C3G LTE - the holy grail?
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Amrish Kacker, Principal Consultant, is the Head of the Wireless and Multimedia practice of Analysys in Asia, based out of Singapore. He has recently moved to Asia from the Cambridge, UK headquarters of Analysys Consulting. Amrish has extensive experience in supporting the investment decision in wireless networks for operators and spectrum holders. He leads the global thought leadership on Fixed Mobile Convergence, MVNOs and WiMAX.
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Amrish Kacker explores the possibilities and challenges of 3G LTE and the service opportunities that it provides to mobile operators…
In principle, delivering increasing data rates through wireless spectrum is still constrained by physics. Therefore, to achieve a substantial jump in end-user data rates, there requires to be a change in the following parameters:
- The amount of spectrum assigned for wireless networks. This is an area that is changing rapidly due to the approach taken by regulators to increasingly become more liberal with spectrum allocations being technology agnostics.
- The spectral efficiency (the number of bits that can be squeezed out of a finite amount of spectrum) needs to improve dramatically. The targets set by the industry for 3G LTE represents nearly a 2-3 fold jump from technologies today (see figure below).
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While the vendor community remains extremely bullish and focused on delivering the next generation of wireless networks, mobile operators continue to remain concerned by the requirements for massive investments every few years into technologies that are primarily designed to support data services - for which the business model and investment justification remains unproven. To complicate the investment decision, a host of alternate wireless technologies (and spectrum to deploy it in) makes the business decision even more risky.
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Developments in the fixed world will always outpace those in the mobile world - thereby implying that wireless will need to focus on services that some offer value add over and above what fixed networks can deliver - either through portability or mobility. This continues to remain at the crux of the 'technology arms race' where currently operators are investing in technologies to ensure that they do not fall behind competitors. However, recent operator investment decisions reflect an increasing scrutiny of investment decisions - for example, in the Czech Republic, Vodafone has decided not to invest in a 3G network - thereby reflecting a situation where the justification for an investment was not available.
Increasingly, operators will face the challenge on investment decisions and will need to work through a rigorous decision making framework that covers the following decision framework:
- Does the new technology provide an opportunity for delivering new services, for which evidence suggests a high probability of adoption?
- If yes, does the demand provide a satisfactory rate of return to the business?
- If no, does not investing in the technology result in enterprise value loss due to a reduction in competitive advantage and therefore customer base?
3G LTE will adopt key features of alternative wireless systems to enable important new service opportunities. 3G LTE could offer a number of attractive revenue opportunities for mobile operators. However, it is critical that they do not lose focus on the many service opportunities they already have with 3G. Operators must ensure that they put adequate, sustained effort into 3G services before moving on to 3G LTE.
Excerpts from an Analysys Report titled
"Prospects for the Evolution of 3G and 4G" |
While HSPA and MBMS will provide important capability enhancements to W-CDMA networks, they will struggle to meet the demanding requirements of some services that could be valuable to both consumers and network operators. For example, many operators would like to offer broadband Internet access to the home in order to accelerate fixed-mobile substitution. Some operators and broadcasters may want to cultivate mass usage of a wide range of mobile TV content.
A number of technologies potentially have the capabilities required to support such demands. For example, the 3GPP LTE group is developing its own evolution of the W-CDMA system (often referred to as Super 3G). In addition, there is already considerable academic and industrial research into technologies classified as 4G. However, some operators may also consider alternative approaches, including broadcasting systems (such as DVB-H, DMB and MediaFLO) and broadband wireless access solutions (such as WiMAX, WiBro and FLASH-OFDM).
Proponents of alternative wireless technologies have attracted considerable attention by claiming that they have the potential to deliver significantly superior price performance compared to cellular systems. However, 3G LTE is aiming to adopt many of the same radio and core network techniques as alternative wireless technologies so as to achieve substantial improvements in performance from deployment dates in 2009.
Enhancements to the 3G radio interface - including OFDM modulation, smart antennas, MIMO and expanded bandwidth (up to 2×20MHz) - should enable 3G LTE to achieve a significant improvement in mobile network throughput. 3GPP is aiming to achieve peak downlink throughput up to 100Mbit/s, three to five times the capacity of HSPA (in the same spectrum), and the same level of coverage as current W-CDMA systems. By adopting a simpler, flatter network structure (similar to that used by WiMAX) 3GPP also aims to achieve much lower latency with 3G LTE, potentially as low as 20ms.
Previous industry experience indicates that wireless systems do not generally deliver their full theoretical performance when implemented across a wide network. In real usage situations it is not uncommon for GPRS, EDGE and WCDMA to deliver just 10% (or less) of the theoretical maximum promised by early marketing, due to limitations of handsets, network equipment or radio coverage. Also, increasing fragmentation in the development of wireless networks may slow the evolution of 3G. Nonetheless, modelling reveals that development of 3G LTE could be sufficient to support potentially important new services:
- VoIP: The capacity and cost improvements of 3G LTE will finally make it feasible for mobile operators to carry voice traffic using VoIP, by making the overheads associated with VoIP negligible. In the short term, this would enable operators to take advantage of VoIP service opportunities (such as presence information, messaging and multimedia capabilities), and in the long term enable them to replace their core networks with cheaper all- IP structures
- mobile TV and radio: The greater capacity of 3G LTE will also enable a much stronger push on mobile TV and radio services, for example allowing a typical operator to offer ten TV broadcast channels, ten radio broadcast channels and 30 minutes per day per user of TV or radio on demand
- broadband Internet access: While 3G LTE will not match the performance of the most advanced fixed network technologies, such as VDSL and optical fibre, it will put mobile "Prospects for the Evolution of 3G and 4G" Excerpts from an Analysys Report titled operators in a much stronger position to target fixed broadband users. For example, it could be used to address the many customers who cannot access the most advanced fixed services, perhaps because they are too far from the nearest exchange. Mobile operators will also be able to offer wide-area broadband Internet access (at a premium), to provide customers with the same service experience they have at home (or workplace) while outside the range of fixed and short-range wireless broadband. 3G LTE will also provide mobile operators with a competitive response to broadband Internet access offered by WiMAX operators.
Analysis of the likely capabilities of 3G LTE reveals that it could enable mobile operators to support Internet access, mobile TV (both unicast and broadcast) and profitable VoIP services. However, even with the significant improvements offered by 3G LTE, the exceptionally high data consumption demands of IPTV (including HDTV) will be well beyond the capabilities of wireless networks for at least the next five years, even taking account of the evolution of compression codecs for IPTV.
In principle, 3G LTE could have significant commercial advantages for mobile operators (compared with alternative wireless technologies), by offering a smooth infrastructure evolution path for operators, allowing them to re-use existing base station sites and equipment while lowering costs of implementation and operation. It could also deliver a more seamless service experience for users across the different technology generations. However, these benefits will only be realised if 3G LTE achieves its targets for network performance at the right price and within the right timescales. If mobile operators perceive that it will be an expensive option, or will arrive too late to meet the needs of their service strategies, they may opt for alternative technologies such as WiMAX and DVB-H.
An important element in the business case for 3G LTE will be spectrum availability and cost. To achieve the greatest benefits, 3G will require additional spectrum, needing 20MHz bandwidths to achieve the highest throughputs and capacity. Hence mobile operators will need to acquire additional spectrum (such as the IMT-2000 extension band) at reasonable prices.
Repinted with the requisite permission from Analysys
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