LTE is the fastest growing mobile communications technology, and in 2014, its adoption (as measured by subscribers) grew by 140% over the previous year. Significant deployments have made Asia the world’s leading region - bypassing North America and now boasting over 47% of all global subscriptions.
The region leads in not only in providing high speed data networks (LTE), but also in improvements to customer experience by differentiating services through large VoLTE deployments.
By the end of 2015, a total of 460 commercial LTE networks are expected to be in use across the globe. A large number of them will be in Asia-Pacific, which will continue to be a leading region in 2015 and beyond.
Top 5 LTE market trends in APAC
1. Commercial VoLTE deployments are surging:
The number of VoLTE deployments constantly rises on a global scale, and Asia-Pacific is no exception. The current technology interest among operators is twice as high as it was last year. Operators deploying VoLTE to offer greatly improved user experiences for their customers, as the tech enables much faster call-connection and superior quality of voice.
Along with benefits to consumers, telcos also gain higher capacity with existing spectrum, enabling them to serve more customers by VoLTE deployment. In April, Singapore’s M1 commercially launched VoLTE and pitches it as a service that offers higher call quality than standard calls.
A total of 80 telecom operators across 42 countries are currently investing in VoLTE and plan to launch the service commercially in the near future.
2. Telcos are finding strong customer adoption, significant increase in data usage, and constant rise in ARPU
LTE finds strong customer adoption in large markets across APAC. It helps increase monthly LTE data consumption, boosts ARPUs, and reduces churn.
SKT in South Korea found that strong LTE adoption led to phenomenal growth in average monthly data usage as well as overall ARPU increase (see chart). By end-2014, 58.5% of its total customer base used LTE services. This adoption rate nearly tripled their monthly LTE data usage per subscriber, which grew from 1.1 GB in Q4 2011 to 3 GB in Q4 2014. The churn rate dropped to 1.7% in Q4 2014 from 2.4% in Q1 2013.
3. Converged LTE networks (FDD & TDD) are emerging strongly
The world’s first converged LTE (TDD & FDD) network was launched by China Mobile Hong Kong in 2012. Since then it has found traction among telcos, although at a very slow rate. Despite the slow uptake, such networks are increasingly becoming a priority for telecom operators globally - including Asia-Pacific.
Converged networks utilize radio frequency resources better, bring economies of scale into the business, and accelerate the upgrade of communication network systems capacity. The mutual integration (TD-LTE & FD-LTE) and common development is the trend that will drive the future global communications industry.
4. WiMax operators turn to LTE for growth opportunities and are required to differentiate their services
A number of telcos in the region have yet to launch LTE services - primarily the ones who have WiMax networks and are looking for growth in their business. Since they are late entrants to the market they have significant challenges to deal with, including the need for a differentiated offering to attract customers.
A large number of markets in the region already have more than 100% mobile penetration, which means in order to get new customers, telcos primarily rely on customer churn.
5. Telcos are coming together to drive efficiencies
Telecom operators in the region are forming partnerships to develop LTE ecosystems, bring in cost efficiencies, and engage in other collaborative efforts. These operators are forming joint strategies to procure LTE-enabled devices like MiFi, smartphones, data cards, etc. They’re also working together to share testing and validation practices and conduct proof-of-concepts and trials.
Two of the large telecom operators in the region have partnered together to share relevant network and product knowledge, technical learning, and best practices to enable delivery of affordable world-class services.
Strong traction for LTE networks by telcos will lay a strong foundation for next generation communication services like video messaging and video calling. It will also help them compete against OTT services. For voice, telcos must develop new opportunities to keep voice services relevant in the market.
Naveen Mishra is Industry Principal, ICT-Telecoms, at Frost & Sullivan Asia Pacific
This article first appeared on Telecom Asia LTE Insights April 2015 edition