Cutting through the Hype: Will the real 4G (LTE-A) please stand up and tell us what 5G is?
While LTE roll-outs continue to increase, especially in developed countries, LTE Advanced (true 4G as defined by ITU-R) has not been deployed on a large scale anywhere that we know of (ABI Research disagrees- see section below). We’re told by Stephane Teral (quoted below), LTE Advanced is just a software upgrade from LTE. If that’s so why don’t we see large scale LTE Advanced deployment in the U.S.?
For example, Verizon has announced it would have 110% LTE coverage in the U.S. by the end of 2015. But they haven’t announced full LTE Advanced (AKA LTE-A) capabilities.
Infonetics: LTE Deployments Stimulate 10% Growth in Mobile Infrastructure Market in 2014:
Infonetics Research, now part of IHS Inc. (NYSE: IHS), today reported that for the full-year 2014, LTE alone pushed mobile infrastructure revenue up 10 percent over 2013, to $46.8 billion worldwide, due in large part to China Mobile’s massive TDD LTE deployment.
“We have consistently said that LTE was supposed to pull the entire mobile infrastructure market out of the funk, and so far it has. LTE revenue grew 69 percent in 2014 from the previous year,” said Stéphane Téral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research, now part of IHS. “That said, we’ve reached the peak of LTE buildouts on this planet+, and we believe market dynamics will cause the mobile macro infrastructure industry to enter a long-tail decline beginning in 2016 until 5G eventually kicks in.”
+ Over the last couple of years, Stephane has repeatedly told this author: “If you want to increase LTE buildouts, do so on another planet.” Today, he reiterated that comment along with one on LTE Advanced: “Mobile network operators are upgrading to LTE-Advanced but that is mainly a software job driving software revenue not hardware, which is what my forecast is all about. We’re done with blanketing the planet with eNBs as we know them; for more eNB business, get a seat on SpaceX and go to Mars!
Stephane expects the mobile infrastructure market to drop by almost half from nearly $47 billion to $27 billion from 2014 to 2019!
MOBILE INFRASTRUCTURE MARKET REPORT:
Infonetics’ fourth quarter 2014 (4Q14) and year-end Mobile Infrastructure Equipment report tracks more than 50 categories of equipment, software and subscribers based on all existing generations of wireless network technology. Here are a few HIGHLIGHTS:
. Infonetics/IHS expects the 2G/3G/4G mobile infrastructure market to drop from nearly $47 billion to $27 billion from 2014 to 2019, as the planet reaches the end of macrocell mobile deployments
. By Infonetics’/IHS’s count, China Mobile has rolled out 700,000 eNodeB units as of January 2015 and plans to add another 300,000 this year
. The rest of the world is moving fast to LTE too, with the Global Mobile Suppliers Association (GSA) estimating that over 450 commercial LTE networks will be launched by the end of 2015
. In 4Q14, global macrocell mobile infrastructure revenue totaled $12 billion, up 8 percent from 3Q14, and up 10 percent from 4Q13 as unabated TDD-LTE activity in China overshadowed strong LTE and 3G activity in Europe and the Middle East
. For the full-year 2014, the overall 2G/3G/4G infrastructure market share leaders are Ericsson, Huawei and Nokia Networks (in alphabetical order)
. Nokia Networks continues to advance, helped by a strong position in the US due to Sprint and T-Mobile US, as well as massive LTE deployments in China
To purchase the report, contact Infonetics: www.infonetics.com/contact.asp
LTE Advanced Explained:
LTE Advanced consists of many different components–from carrier aggregation to HetNets to coordinated multipoint and more. Because of this, not all operators are likely to deploy LTE Advanced n the same way with the same feature sets. In fact, most experts say that every LTE-A deployment will be unique.
Mike Haberman, Verizon’s vice president of network support, said last December that Verizon is testing carrier aggregation right now on its network to ensure it can work properly, and devices that can support carrier aggregation will come into the market after that. Carrier aggregation, which is the most well-known and widely used technique of the LTE Advanced standard, bonds together disparate bands of spectrum to create wider channels and produce more capacity and faster speeds.
However, an LTE network that includes just one feature, e.g. Carrier Aggregation, can’t really be called LTE-A in this author’s opinion.
ABI Research on LTE Advanced:
ABI Research states that at the end of 2014, LTE-Advanced covered its first 100 million people worldwide, just 4 years since the network’s inception. ABI Research predicts that the coverage will reach 1 billion in 4 more years.
At the end of 2014, there were 49 commercially available LTE-Advanced networks around the world. Western European operators lead the commercialization with 20 operators, followed by 13 in Asia-Pacific; however, North America still commands the largest population coverage at 7.8%. “All four major operators of the United States have either commercially deployed (AT&T and Sprint) or have been actively deploying (Verizon and T-Mobile) their LTE-Advanced networks,” comments Lian Jye Su, Research Associate of Core Forecasting.
Globally, a number of major auctions are expected to take place in several major markets in 2015. The Telecom Regulatory Authority of India has just recently confirmed a LTE spectrum auction on the 25th of February. In France, the government has recently approved the reassignment of the 700 MHz band for telecom services. At this moment, the FCC of the United States is currently conducting an auction for AWS-3 spectrum. “As heavy subscribers’ data traffic growth has exploded, ABI Research anticipates fierce competition for more spectrum, as well as an active migration to VoLTE and higher data modulation schemes such as LTE and LTE-Advanced, which has higher spectral efficiency,” adds Jake Saunders, VP and Practice Director of Core Forecasting.
