Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.
LTE and 4G are two terms firmly rooted in every wireless subscriber’s vocabulary. The networks themselves, however, have a comparatively marginal grip on the global marketplace.
The interest in LTE only continues to grow, as the technology promises to improve the user experience. With the prevalence of marketing campaigns run by major carriers, many consumers assume they already have LTE and its capabilities. In reality, only a small fraction of the world’s mobile broadband networks are LTE-enabled — which is not to say the ratio won’t change in the coming years. For LTE networks to become truly widespread, however, carriers need strategies to expand not just coverage, but capacity as well.
Vital to most of these strategies is the extensive use of small cells. Small cells work well in crowded urban environments as complementary systems to existing macrocells, and they are the most cost-effective means of providing better coverage and more bandwidth to support complex mobile data services.
Data growth
Carriers are actively searching for ways to better accommodate mobile traffic, as it has increased exponentially in recent years and shows no sign of slowing. According to a GSMA report on the mobile economy, mobile broadband is expected to grow from 1.6 billion connections in 2012, to 5.1 billion in 2017 – a compound annual growth rate of 27%. Additionally, subscribers are increasing at a rate four-times faster than the global population, and the total is projected to surpass 4 billion in 2018. But this massive increase only begins to tell the whole story.
More than ever, subscribers are putting pressure on mobile operators to accommodate data usage. In 2012, total traffic volumes exceeded the sum of all preceding years combined, with data as the dominant force behind this growth. According to Cisco’s 2013 VNI Mobile Forecast, mobile data traffic grew 70% worldwide in 2012. Last year’s data traffic of .9 exabytes per month is expected to grow at a CAGR of 66%, reaching 11.2 exabytes of monthly traffic in 2017. While data usage is expanding across all carriers and all networks, it has especially spiked on next-generation networks.
State of LTE rollouts
With the ever-growing demand for data, it should come as no surprise that demand for LTE services is also growing. In the minds of carriers and subscribers alike, LTE represents the evolution of mobile technology. It enables and enhances bandwidth-hungry applications like interactive TV, video blogging, advanced gaming, and professional services – applications which are fueling the data expansion.
Today’s LTE rollouts are mainly focused on coverage. Despite this focus, LTE has not yet become the norm. According to the GSMA, 145 LTE-enabled mobile broadband networks were commercially available in 66 countries as of the beginning of 2013. Overall, 3,200 wireless networks are established in 236 countries, meaning only 4% are LTE-enabled. In the United States, LTE wireless connections comprise 27 million out of a total of 345 million connections. Although they represent a minority of the world’s connections, LTE devices are responsible for a disproportionately large amount of traffic.
The GSMA reports LTE accounted for 14% percent of traffic in 2012 while representing just 1% of connections. By 2017, the traffic share is forecast to increase to 45%, versus a 10% connections share. With subscribers using more data every year, current networks won’t be able to handle the volume of data used by “4G” devices, which generated an average of 19-times more traffic than non-“4G” devices in 2012. Several leading carriers have therefore chosen to adopt TD-LTE and LTE-Advanced (LTE-A) technologies, which make more efficient use of the spectrum within an allocated channel, enabling higher subscriber densities and data rates.
For example, China Mobile will invest $6.7 billion in 2013 to roll out a TD-LTE system that builds on its existing, TDD-capable infrastructure. Many carriers believe TD-LTE systems’ asymmetric operation will allow greater flexibility in capacity planning and allocation – two capabilities which will become increasingly important as a system’s data traffic levels begin to exceed half of its nominal capacity.
Other operators, such as DoCoMo and T-Mobile, favor the multiple-input, multiple-output antenna technology of LTE-A to boost subscriber density and capacity. LTE-A allows more users to share the network by giving carriers a more granular way to divide and allocate spectrum between devices and the base station.
Carrier strategies differ around the world, but they do share one common feature: small cells.
Small cells
China Mobile, DoCoMo and countless others have committed to using small cells to improve and expand their various LTE-enabled systems. The technology is relatively old news to carriers, who have already been using it to improve 3G network coverage and capacity. Small cell networks are inexpensive to purchase and deploy, and can be placed virtually anywhere a mobile network needs improvement. They are the most effective way for carriers to deliver the coverage and capacity needed for next-generation networks, and are consequently being adopted widely.
Infonetics recently published a study revealing operators’ plans to deal with ever-increasing traffic. The study asked them to calculate the percentage of mobile traffic handled by macrocells, outdoor small cells and indoor small cells in the near future. Operators predicted that by the end of 2013, conventional macrocells will be handling 71% of their networks’ traffic, compared to 90% in 2011. On the other hand, they said outdoor small cells will account for 11% of total capacity (five-times greater than in 2011) and indoor small cells will handle the remaining 8%. Infonetics also said it expects global LTE small cell shipments to overtake 3G shipments by the end of 2013, growing the overall small cell market to $2.7 billion by 2017.
Conclusion
The current state of “4G” technology is certainly confusing. It hasn’t become the norm, yet everyone knows about it. It only works on a fraction of the world’s networks, yet every major carrier markets it.
Despite these contradictions, there are plenty of certainties in the realm of “4G.” The next-generation mobile technology will greatly improve user experience, and it will challenge carriers to reinforce backhaul and plan for the inevitable transition from 3G networks. 4G isn’t fully here yet, but it will be soon.
Martin Nuss joined Vitesse in November 2007 as VP, Technology and Strategy and CTO. Dr. Nuss has over 20 years of technical and management experience and is a recognized industry expert in timing and synchronization for communications networks. Dr. Nuss serves on the board of directors for the Alliance for Telecommunications Industry Solutions (ATIS) and is a fellow of the Optical Society of America and IEEE member. He holds a doctorate in applied physics from the Technical University in Munich, Germany. He can be reached at nuss@vitesse.com.
