Uncommon Wisdom

May 21 2009   1:02PM GMT

4G LTE adoption may depend on smartphone model

Tom Nolle Tom Nolle Profile: Tom Nolle

The LTE transformation appears to be gaining momentum, even though it still looks like no significant investment will be made until 2010. We believe that a major factor in this is the decision by service providers to adopt a smartphone-pull model for data revenue, a model that relies on the Internet and handsets to drive data growth and shift revenue to data-centric plans.

Unlike some previous walled-garden service plans, the smartphone model needs a lot of users and capacity to create additional revenue, and thus may be best approached with LTE. Too much near-term push on data, one operator tells us, would confront operators with the choice of either staying with 3G and risking an explosion in the number of cells, or forcing the buyers of 3G smartphones to upgrade en masse to 4G.

Femtocell plans are likely a good barometer here; operators have been talking up 4G femtocells and Motorola has now announced it’s focusing its femtocell work there. Our model says that 2011 will be the big year for 4G, which means that it will be important for equipment vendors to both prepare for that and address how to keep infrastructure spending up in the meantime.

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