Mobile operators can reap billions of dollars in savings tied to the rollout of the latest technology in LTE modems
North American mobile operators have invested roughly $265 billion in total capital expense and $70 billion for spectrum since the 700 megahertz auction in 2008. While waiting for “5G” technology rollouts in 2020, those same operators will have data revenue of more than $835 billion, according to the ABI Research market data “Mobile Carrier Revenue and Profit” and “Mobile Operator Capex.” ABI Research also forecasts that North America LTE kit investment will amount to nearly $30 billion through 2020, including macrocell, small cell and related backhaul, and in-building systems. As astounding as these figures are, it is even more shocking to realize that all financial performance is constrained at a single choke point: the wireless network’s capacity to deliver the data bits.
Operators make heroic efforts to optimize wireless networks, but those efforts are only one side of the data connection. Moving the data to the subscriber also depends on the capability of the mobile device at the other end of the connection. The operator’s financial performance is directly dependent on its efficient use of network resources, and Cat 4 and Cat 9 mobiles with legacy modems can limit the network’s capacity and efficiency. The critical parts of the network are cell sites with heavy subscriber and traffic loads. Typically, these are the dense urban areas at busy times, which take an increasingly larger part of the day.
How do 4G LTE modems make a difference?
ABI foresees LTE densification and in-building solutions as the major radio access network spend in North America through 2020, providing capacity where the mobile device can be the constriction to network traffic. If the mobile pool has a large population of devices that are single-carrier LTE (Cat 4) or just 64 quadrature amplitude modulation (Cat 9) and do not support the advanced features of LTE (256 QAM and carrier aggregation), the network capacity at crowded hot spots suffers because the slower devices cannot accept data as fast as the networks can send. That leads to network congestion as the slower devices limit spectrum utilization.
256 QAM
Advanced digital modulation, 256 QAM, is available with state-of-the-art LTE modems. This simply means the network can pack one-third more data (eight bits per symbol) in the LTE signal as 64 QAM (six bits per symbol). If the operator’s hot zones are populated with Cat 9 (64 QAM) devices, upgrading the hot zone pool to Cat 12 (256 QAM) devices and service would increase the hot zone capacity by 1.33-times. Operators should study the mobile mix in the high-density hot zones and encourage upgrades to 256 QAM devices.
Carrier aggregation
In high-density urban areas, operators will likely have multiple spectrum assets. Carrier aggregation is about more than just bonding carriers to make a faster connection. The network can actually pack in 40% more data, meaning it can deliver the same data performance and user experience to 40% more subscribers. It does that by leveraging statistical gains, because with carrier aggregation the network finds the underutilized parts of the LTE signal. As these parts of the LTE signal are identified, the network adjusts how the data bits are packed for more efficient use of multiple LTE signals. Carrier aggregation gains apply regardless of the modulation QAM and reach throughout the cell. Infrastructure vendors show that carrier aggregation can deliver a 1.4-times capacity gain, so operators with multiple spectrums should use carrier aggregation regardless of device strategy.
What about real-world conditions?
This analysis is for dense urban hot spots and in-building scenarios where a well-designed network will maximize signal strength and minimize interference and noise. These are the conditions in which 256 QAM delivers the extra performance. Carrier aggregation benefits apply everywhere regardless of signal strength and noise.
For a baseline comparison, assume the $30 billion of LTE densification is for a network with a pool of Cat 4, 64 QAM devices. Suppose those subscribers upgrade to Cat 12 devices with 256 QAM and carrier aggregation; then the network could deliver a capacity gain of 1.86-times (1.33 x 1.4). In a real-world situation, there is a complicated mix of mobile devices, and a well-designed small cell, heterogeneous network or in-building system will still have variation in the signal strength, so the capacity gained from adding 256 QAM and carrier aggregation will vary depending on the current mobile mix. Thinking in terms of North America LTE densification – that is, the high-density hot zones – an upgrade to 256 QAM and carrier aggregation provides a comparable value nearly as large as the $30 billion capital expense.
What is an operator to do?
Although real-world situations are more complex than this analysis, a pool of phones with better performing modems will effectively deliver a higher-capacity network, better user experience and enhance subscriber loyalty. Since each network is different the benefits will vary, but it is worthwhile to consider the mobile’s impact to network performance. Here are a few things that operators should do now.
• Insist that device vendors keep in sync with network roadmap plans, delivering modem features like those mentioned here, even for budget phones.
• With smartphone lifetimes of two years, plan ahead and fill the mobile pool with phones having beneficial features that will soon turn on.
• Consider consumer-friendly and innovative pricing plans that encourage subscribers to choose the mobiles with better-performing modems.
• Design hot zone, small cell and in-building systems to maximize signal strength while minimizing interference.
• Upgrade network software for 256 QAM and carrier aggregation and start reaping the benefits.
Operators have paid for spectrum and LTE kit, and should consider the impact of the mobile’s modem on network performance. If the operators play this right, it can be a win-win solution for all.
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