4G fragmentation sparks costs, roaming issues

The costs of 4G handsets are likely to be higher and more challenges could arise with international roaming because of the increasingly fragmented long-term evolution (LTE) network landscape, industry watchers note. This is especially so in Asia-Pacific, where LTE deployment is expected to be the most varied globally.

According to a study by GSMA Wireless Intelligence, it is expected that there will be more than 200 live LTE networks using at least 38 different frequency band combinations worldwide in three years' time.

Joss Gillet, senior analyst at Wireless Intelligence, pointed out that the launch of Apple's new iPad--which uses the 700 MHz and 2100 MHz frequency bands--showed up the flaws in the current 4G landscape.

"This device will work in markets where these two bands have been selected for LTE networks, which include all LTE operators in North America as well as NTT Docomo in Japan or Smart in the Philippines, but excludes operators in Europe, which are mostly on 2600 MHz, or in Asia which mostly relies on 1800 MHz and 2600 MHz," he said.

Vikas Chanani, analyst for ICT Practice at Frost & Sullivan, agreed. He said: "Looking at the global much-hyped LTE spectrum allocation, it is nothing but highly fragmented and a messy scenario."

"Spectrum allocation across different countries were not planned and unified from the beginning. Decades ago, different bands are allocated for broadcasting, military, etc, in every nation. At that time, no one had anticipated the deployment of 4G and issues of roaming which the industry is facing currently."

Higher handset costs expected
According to Gillet, the spectrum fragmentation forces handset manufacturers to create different versions of their LTE devices according to operator partnerships or targeted markets.

"This approach is devoid of much needed economies of scale, which could lower the cost of devices. In essence, it means that LTE devices are likely to remain in high price segments for some time until volumes pick up in consecutive frequency bands globally," he added.

The Wireless Intelligence senior analyst added that in developing countries, including Asia, spectrum fragmentation and the prohibitive cost of LTE devices are likely to act as growth hurdles over the next five years until economies of scale are reached and affordability introduced at a mass-market level.

For now, Gillet pointed out that in BRIC (Brazil, Russia, India, and China) markets, the cost of an LTE smartphone with an average retail price of US$500 is four times the average monthly GDP (gross domestic product) per capita in India, US$150 higher than that of China, and two-thirds that of both Brazil and Russia.

Additionally, since there is a high level of uncertainty surrounding future spectrum availability, handset makers are having to produce devices based on specifications dictated by current live networks without considering future network evolution, he noted.

They are also compelled to speed up production of LTE smartphones to drive demand and launches are not conducted in a harmonized manner, he added.

The analyst pointed out that Singapore would be one market that was likely to receive a wider portfolio of devices, as it shared similar spectrums with neighboring markets like Hong Kong and South Korea.

"Nonetheless, since volumes are likely to remain small, retail prices will remain high for some time. In addition, even though inter-regional LTE roaming might not be much of an issue, consumers will face problems when traveling to other world regions with their LTE devices," Gillet added.

Samsung was one handset maker that said it would roll out devices when networks are available.

Winston Goh, senior product manager for telecommunications at Samsung Asia, said: "Obviously we would prefer it if every operator around the world used the exact same network with the exact same specifications and exact same spectrum. However, this is impossible as every country has its own regulatory framework and requirement, and every operator has its own technical and financial considerations."

Besides raising the cost of handsets, the network fragmentation may cause problems for international roaming too, said Chanani.

"Handset manufacturers have to support multiple radios and spectrum to enable international roaming," he explained. "But because the spectrum allocation is a lot chaotic, it is not feasible to support over 30 different bands on a single handset. Customizing handsets for different regions will increase the manufacturing cost of handsets and still not resolve the problem of international roaming on LTE networks."

Gillet concurred, and believes the market is unlikely to see a "world device" anytime soon if manufacturers are required to include support for the disparate frequencies in their handsets.

Reallocation of spectrum a solution
One way of mitigating the problem of Asia's fragmented LTE landscape is to have regulators from the various regional markets to cooperate and coordinate the reallocation of spectrum, Chanani suggested.

"Different nations should work together at the regulatory level to unify the spectrum allocation in Asia. This would force handset manufacturers to support that spectrum band for Asia and consumers can roam on LTE networks, at least in the region," he said.

Gillet said regulators should also look to promoting network sharing agreements to harmonize the region's spectrum use.

"Operators too should seek greater inter-regional synergies and collaboration to reach required economies of scale--an example set by the Global TD-LTE Initiative (GTI) led by China Mobile," he added.

These efforts could reap benefits for industry players in the future since there is high demand for data roaming for both business and leisure purposes currently, Chanani surmised.