Despite the much-hyped higher surfing speeds that LTE looks set to bring, the clear case for the technology from an operators’ point of view lies in the potential opportunity to reduce the cost per bit.
The LTE wave in the Asia Pacific is being led by Japan, Hong Kong, South Korea and Australia, which will each see at least one commercial LTE rollout by year-end.
However, the technology’s progress in the rest of the region could be hampered by simple economics, says Foong King Yew, a principal analyst at Gartner.
“The pace of change is very rapid, with carriers expected to deploy new technologies within a shorter span of time. Think the early transitions from WAP to GRPS to EDGE to 3G and now, LTE,” says Foong. “Each change involves investment. How can they ensure they get reasonable returns?”
Carriers’ potential LTE woes could also stem from the ‘uncertainty of the charging mechanism’, says Foong. “With many carriers now expected to give away more for less due to competition, many may have to take another look at flat rate data plans for mobile broadband, as this will have a direct impact on the decision to invest in LTE.”
While much of an operator’s existing infrastructure can be reused in the move to LTE, technical challenges exist for 2G/2.5G/3G providers to maintain the quality of service on their networks while the LTE upgrade goes on.
“Carriers need to put in place the necessary bandwidth in the backhaul, with the high data usage expected from LTE networks,” says IDC’s senior research manager Alex Chau.
Spectrum allocation is one other issue operators have to contend with. “Markets such as Australia have enough existing spectrum that can be re-farmed for LTE. But this is not the case for other markets and operators will have to wait for regulators to issue new spectrum at either 2.6Ghz or 700Mhz.”
This delay in spectrum allocation, according to McCormick, is a key reason why LTE isn’t being rolled out as fast in the Asia Pacific, compared to Europe and the US.
Singapore’s top two carriers, Starhub and SingTel, declined comment on potential problems associated with LTE rollouts and instead expressed optimism.
A SingTel spokesman said the company had embarked on regional trials in 2010 to “help SingTel and its associates and joint venture companies better understand LTE and determine the best approach and strategy for its adoption in their respective local markets”.
A Starhub spokesman said the company had completed technical trials in 2010 with an LTE rollout planned for later this year. The Starhub spokesman added the company did not expect LTE services to take off till next year.
How fast LTE could gain ground in a market may simply lie in how heavily carriers are willing to subsidize compatible devices, said Foong. “With several carriers having spent considerable sums on iPhone subsidies, carriers may be somewhat reluctant to get onboard too soon.”