LTE is the future, but the future isn't here yet

LTE was much hyped during the Congress by vendors vowing commercial availability as soon as next year. Such interest in the next-generation technology was fuelled by Verizon's announcement of its network equipment suppliers (Alcatel-Lucent and Ericsson), a move that may make the US operator the first in the world to commercially launch networks. LTE promises to generate mass market demand for mobile broadband services, to connect the telecom industry with its adjacent industries, to improve user experience, and to lower mobile operators' operating costs. Whilst we agree that these are some of the next steps the industry should focus on, the challenges behind LTE's business case are significant. The deployment scenario outlined during Congress suggests the following: LTE is likely to be deployed mainly in urban areas; capex increase is huge and network rollout will take time; regulators will have to go through the lengthy process of spectrum allocation; voice over LTE will not be introduced before 2011; multi-mode devices are not likely to target the mid to low price tiers at launch; LTE will add cost to devices as it implies improvements in features and power consumption management; LTE implies that mobile operators radically improve their consumer segmentation and successfully address new areas of marketing opportunities. Today, the reality is that mobile operators have to manage HSPA network expansion in a difficult economic climate. Mobile broadband services (dongles and laptops) represent a small portion of most markets where it has been introduced and there is no clear formula yet to speed its adoption in more price sensitive consumer segments. Hence, LTE is not likely to reach mass market anytime before 2012 when we expect to see the first big wave of commercial availability.

(This article is part of a series of follow-ups on Mobile World Congress 2009 from the GSMA Intelligence team.)