Analyst: Wait before rushing into LTE

Operators should wait for kinks in the technology and business case to be ironed out, before embarking on full-scale upgrades to 4G standard, long term evolution, says Ovum.
Written by Victoria Ho, Contributor

Operators should wait before embarking on a full-scale LTE (long term evolution) rollout, but still plan now in order to be a part of the eventual 4G game, analyst house Ovum has advised.

According to Jeremy Green, practice leader of Ovum's mobile division, there are "few first-mover advantages" for LTE network upgrades given the lack of a clear revenue stream to justify the high capital investment. As such, there was "no need to rush headlong into implementation. he pointed out.

This, in spite of the impending commercial launches of LTE to start next year from the likes of NTT DoCoMo and Verizon.

The disappointment of 3G's beginnings some ten years ago, which failed to unlock new revenue streams as promised, have cast a shadow upon the business case for quick 4G rollout now, Green said Friday in a statement.

Adding to that was the burden of a global economic downturn, which blunted investors' and lenders' enthusiasm for rapid rollout projects, he added.

Green noted: "The suggestion that higher data speeds will enable new sources of revenue for mobile operators are no more likely to be true now than they proved to be then."

On the other hand, selling a new service requires operators to upgrade networks to cater to new subscriptions, which may compel operators to embark on quick LTE rollouts, Green said. But with "most mobile networks almost certainly implementing LTE" eventually, most "can afford to wait until implementation and operational issues are resolved and the business case improves," he pointed out.

In the meantime, operators should plan their LTE strategy to avoid the eventual rush, he cautioned. For example, CDMA operators may have to decide between shutting down their networks in favor of HSPA as an interim step to LTE, or operate both LTE and CDMA networks together, he said.

Verizon decided back in late 2007 to switch over to LTE, abandoning the UMB (ultramobile broadband) standard backed by its partners. It currently has plans to fast-track LTE while maintaining its CDMA network.

"All [operators'] intermediate steps should factor in the eventual migration to LTE, so that investments and incremental improvements to the network are LTE-ready," said Green.

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