3G

AT&T to jump to 4G, abandon HSPA+

AT&T has abandoned its HSPA+ (high speed packet access) plans in favor of a migration to 4G LTE, a move that isn’t at all surprising, given Verizon’s commitment to LTE and the extreme competition between the two companies. Sprint promoting 4G (via WiMAX) would have left AT&T at risk of being the only 3G provider of note in the U.S.

The big issue, we think, is likely the stress that the iPhone success places on AT&T’s cellular network. The move to 4G will have major repercussions in the infrastructure space because it will likely divert even more capex to the wireless side and to cell towers and RF modernization. It will also make evolved packet core a very hot metro issue, hot enough to change procurement plans for some operators.

Another impact of the decision will be to make the whole procurement zone purchase strategy of operators more important because wireless is likely to be its own zone and drive other product decisions, including FMC and VoIP.

Verizon completes LTE test, discusses plans

Verizon completed a two-city test of its LTE service to the hype and hyperbole of the press, but there are still no indications of what LTE will really mean to users because its price and performance levels are not yet announced.

While LTE is theoretically capable of much higher speeds, few in the industry expect Verizon to unleash full LTE performance, and in any event, at higher speeds, users just use up their monthly cap in fewer seconds.

In our view, the primary driver behind LTE is the need to create a wireless network that’s designed primary for smartphones and netbooks, which will be more data-heavy than today’s devices, even if stringent rate limiting and pricing levels constrain user behavior. Remember, both 100 Mbps of LTE and 3 Mbps of 3G are shared among all the users in the cell, but LTE supports more users per cell than 3G. That’s what’s critical as the number of wireless devices and data-ready devices increases.

Verizon expects to have LTE rolled out nationally some time in 2013 and its first commercial services will be available in 2010.

Mobile broadband growth has upside and problems

Mobile broadband traffic, primarily to smartphones, is growing primarily due to increased use of video content. Research shows a 30% increase worldwide, and this is both a driver for LTE and a source of concern for mobile operators.

At present, mobile data plans aren’t uniformly all-you-can-eat, so most operators have some revenue upside to traffic growth in mobile services, but it’s clear that mobile content will threaten the older 3G network paradigms and force 4G migration at the current pace of growth. Operators may thus have to accelerate LTE, a trend that is already becoming visible, and the current plans may be inadequate if smartphone wars among providers stimulate further content viewing and traffic growth. The trend may also keep mobile tied to usage pricing as a defensive move.

Operators look to more effective traffic analysis and management

O2 has been deploying DPI for traffic analysis (and possibly management) in its upgraded 7 Mbps upgrade to 3G, and some of the information the company has gained could have a significant impact on 3G/4G planning worldwide.

The company found, not surprisingly, that 5% of users consumed 80% of bandwidth. This skewing of the old 80-20 rule is one of the primary reasons why operators say that some form of traffic management is essential to insure that the broad population gets good service at a fair price. The data also shows that most usage is in the evening and at home, however, which means that femtocells would offload considerable traffic were they widely deployed.

Many operators tell us that while 3G femtocells are possible, the application of IMS and 4G would make it far easier, particularly if self-organizing principles were applied to cell setup. How valuable all this intelligence will be may depend on regulatory trends, though; many countries are seeing considerable public advocacy pressure against traffic management.

Comcast launches multi-modal WiMax service in Oregon

Comcast has launched a WiMax multi-modal service in Portland, Ore., that lets customers use either Clearwire WiMAX or Comcast cable for Internet access at one fixed charge. An additional plan offers access to Sprint’s national 3G network.

The plan is aimed at the RBOCs’ success with smartphones in promoting their own data plans for wireless, creating a useful bundle for consumers. RBOCs are also expected to launch femtocell-based services that would directly integrate wireless and wireline. Comcast says it will follow up with similar services in other Clearwire WiMax cities.

Voice over LTE models challenge vendors/operators

The impending LTE rollout is creating questions about how voice will be handled, and the answer may have a big impact on the fortunes of vendors. There are three basic approaches being proposed by some operators: IMS/VoIP, using the 2/3G network for voice and 4G for data only (multimodal handsets), and a circuit-over-IP architecture called Voice over LTE via Generic Access(VoLGA).

Obviously the IMS approach would favor the big telecom equipment vendors while the others might admit a broader range of bidders. We’ve heard many operators voting for the fallback-to-3G approach because it would make handset transition easier since current smartphones could continue to operate on the current network, but there are potentially spectrum and cell issues to be resolved.

4G LTE adoption may depend on smartphone model

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.