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LTE Unlikely to Offer Superfast Mobile Broadband to the Masses Until...

Although the first 3G LTE (Long Term Evolution) networks will come into operation in Japan in 2010, the technology is unlikely to see the light of day until 2011 in the rest of the world. Even then, subscriber numbers are forecast to be only 4.2 million with a large proportion using LTE via data cards on their laptops, according to a recently published report from London-based research and consulting firm, ARCchart. As in the case of WCDMA, the role of handset manufacturers will be crucial and it is not until 2012 and 2013 when LTE handsets really penetrate the market that LTE will see significant take up. Some operators will choose to delay rolling out LTE in preference for HSPA+ which will offer many of the benefits of LTE.

Many cellular operators are betting on LTE to provide their next-generation mobile broadband networks with download speeds of 100 Mbps. However, the key question remains, can operators who are only just starting to see returns from their 3G licenses really justify investing in what is essentially a new replacement technology The ARCchart report, titled "The LTE Business Case: Operator and Vendor Strategies", examines the technical and market dilemmas faced by operators and vendors in their migration to LTE, examining the LTE business case in the context of a converging communications world. The report looks at the risks associated with the upgrade to a totally new technology and the progress made by the principal vendors and standards bodies involved.

The mobile industry has been searching for consensus over the best technology route to follow. "Making the wrong decision is potentially disastrous, as a technology without critical mass will accrue none of the benefits of mass production and may prove incompatible with the rest of the industry," according to Chris White, the report's lead author. "At first there were three main contenders: UMB, WiMAX Mobile, and LTE. Each has its own specific advantages and its own vocal advocates. But now it looks as if market momentum has firmly swung in LTE's favour." LTE is likely to be the technology of choice for those operators following the CDMA route as well as the GSM route. Verizon announced in late 2007 that it would be adopting LTE, despite its status as one of the flag bearers for CDMA. This brings it into line with joint venture partner Vodafone which also announced its intention to move to LTE.

Without doubt, the most ambitious operator in the LTE space is NTT DoCoMo, which is looking to deploy by 2009, although a more realistic date is probably 2010. Most other operators are looking at 2011, at the earliest, with many planning first to upgrade their mobile networks with HSPA+, holding fire on LTE until the business case looks stronger. When rollouts begin, initial launches are likely to be cautious and focussed on urban areas, where population density makes profitability easier to achieve. Many operators - like Vodafone and Orange - will continue to adopt a dual strategy of deploying LTE in their developed markets and WiMAX in developing markets, where subscribers have less access to the Internet.

One major obstacle on the road to LTE heaven is the burgeoning cost of IPR that has so handicapped 3G operators. Recent moves by some of the industry's biggest equipment manufacturers - such as Nokia - have shown that they are determined to cap aggregate IPR costs for LTE at what they view as a sustainable level. The report delivers a verdict on how likely they are to succeed, and examines the implications of new directions in IPR for the likes of Qualcomm.

Report title: The LTE Business Case: Operator and Vendor Strategies

Publication date: April 2008

Table of contents: http://www.arcchart.com/reports/lte.asp

Cover artwork: http://www.arcchart.com/reports/images/cover_lte.jpg

About ARCchart

ARCchart is an independent research and consulting firm focusing on all aspects of the wireless communications sector. Based in London, ARCchart's depth and breadth of analysis provides a global perspective on wireless technology and industry developments. Combining original thinking with exceptional knowledge and experience, ARCchart assists clients in making sound commercial decisions about technologies, market strategies and competitive positions. ARCchart's strategic advice covers all aspects of the wireless value chain - ranging from semiconductors and WLANs to network operators, handsets and mobile applications.

For more information on the report, contact ARCchart:

Tel: + 44 207 456 9669

Fax: +44 207 247 7378

Email: service @ arcchart.com

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