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Optimizing the 4G Technology Cycle

Gabriel Brown
5/26/2017

For anyone interested in the service provider networking business these three statistics on worldwide 4G LTE deployment should be utterly compelling:

  • LTE surpassed 2 billion active users in the first quarter of 2017 and has now overtaken 3G as the most popular broadband access technology worldwide. [Source: Ovum]
  • Mobile operators have invested over a trillion dollars in their networks since LTE launched, providing 4G coverage to approximately 60% of the global population. [GSMA]
  • The global average is 4G downlink speed is around 17 Mbit/s and above 20 Mbit/s in most countries. [Open Signal]

There's no question LTE is an incredibly successful technology -- most of us depend on it in our daily lives -- but what these data points also show is that LTE is now entering the most commercially productive phase of its lifecycle. This is the period in the approximately 20-year mobile technology cycle where operators that have invested in network deployment can generate sustainable, long-term returns. With the network now mostly built and paid for, and with ongoing customer demand, LTE should deliver a generous surplus to operators. This is the essence of mobile network economics.

To optimize returns from 4G LTE, however, operators cannot relax: they must continue to invest in coverage and in new capabilities. The good news is, there are a lot of good options. On coverage, high-volume equipment pricing, typical at this stage of the cycle, and spectrum re-farming, enables operators to extend their network coverage at relatively low cost. And advances in the underlying LTE technology mean operators can simultaneously introduce new revenue-generating capabilities on deployed networks.

LTE-Advanced Pro (a.k.a. 3GPP Release 13, a.k.a. 4.5G) is the critical mid-cycle upgrade release that will drive 4G commercially and technically over the next five years. It introduces a raft of new capabilities that will drive investment in network upgrades to help sustain ARPU in the consumer and enterprise smartphone markets and can open up a raft of new opportunities in industry verticals that will radically expand the addressable market for LTE into sectors such as public safety, connected vehicles, factory automation, smart cities, media, healthcare and so on.

Some of the major features of LTE-Advanced Pro include:

  • Gigabit mobile. Using a combination of 4x4 MIMO, three-carrier aggregation, and 256QAM operators are now deploying 1Gbit/s downlink speeds.
  • Internet of Things. With LTE-M and NB-IoT operators can support a wide range of machine-type services from connected cars, to asset tracking, to environmental sensors.
  • Public safety. Features such ad-hoc networking and mission-critical push-to-talk make LTE attractive for “blue-light” emergency services.
  • Unlicensed spectrum. Standardization of LTE in 5GHz spectrum using LTE Assisted Access not only makes more capacity available to operators, but also represents a step-change in how the industry thinks about shared spectrum.
  • New Architectures. New LTE-A Pro capabilities also drive change in the network architecture. Cloud RAN, small cells, virtual core networks and edge computing are examples of this.

It is critical, in my view, that operators deploy these capabilities and develop these business opportunities in 4G ahead of 5G deployment in the 2020s. As such, we can think of LTE-A Pro as not only valuable on its own terms, but also as part of a network strategy that will accelerate the commercial success of 5G.

This blog is sponsored by Huawei

— Gabriel Brown, Principal Analyst, Heavy Reading

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