I had the good fortune to attend the LTE LATAM (Latin America) conference last week in Brazil. LTE is still at an early stage in the region, and there are some spectrum and other issues which may hold back takeup. But with strong demand for mobile data, LTE is seen as an essential part of the solution. Several vendors and operators now openly recognize that small cells have a strong part to play.
Strong interest in LTE
With over 500 attendees at a conference with a price tag that was more expensive than Mobile World Congress, the 50+ operators attending were clearly interested.
Good overviews of the LTE global market status were given by Informa and 4GAmericas, but there was lacking an endorsement by a senior VP from any major network. The exhibitors were mostly technical, with many representing radio planning, optimization and ancillary products (such as repeaters). Huawei and Ericsson had the two largest stands, promoting their full range of 3G and 4G capabilities. There was comparatively little talk about pricing or new LTE only services yet – this will help boost capacity (and speed) but be priced and managed at the same level as today's 3G.
A Global Perspective
Worldwide, with some 50+ live commercial LTE networks, the vast majority of today's 12 million LTE subscribers are on Verizon or NTT DoCoMo, but South Korea is expanding most quickly. I think we can expect to see South Korean networks offer a VoLTE (voice over LTE) service later this year. Samsung have set themselves a goal of becoming a major network supplier within 3 years and see LTE as the means to achieve it.
There are several different reasons for adoption of LTE. Informa listed four different business drivers globally:
- Increased network capacity to meet growing data demand
- Brand leadership
- Increased revenues from new services
- No other choice (eg CDMA operators)
In LATAM, the primary reason is for increased network capacity. In their survey, Informa identified that more than 65% of service providers saw a viable business case for LTE today with the remaining third not yet seeing a commercial return. It was later said that some have chosen to price LTE quite highly and not market it, effectively limiting takeup during the early launch stages so they can learn about the technology (both technically and from a marketing view) with low risk/impact.
Some key issues in LATAM
With developed countries able to ride on higher revenues and a rapid takeup of smartphones, the LATAM region has to work with average revenues per user (ARPU) of $14. Wireline broadband penetration is less than 20%. This means that many people will have their first "internet" experience on a smartphone. While some may look at LTE as the means to deliver high capacity internet broadband wirelessly instead of using wires in the ground, most service providers recognize that smartphones offer much higher levels of profitability than "utility level" broadband.
Another major difference in LATAM is spectrum. Unlike other regions, they still use analogue TV in the 700-800MHz spectrum which was switched off in the US and Europe to make way for LTE. Recently, a proposal to use 450MHz (which would give even longer range and in-building penetration) has gathered momentum. For high capacity/urban use, the 2.6GHz band seemed quite popular.
3G still offers huge potential. The 3GPP standards representative reminded us of the ongoing development of HSPA+, where many of the LTE concepts (MIMO, 20MHz carrier bandwidth, 64QAM) can equally be applied. The peak rates achievable in future versions of the 3GPP standards will grow to 168Mbit/s in Release 10 and 336Mbit/s in Release 11. With some 3,362 different HSPA capable devices in the market today from 271 suppliers, this technology will continue to dominate for many years. By 2016, there will be 600 million 4G/LTE subscribers compared to 3.5Billion on 3G/HSPA.
Data revenues as a contribution of the total are lower in LATAM – an average of 23% compared to 37% in North America. There are some notable exceptions, such as Argentina 48% and Venezuela 36% (but I'm not sure what proportion of those figures comes from SMS).
One commercial LTE network charges the same price
Although a relatively small island with 3.7 million inhabitants, this is a fiercely competitive telecoms environment with 5 mobile networks including the US majors. OpenMobile has aggressively deployed LTE, giving away free USB modems to their existing customers to encourage takeup. Pricing is the same as for 3G, but early indications are of higher consumption (5 Gbytes/month average compared to 3GB on 3G) leading to increased revenues.
Personal Telecom foresees Small Cells as the only credible capacity solution
One Argentinian operator, Personal Telecom, offers both fixed and mobile service. Their Technology Director observed that the three factors which increase capacity are spectrum, number of sites and spectral efficiency. Service providers have little control over two of these, which may give a step function of increased capability, but in the end it is the number of sites that will deliver the high capacity required. When deploying FTTx (fibre to the home/curb/premises), he saw clear synergy with installing many more small cellsites connected through this fibre in neighbourhoods and business districts. The use of small cells would avoid the planning issues and objections to large cell towers of the past and can be accommodated alongside the DSLAM or other fibre connected equipment being deployed for wireline access.
Sadly, some of the detail of this presentation was lost in translation.
More Small Cell specifics
Huawei outlined their new AtomCell product, a small cell to complement their GigaCell macrocells. They suggested a ratio of 4.1 AtomCells per Gigacell, locating them at traffic intersections/crossroads to give maximum capacity growth.
Ericsson noted that their recent acquisition of BelAir gives them a full range of cellsite capabilities including small cells, and even includes public Wi-Fi.
While both Ericsson and Huawei strive to point out that there are other technology advances in macrocells too, both are now saying that small cells are an essential part of the solution to meet data capacity needs.
Comba, a Chinese vendor of RF repeater and DAS systems, also had an LTE small cell on their stand. Although I asked for more details, the product isn't commercially available until the end of the year and their representative had few technical details to offer. This isn't the first DAS system vendor I've seen move into small cells (especially LTE) – for example, PowerWave made a big splash with theirs at Mobile World Congress earlier in the year.
The bustling and busy streets of Brazil are signs of a fast growing economy, reflected by the tremendous growth in many aspects of telecom. Although spectrum issues may mean the region takes a slightly different path and timeframe, there is no doubt it will continue to invest heavily in both 3G and LTE in the coming years.
Several operators and vendors openly recognize that small cells (both 3G and LTE) are an essential means to achieve high data capacity. It was good to see large players such as Ericsson and Huawei including this in their presentations, with the some operators reflecting this viewpoint.