Consequently, all the recent hype about 5G seems premature. While 3GPP is working on the essential components of 5G, the ITU-R hasn’t fully defined it yet. Here’s the official ITU-R progress report on 5G:
“The detailed investigation of the key elements of “5G” are already well underway, once again utilizing the highly successful partnership ITU-R has with the mobile broadband industry and the wide range of stakeholders in the “5G” community. In 2015, ITU-R plans to finalize its “Vision” of the “5G” mobile broadband connected society. This view of the horizon for the future of mobile technology will be instrumental in setting the agenda for the World Radio communication Conference 2015, where deliberations on additional spectrum will take place in support of the future growth of IMT.”
Alcatel-Lucent’s View of 5G:
5G is “still a technology push story, not a market pull one,” Michael Peeters, Wireless CTO for Alcatel-Lucent, told Mobile World Live.
“Operators have two primary approaches to 5G: one which is driven by their research organisations which need to understand whatever 5G may be in order to be ready and to drive the direction of research and standards; and another which is driven by commercial and operational needs which are trying to understand how 5G fits into future operations and revenue streams. It is clear that today the first one is the more important one,” he said.
There are two “likely, or rather, visible” paths for operators looking to make the most of 5G, Peeters continued.
The first will be through the continued support of “ultra broadband applications”, solving capacity issues where heavy users are connected to networks. And the second is “enabling the world of ubiquitous IoT” – “where an infinity of devices (real, or virtual i.e. applications) each use almost zero bandwidth, but nonetheless eat up all of the control plane of the network.”
A Wireless Expert’s Views on 5G:
Here’s the Introduction section of a recent blog post by Chetan Sharma: Technology & Strategy Consulting:
Exposed url: http://www.chetansharma.com/5G.htm
“The deployment of LTE otherwise known as 4G is in full swing. Operators in US, Japan, Korea, Finland, Australia, and others started deploying the new technology some years ago and are nearing completion of their network build out. Others in Europe and Asia are on an aggressive schedule to catch-up. We can expect that a majority of the operators will have LTE up and running in the next couple of years. Operators have sunsetted 2G. In some instances they even stopped investing in 3G and are putting all of their investments in the 4G bucket. As mobile networks transition to all IP, operators will be able to re-farm their spectrum assets for 4G deployments. Beyond LTE, operators are looking at LTE-A to provide more efficiency and network bandwidth to consumers.
In mature LTE markets like the US, Korea, and Japan, the talk has shifted to the next generation technology evolution – 5G. Even Europe, which still has a long way to go before their 4G is built out have set their sights on 5G to recapture the mantle and the pride of the GSM days. Korea and Japan led the world in 3G but lost the lead of 4G to the US. They both are eager to be considered leaders in 5G. Japanese government has set the ambitious goal of having 5G by the Tokyo Olympics in 2020. US regulators have started to talk about 5G and the future spectrum needs as well.
Since the launch of 1G networks in late seventies and the eighties, we are now onto the 5th iteration of the network technology evolution. We have gone through a lot of technology skirmishes but with 4G and likely with 5G, we are narrowing the differences between technology options giving significant technology scale advantages to the ecosystem.
As network technologies have evolved, the application landscape has changed as well. 1G or AMPS was all about basic voice services. GSM and CDMA (2G) digitized mobile and we saw basic messaging and data services introduced into the market. 3G (WCDMA, EVDO) introduced the potential of data services to the ecosystem and the consumers. The launch of iMode in Japan became the poster child of data services for much of the 3G evolution around the globe. Midway in the 3G growth, new players like Apple and Google entered the ecosystem and laid the foundation of unprecedented data and application growth. Business models and control points in the ecosystem changed overnight. The insatiable data demand led to the acceleration of the 4G services in many leading markets. For the first time, the network technology was data-led. We are clearly moving towards an IP infrastructure where voice is just another app running on the data network.
In fact, data is the primary revenue engine for the services providers and rest of the ecosystem. In Japan, almost 80% of the revenue now comes from data services. In the US, we are approaching 60%. Other nations are not far behind. Even the emerging markets have caught up very fast and in some instances leap-frogging their western counterparts in certain application and services segments.
All through last four generations, the fundamental business model of “metering” remained the same. Barring some exceptions, there has been a direct correlation of usage and revenues. Will 5G be any different?
Another significant standard that has evolved is Wi-Fi. The impact of Wi-Fi on the mobile ecosystem can’t be overstated. It has become so pervasive that we have ask the question how long before nationwide Wi-Fi first networks start to make a run for the wallet share in major markets. How will Wi-Fi fit in with 5G, will the two standards merge?
Will 5G offer new business models or explore a different relationship between usage and cost? Will consumers warm up to the idea of value-based pricing? Or Will access just become a commodity layer like water and electricity and most of the value will reside in the platform and application layers? Though we have started to see the shifts (as discussed in detail in our 4th wave series of papers), how fast will future accelerate? Will the ecosystem landscape be markedly different than what we have in place today?
We won’t know the answer to some of these questions for a while but it is worth exploring the lessons from the past and potential disruptions that 5G could bring to the ecosystem that benefits the end customers. In the end, it might not be about the technology at all but about the business models that shape the technology landscape. This paper explores 5G through the lens of the past and explores the wireless world beyond 2020.”
We’ll leave it to the reader to sort out the buzz/hype from market reality. To this author, it’s alarming that Infonetics projects the ENTIRE MOBILE INFRASTRUCTURE MARKET TO DECLINE precipitously over the next four years, while wireless network equipment vendors are talking the talk about 5G!