US, South Korea and Japan account for 87% of global LTE connections - LTE pioneers Verizon Wireless, SK Telecom and NTT Docomo reach major LTE milestones in Q2

Operators in the USA, South Korea and Japan have established themselves as the early leaders in LTE, jointly accounting for almost nine in every ten of the world’s LTE connections in Q2 2012, according to GSMA Intelligence.

It is estimated that global LTE connections topped 27 million at the end of Q2, up from around 10 million at the end of 2011; US operators accounted for 47 percent of the total, followed by South Korea (27 percent) and Japan (13 percent).

While these three markets dominate connection volumes to date, LTE networks are being launched in an increasing number of countries across the world. GSMA Intelligence estimates that the number of global markets with live LTE networks has grown from 30 at the end of 2011 to over 40 six months later, with LTE launching for the first time in H1 2012 in major markets such as India and Russia.

The world’s largest LTE operator is currently the US market leader, Verizon Wireless. The US number-one first launched its next-generation network at the end of 2010 and it is now live in 337 regional markets, covering nearly 75 percent of the US population (233 million POPs). Last week, Verizon announced that it had sold 3.2 million LTE devices in Q2, bringing its cumulative total past 10 million, and representing over 12 percent of retail postpaid connections.

Its major rivals are playing catch-up. AT&T launched LTE in September last year and is currently live in 47 markets, with plans to complete rollout by the end of next year. It claims its 4G-branded network (HSPA+/LTE) covers 260 million of the population; it had a third of its postpaid smartphone subscribers (2.5 million) using its '4G' devices by Q2. Number-three US operator Sprint switched on its first LTE networks in 15 markets earlier this month, while several US regional operators have also launched, including the two largest, MetroPCS and Leap Wireless.

Meanwhile, the South Korean market leader SK Telecom announced this week that it had surpassed 4 million LTE subscribers, adding the last million in just 44 days (it hit the 3 million mark on 6 June), with an average of 41,000 LTE users signing up per day in July. It is targeting 7 million in total by year-end. The operator also claims to be the first in the world to launch multi-carrier LTE, planning to roll-out the technology across Seoul and six other metropolitan cities this year.

SK’s rivals are not far behind. According to local press reports this week, LG Uplus – which launched LTE at the same time as SK (July 2011) – has close to 3 million LTE subscribers, while KT has 1.4 million following launch in January this year.

Japan’s largest operator, NTT Docomo, launched LTE in December 2010 and also this week announced it had hit the 4 million milestone. The Xi-branded network passed the 4 million subscriber mark on 22 July, around one and a half months after reaching 3 million. The operator attributed the accelerating growth to the launch of a fresh range of compatible smartphones earlier in the year.

Docomo’s first domestic LTE competition came via SoftBank Mobile, which launched services in February this year based on AXGP, a similar technology to TD-LTE, and had 132K subs on the network by the end of June. EMOBILE launched LTE in March, while second-placed Japanese operator KDDI plans to do so before year-end.

Joss Gillet, Senior Analyst, GSMA Intelligence:

The average revenue generated by a smartphone user is typically twice that of a non-smartphone user. In addition, smartphone subscriber churn levels are significantly lower than for other postpaid customers. LTE networks help to support these positive trends, while at the same time triggering a number of changes in market dynamics. The arrival of LTE in the US has for instance increased competition in the business segment, while consumer tariffs have seen the addition of innovative data plans that allow users to share a single bucket of data across multiple devices. In the US, South Korea and Japan, aggressive LTE network rollout was one of the key growth engines behind rapid LTE adoption. By the middle of next year, mobile operators in these markets will have either achieved nationwide coverage or will have covered their entire 3G network footprint with LTE. As a result of its LTE investment, Verizon Wireless expects to achieve both network capacity improvements and reduced costs per megabyte. Plus, the US number-one is already seeing a positive upside to rapid LTE uptake, reporting year-on-year equipment revenue growth last quarter as LTE device sales offset a decrease in sales of basic phones. This reflects the rapid migration from basic and feature phones to smartphones, which the rollout of LTE networks and services is accelerating. The arrival of more compelling LTE devices, notably on the Android and Windows platforms, will continue to fuel this market transformation.

Global LTE connections by market, Q2 2012
Source: GSMA Intelligence