Analyst Angle: Good news at World Mobile Congress means quicker growth

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
With the announcements in Barcelona this week it is easy to see the mobile wireless industry is coherently moving forward.
Announcements by Microsoft stating it is jumping back hard into the mobile device operating system fray, Nokia and Intel stating the two companies will develop and open applications to all vendors and Verizon Wireless reiterating it will have dozens of its U.S. markets utilizing LTE by the end of the year, among other items, is all good news during harder-than-expected times for the mobile industry.
More operating systems to choose from, applications that can run regardless of the device or OS and an LTE-defined world during the next decade will help spur 3.5G and 4G growth during the next 10 years in both established and emerging mobile wireless markets. How will things shake out amongst air interfaces during that time?
LTE wins
Although the wireless industry has been full of drama between competing standards in the past, we see close to a zero chance for a competing 4G standard to displace LTE. The only real competitor at this point is 802.16m, which the commercialization of appears to be two to three years behind that of LTE. The WiMAX Forum is attempting to position 802.16m as an equivalent to “LTE advanced” but most observers see it as parallel to LTE and, importantly, 802.16m is unlikely to offer better spectral efficiency or coverage than LTE.
Also critical is the fact LTE draws on the combined GSM and CDMA developer and vendor communities and WiMAX cannot match this as of today. LTE is also a lower risk deployment than WiMAX since it has been chosen by the CDMA and GSM vendors as the 4G part of their roadmap.
This backing of LTE by the CDMA and GSM vendors represents a unification of the wireless market after years of fragmentation and concerns of deeper dividedness just a few years ago as 802.20, FLASH-OFDM, UMB and WiMAX vendors vied for contracts.
With this widespread support for LTE from those that have actually built and operated the mobile wireless networks worldwide we expect to see quicker ramp up of volumes for LTE than would have otherwise been possible in a fragmented market.
HSPA+ first for some carriers
While some of the larger carriers in established markets, such as Verizon in the United States, are going to upgrade quickly to LTE, many carriers will seek to utilize HSPA+ during the next few years before going to LTE.
For those carriers that do not have the large subscriber base of tens of million of subscribers and which are worrying about upgrading for data users before their users make it necessary, HSPA+ makes sense. It offers carriers a significant advantage over 4G standards because it offers roughly 75% to 80% of the benefits of similarly configured 4G platforms while maintaining backwards compatibility. It can be deployed selectively and used to target only those areas that require additional capacity without deploying a net network and air interface or requiring handsets to be multi-mode.
HSPA+ can evolve from existing networks while retaining backwards compatibility. Every other 3.5G and 4G technology requires a fork lift upgrade at the base station and often in the core network as well.
As is the case with most technologies, new handsets will also be required to fully benefit from HSPA+. Backwards compatibility with earlier versions of the standard are maintained but not with the same speeds or latencies. Devices must be capable of decoding the higher modulation, operating with VoIP and additional receivers are needed in the handset for MIMO.
Some HSPA+ features can be implemented with software updates, such as MAC layer enhancements, in the base station and/or RNC. Others will require line card changes in the base station. Implementation of MIMO will require additional transmit and/or receive channels which may necessitate an entirely new base station if the existing base station cannot accommodate paths for the additional channels and antennas.
World of 3.5G and 4G subscribers soon
With these developments, as well as others announced this week, Visant Strategies sees 3.5G and 4G subscribers exceeding one billion in 2015. There are a few important points that must be addressed when looking at this large figure.
At that time, over 60% of these subscribers are expected to be HSPA+ users who will be converted via handset purchases and who will see their respective mobile carrier implement software and line card upgrades and not, generally, utilize MIMO.
LTE growth rates will rise greatly after 2015 with the technology having a relatively rapid rise at that point which reflects the combined weight of the formerly separated CDMA and GSM communities. Roughly 65% of 3.5G and 4G subscribers are expected to reside in the developed economies of Western Europe, North America, Japan, Taiwan, Australia and Korea.
Backhaul still has to be a strong focus
Great focus is being placed on the radio transport network, but backhaul is emerging as an equal or even greater network bottleneck than the last mile radio network itself. In fact, carriers will fail to reap the benefits of 3.5G and 4G until they resolve backhaul issues. LTE and HSPA+ that are connected by 3G size backhaul pipes will still be 3G.
The main problem for many carriers is the cost to backhaul individual base stations. This can also be an issue when employing relatively inexpensive wireless microwave since, eventually, the traffic eventually will be carried by a wired network that will have a carriage price.
Available backhaul capacity is also becoming an issue as tower capacity, with towers often having more than one and sometimes up to five base stations, exceeding capacity available via traditional copper medium. Mobile carriers or tower operators will need to adopt fiber or point-to-point (PTP) microwave equipment to alleviate such shortcomings.
But copper is unlikely to go away since it will be adequate for many cell sites that require only a low to medium level of bandwidth. Also, in 2010 DSL and deeper fiber installations are continuing to improve copper capacity.
During the past four years we have seen operators wisely incorporate backhaul planning with 3.5G deployments and for future 4G deployments and this has began to help solve the problem. Backhaul vendors continue to upgrade their offerings and array of techniques for backhaul as well.
Larry Swasey is co-founder of Visant Strategies. He has been covering wireless, network and component technologies for twenty years. In addition to managing the company and authoring studies for Visant he also frequently contributes articles to related newsletters and trade magazines, speaks at technology trade shows and is quoted by journalists. Swasey can be reached at: swasey@visantstrategies.com.
Andy Fuertes is Sr. Analyst and co-founder of Visant Strategies. Fuertes has worked in the high-tech research industry for ten years. He started his career at Information Gatekeepers in 1992 and was employed by Allied Business Intelligence from 1993 to 2002. During his tenure at ABI Research, Fuertes was promoted from the title of Analyst to Vice President of Research. He authored studies on broadband access, wireless broadband, RF semiconductors, mobile telephony, antennas, crystal oscillators, and satellite technologies. Fuentes can be reached at: fuertes@visantstrategies.com.