and market penetration. These players fall within Yankee Group’s categorization as “Innovative Challengers,” “Regional Pioneers” and “Capital Constrained Entrants.” For example, Sprint Nextel Corp. in the U.S. and Mobilink in Pakistan chose WiMAX because they want to be first to market with 4G. Mobilink is initially focused on using WiMAX to address pent-up demand for basic broadband services. For both Sprint and Mobilink, 4G is about mobile Internet; it enables a change in business model for the mobile operator to broadband IP and VOIP services.
In North America and Western Europe, 4G is all about LTE from a mobile operator perspective; with the exception of Sprint, WiMAX is for the large part being deployed only by ISPs. In the U.S., AT&T and Verizon enjoy common ownership of wireless and wireline; Sprint had to build WiMAX to have its own broadband network. Operators in emerging countries like Mobilink in Pakistan are more drawn to WiMAX.
Our survey data reinforces that LTE has superiority among mobile operators: 56% of respondents are developing or plan to develop LTE (30% CDMA2000; 26% GSM/WDCMA/LTE), while 30% of the respondents aligned with 802.16e. The future for UMB is dismal: among CDMA service providers, only 2% say they will follow it as a migration path to 4G, compared with 48% for LTE and 36% for WiMAX.
How will mobile service providers position WiMAX and LTE relative to 3G? Among those companies surveyed that are 3G operators, the majority (51%) are positioning WiMAX/LTE as an enhancement to 3G. Only 9% say they will position it as a replacement. We believe that this is logical given the significant investments these players have made in 3G technology.
Timing demand
The key factor influencing the rate at which operators plan to roll out 4G networks is overwhelmingly market demand (76%). Only 24% of respondents stated competition. Contrary to these results, we believe that market competition is playing an increasing role in 4G deployments, as service revenues for traditional services saturate. While usage today is still predominantly voice and texting, the emergence of portable media oriented devices and applications like video streaming, social networking etc. are anticipated to rapidly drive demand for mobile broadband. Given the high capex and opex in deploying 4G networks, timing is critical.
The difference between WiMAX and LTE is less about technology and more about availability today, and the commercial positioning of the respective technologies. WiMAX is here now; LTE is at least two years away. Operators have to decide whether to wait or deploy now. There are already approximately 260 WiMAX 802.16d networks deployed in 110 countries; a vendor ecosystem is solidifying. The recent formation of the Open Patent Alliance of a group of WiMAX players including Cisco Systems, Intel Corp., Alcatel-Lucent, Clearwire, Sprint and Samsung promises to drive device and application development and should create a lower cost structure for the technology over time.
But a certain level of confusion still exists around WiMAX. There are various versions of the technology standard (802.16d, 802.l6e and 802.16m) and at differing levels of maturity that service providers regard necessary for commercialization. There continues to be uncertainty around the new Clearwire/Sprint joint venture. Most service providers anticipate a 24-month period before technology will be available for them to leverage, which brings 802.16e closer in timing to LTE in reality.
How do service providers decide between WIMAX and LTE as a 4G migration strategy? Exhibits 2 and 3 present the importance of factors influencing selection decisions among our survey respondents. The responses illustrate that the evolution of the technology is in line with the priorities of service implementation strategies.
Among factors influencing their decision to deploy WiMAX, most important is technology differentiation that can provide capex savings. WiMAX is spectrally more efficient and less expensive than LTE to deploy. But adoption of WiMAX is less about technology, and more about a business model change: a means for mobile operators to enter the broadband market and to create a new business in broadband. They can bundle with mobile service to reduce churn and secure customers. WiMAX offers the means to create a parallel broadband business to mobile and offer broadband to customers.
For operators in highly competitive markets, WiMAX gives them a head start. But there is a risk factor in mobile operators becoming involved in the Internet, a new business that they do not yet understand. WiMAX also offers 3G operators alternate broadband connectivity: a means to compete in broadband without giving up capacity and degrading performance on their 3G voice network. WiMAX can be a parallel network without the overhead of a mobile service.
Meanwhile, as demonstrated in chart 3, for an operator like Verizon, while LTE is a technology transition from CDMA EV-DO, it suits its FDD spectrum, in allocations over 10 megahertz, which include AWS and its recent 700 MHz win. For GSM operators like its parent Vodafone, LTE is simply a continuation of the GSM technology migration path from HSPDA. Less of a decision influencer but still important to operators is the ability to take advantage of the scale of GSM and international roamin
g. Verizon’s decision was as much business as technology driven: a desire to get on the same 4G standard and become part of the global wireless community that Vodafone has developed.
In the race to 4G, mobile WiMAX and LTE have emerged as the candidate radio technologies. But can both technologies maintain a market position? Are they competitive or complementary? Will they continue to exist as independent 4G alternatives or merge into one industry standard? Intel is conceding that WiMAX is part of LTE and is looking at ways to integrate the two technologies. LTE proponents will also be happy for WiMAX to merge with LTE, but as a subset. The performance of WiMAX and LTE are similar so today’s decisions are more about availability.
WiMAX has its place today, but ultimately, it’s a bridging technology. In the longer term, LTE will likely dominate, with characteristics of WiMAX being absorbed into LTE. WiMAX is a means to accelerate LTE: vendors can take R&D used in WiMAX and apply to LTE.
For more information, go to YankeeGroup.com
