ABI Research expects usage of LTE networks to grow so quickly that the data traffic on LTE will surpass that of 3G networks within three years.
The firm noted that while LTE subscriptions made up only 2.9% of the global total at the end of the second quarter of 2013, those users are still expected to account for more than 20% of the total data consumption on mobile networks worldwide for this year. ABI predicts that LTE data traffic will expand at a compound annual growth rate of 82.2% between 2013 and 2018.
“After surpassing 3G networks in 2016, 4G networks will go on to capture two-thirds of data traffic by 2018,” ABI said.
Driving the trend are two factors: aggressive LTE network deployments, and a wide variety of smartphones and tablets whose prices are falling.
“These two factors work hand in hand to enable consumers to stream videos,” comments Ying Kang Tan, research associate at ABI Research. “Already, Verizon saw video accounting for 50% of its network traffic earlier this year. ABI Research believes global annual video consumption will soar at a CAGR of 60.6% to exceed 100 exabytes in 2018.”
Internet surfing is expected to account for 27% of the data traffic.
“The result is that the revenue generated from data traffic – excluding that from texting – will increase at a CAGR of 7.9% between 2013 and 2018,” notes Jake Saunders, practice director and VP, core forecasting. “However, voice service revenue will still take up the bulk (52.7%) of the global total in 2018. Operators still need to improve their voice quality and not lose sight of this segment.”
ABI also recently took a look at the total cost of ownership for the two flavors of LTE, FDD and TDD. While FDD has dominated U.S. deployments thus far, TDD is favored by operators such as China Mobile and Clearwire and is expected to go mainstream in 2014, according to ABI.
China Mobile has announced plans to spend $3.3 billion on a roll-out of more than 200,000 TDD-LTE base stations, and ABI said that Clearwire is anticipated to have rolled out 5,000 TDD-LTE base stations to complement Sprint’s LTE network. There are 21 commercial TDD networks launched around the world, and 60 total deployments. Other operators using TDD include Softbank in Japan, Airtel in India, and Optus in Australia.
“As a result of this ramp up in LTE-TDD deployments, pops coverage has surpassed 18.5% of the population by September 2013 and should eclipse 49% by 2018,” observed Jake Saunders, VP and practice director at ABI Research.
ABI said that TDD’s benefits include the fact that a single band of up to 20 megahertz of TDD spectrum can handle up and down traffic; cheaper spectrum than that used for FDD; and flexibility of deployment, since TDD can be deployed as a complete network, a hybrid TDD/FDD network, backhaul, or a WiMAX network extension. The spectrum costs play a particularly significant role, with TDD spectrum coming in at 44% cheaper than FDD spectrum, according to ABI. Major TDD contract awards have brought the cost of TDD equipment in line with that of FDD, with Huawei having particular success in that arena and landing 36 deployment contracts.
For stand-alone networks, ABI calculated that the total cost of ownership for TDD-LTE is 13% lower than for an FDD-LTE network, and that TDD can provide 33% savings if used for backhaul compared to point-to-point microwave, and 43% cheaper than fiber.
“LTE-TDD is attractive to carriers as a flexible and cost-effective solution,” added Jake Saunders.
