Maravedis-Rethink: 4G Global Market Highlights

4G Counts Quarterly Report – Q4 2011 Produced March 2012

Executive Summary

Many operators launched LTE networks during the year as they upgraded or moved from 3G. On the other hand, the WiMAX industry continued to lose pace around the globe. Not only did several of the most prominent WiMAX operators announce their commitment to TD-LTE, but most slowed down the addition of new WiMAX subscribers to their networks as they antici-pated their move to the new technology.

A few highlights:
1) Sprint’s announcement that the first major markets in United States were to re-ceive 4G LTE in mid-2012, including Dallas, Atlanta, Houston, San Antonio and others, totalling 10 markets,

2) The FCC disapproval of the merger between AT&T and TMobile, meaning the deal is officially dead,

3) The AT&T LTE commercial launch covering 28 markets at the end of 2011,

4) Sprint’s announcement of its intention to help finance Clearwire’s LTE network and keep offering WiMAX service through 2015 under a set of agreements worth as much as US$1.6 billion,

5) Yota’s (Russia) launch of LTE in the city of Novosibirsk, Siberia, in December 2011 after a long wait for government approval.

Not only are many operators moving to LTE, but several vendors are exiting WiMAX al-together and refocusing on their 3GPP mobile broadband business. One of the major announcements during Q4 2011 was that Nokia Siemens Networks sold its WiMAX unit recently acquired from Motorola to NewNet Communications. This was the second re-cent sell-off for the company, as Dragonwave acquired its microwave backhaul business in October 2011.

LTE Deployment Trends

At the end of Q4 2011, 54 operators were commercial with LTE, including 19 added dur-ing the quarter alone. The total number of LTE subscribers at the end of the year reached 12.02 million worldwide. Fully 224 additional major mobile operators had com-mitted to launching the technology in the future, 193 with FDD-LTE, 31 with TD-LTE.

Although most of the commitments, trials and deployments are predominantly FDD-LTE, TD-LTE is gaining significant momentum. At the end of December 2011, there were 30 commitments to TD-LTE and 4 commercial TD-LTE networks: Aero2 (Poland), STC (Saudi Arabia), Mobily (Saudi Arabia) and SKY (Brazil). SKY’s is the first TD-LTE deploy-ment in Latin America of this kind. The region where more TDLTE trials have been con-ducted is APAC with 18 operators trials, followed by Europe with 5 trials. Although, the number of commercial LTE deployments in Europe is higher than any other region, with 25 commercial deployments counted at the end of 2011, the region still scores a very low LTE subscriber uptake with only 980k LTE subscribers reported at the end of 2011, rep-resenting 8% of the global LTE subscriber base.

A major reason for this phenomenon is that LTE smartphones are, strangely, nowhere to be seen in Europe. But that is changing in 2012, as some major LTE players including TeliaSonera and Tele2 in Sweden, and Vodafone Germany announced in February 2012 the introduction of new LTE smartphones. The introduction of LTE smartphones in Europe will boost the subscriber uptake in the region.

The most recent Maravedis 4G Subscriber Forecast predicts that LTE subscribers will grow from 12 million in 2011 to 469 million in 2016. By the end of 2016, 75% of the LTE subscriber base or 350 million will be FDD LTE subscribers, while the remaining 25% or 118 million will be TD-LTE subscribers. We expect that the TD-LTE subscriber uptake will commence in 2013.

BWA/WiMAX Trends

While in previous years we saw WiMAX subscribers growing at an average quarterly rate of 25%-30%, our findings revealed that subscriber growth for WiMAX decreased dramati-cally in 2011. In Q4 2011 alone, the quarterly WiMAX subscriber growth was only 14%. Today, WiMAX is being seen as the technology of choice for greenfield operators to pro-vide fixed-nomadic connectivity, while LTE is the choice for operators wanting to provide mobile broadband. At the end of Q4 2011, the worldwide BWA/WiMAX industry ac-counted for 25.16 million subscribers, an increase of 14% quarter over quarter from 22.07 million reported at the end of Q3 2011. Q4 2011 quarterly increase was low com-pared to the previous quarters.

For example, in Q4 2010, the subscriber quarterly increase was 35%, while in Q1 2011 it decreased to only 30%. In Q2 and Q3 2011, the subscriber quarterly increase was 20% per quarter. This shows a quarterly slowdown on subscriber additions. The BWA/WiMAX subscriber base grew by 12.16 million between Q4 2010 and Q4 2011, which represents a yearly increase of 193%.

For the Top 50 BWA/WiMAX operators tracked in 4GCounts Q4 2011, recorded ARPU was US$39.60 and US$76.24 for residential and business subscribers respectively, com-pared to US$39.17 and US$77.51 for the same segments in Q3 2011. Total worldwide WiMAX business revenues were $2.10 billion during the quarter.