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WiMax Operator Issues LTE RFP

Ray Le Maistre
11/23/2010
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Remember the Betamax vs. VHS video technology war? VHS won, of course. And for Russian wireless broadband network operator Yota, WiMax is today's Betamax, so it's shifting to what it regards as the VHS of mobile broadband -- Long Term Evolution (LTE).

That Yota, which has already built out a significant WiMax access network in Russia, wants to deploy LTE isn't breaking news. The move first came to light in May this year, though, at that time, details about its plans were sketchy, and there was much speculation about whether the company would be allowed to switch technology under the terms of its license. (See LTE Watch: Yota Drops WiMax for LTE and Yota: WiMax + LTE for Russia.)

Now, though, Yota's VP of business development Yegor Ivanov has set the record straight in an interview with Light Reading at the recent Mobile Asia Congress 2010 in Hong Kong, and it doesn't make pleasant reading for the WiMax community. That’s because Yota is planning to choose its LTE infrastructure supplier(s) before the end of this year, and has outlined its plans to wind down its WiMax services.

Where Yota is now
Yota currently has mobile WiMax (802.16e) networks built in five Russian cities -- Moscow, St. Petersburg, Ufa, Sochi and Krasnodar -- using spectrum in the 2.6GHz band. It also has a network up and running in the Nicaraguan capital, Managua, and is building networks in Peru and Belarus. (See Yota Starts Nicaragua Deployment and Yota Picks Bridgewater.)

Ivanov says that, to date, the company has invested US$600 million in its networks, including the high-capacity fiber-based backhaul connections it runs to most of its base stations. It decided to have a single supplier for its WiMax infrastructure, with Samsung Corp. its vendor of choice. (See Yota: A Model WiMax Startup? and Yota Uses Samsung WiMax in Nicaragua.)

It has 700,000 customers, of which 6,000 are in Nicaragua and the remainder in Russia, where the customers pay the equivalent of US$30 per month for unlimited broadband use, with no contract. (Customers pay for each month in advance, and can cancel at any point.) Ivanov says the company is signing up 3,000 new customers each day.

Basically, Yota can see the world being dominated by LTE, with little support for WiMax, and the Russian company wants to benefit from the economies of scale, broad range of devices, and service attributes of LTE. Ivanov confirms that Yota's plans are based around the deployment of FDD LTE technology, not the TDD version of the technology that's broadly regarded as the alternative for those operators with spectrum currently suited to WiMax. He adds that Yota has enough spectrum to deploy FDD technology, which uses paired bands of spectrum for the downlink and uplink, separated by a guard band. (TDD technology uses the same channel for the uplink and downlink.)

In fact, Yota has already deployed FDD LTE technology in the Russian city of Kazan, and in Belarus, using base station technology from Huawei Technologies Co. Ltd. , says Ivanov. (See Yota Shows Off 4G in Kazan.)

What Yota is doing next
But Huawei isn’t being handed the company-wide LTE infrastructure deal. Instead, Yota has issued a request for proposal (RFP) to the main mobile infrastructure vendors for the delivery of equipment for 15 new markets in Russia, plus the five main markets where it’s already operational with WiMax. Ivanov expects to have a vendor shortlist by early December, and make a decision on LTE equipment procurement before the end of 2010.

The plan then is to roll out LTE in those 15 new markets during 2011, and also start building out LTE in Yota's existing five markets. "As we start selling LTE service, we will stop selling WiMax. We believe we can switch off WiMax within three years. Existing WiMax customers will be migrated to LTE as they upgrade [their CPE]." Yota believes its WiMax user base will have all required a CPE upgrade by 2013.

Ultimately, Yota believes that LTE will not only provide it with multiple business advantages, but make it easier to add voice services to the current offer of wireless broadband connectivity. Ivanov says there was "an issue" with WiMax regarding voice services, though he stresses this was not the reason for the migration to LTE, which is all about benefiting from the economics of the ecosystem.

He adds that Yota isn't planning on becoming a voice service provider anytime soon, and that even though some companies are already talking about the capabilities of voice over LTE (VoLTE) technologies, Yota doesn't believe the VoLTE technologies are ready for commercial deployment yet. (See ZTE Demos VoLTE.)

And does Yota's license allow this switch? Ivanov says the shift to FDD LTE has been given the all-clear by the Russian authorities, though he adds there's an amendment to some specific Russian legislation that still has to be officially passed to put Yota in the clear. That change in the law, though, is absolutely going to happen, he notes.

Further international growth
With LTE now at the heart of its strategy, Yota knows that acquiring new spectrum and licenses is going to get tougher and be more expensive, even though it's only planning on building new networks in developing markets where there is currently low broadband penetration and little competition. (Nicaragua is a classic example -– Ivanov says Yota, with about 6,000 customers, already commands about 10 percent of the country's Internet access market.)

So Yota is now looking to partner with financial institutions that have the money to invest and are keen to enter the wireless broadband market. Ivanov says discussions are ongoing with financial institutions in two countries, one in Africa and the other in Latin America.

— Ray Le Maistre, International Managing Editor, Light Reading

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