Ltetdd Wp Phase2 Final v3

White Paper

LTE TDD Operator Business Case & Adoption Forecast

Prepared by

Berge Ayvazian Senior Consultant, Heavy Reading

www.heavyreading.com

On behalf of

March 2011

http://www.heavyreading.com/�

© HEAVY READING | MARCH 2011 | WHITE PAPER | LTE TDD OPERATOR BUSINESS CASE & FORECAST 2

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY ...................................................................................... 3

II. LTE FDD & TDD MARKET UPDATE, YEAR-END 2010 ..................................... 5

III. OUTLOOK FOR LTE FDD & TDD NETWORK DEPLOYMENTS ........................ 9

IV. LTE OPERATOR SURVEY RESULTS ............................................................... 13

V. MOBILE OPERATOR LTE TDD NETWORK DEPLOYMENT PLANS ................. 17

VI. LTE TDD BUSINESS CASE FOR MALAYSIA .................................................. 24

VII. LTE OPERATOR DEPLOYMENT & SUBSCRIBER FORECAST ..................... 27

LIST OF FIGURES Figure 1: LTE Network Plans, Year-End 2010 .................................................................. 5 Figure 2: LTE Commercial Network Deployments, Year-End 2010 .................................. 6 Figure 3: Vendor Ecosystem Ready for LTE Deployments in 2011 .................................. 9 Figure 4: Single Chipset Solutions for EDGE, HSPA+, EVDO & LTE (FDD & TDD) ...... 10 Figure 5: Operator Plans for LTE TDD Deployments in 2011 & Beyond ........................ 12 Figure 6: Operator Timing of Commercial LTE Deployment by Region .......................... 13 Figure 7: Three Phases of Operator LTE Deployment .................................................... 14 Figure 8: Frequency Bands for LTE Deployments .......................................................... 14 Figure 9: Mobile Operator Attitudes Toward LTE TDD & FDD ....................................... 15 Figure 10: 3G, LTE TDD & FDD Network Deployment Scenarios by Spectrum Band ... 15 Figure 11: LTE TDD & FDD Network Deployment Scenarios ......................................... 16 Figure 12: Leading MNOs Planning LTE Deployments in North/Latin America .............. 17 Figure 13: Leading MNOs Planning LTE Deployments in Europe .................................. 19 Figure 14: Leading MNOs Planning LTE Deployments in Asia/Pacific ........................... 20 Figure 15: LTE TDD Emerging as Technology of Choice for India BWA 2.3 GHz .......... 22 Figure 16: India's BWA Coverage Circles ....................................................................... 23 Figure 17: 3G & WiMax Competition Drive Mobile Broadband in Malaysia .................... 24 Figure 18: Malaysia 4G Business Case Scenario – WiMax ............................................ 25 Figure 19: Malaysia 4G Business Case Scenario – LTE TDD ........................................ 26 Figure 20: LTE TDD Trials Planned in 2011-12 Using 2.3GHz & 2.6GHz TDD Bands .. 27 Figure 21: LTE Subscriber Market Forecast 2010-2015 ................................................. 28


I. Executive Summary Mobile operators worldwide are making serious financial commitments to deploy all-IP 4G mobile broadband networks. The race to 4G is being driven by operator competition to capture market share among the most advanced subscribers with new smartphone devices and applications that drive mobile data traffic growth. Operators are now deploying 4G mobile broadband networks and services to handle this traffic growth, although the first releases of mobile WiMax, HSPA+, and LTE are all considered by the ITU to be pre-4G technologies. The ITU recently announced that the following two technologies have successfully met all of the established criteria to be officially designated as IMT-Advanced, qualifying them as true 4G mobile broadband technologies:

• Mobile WiMax 2, or IEEE 802.16m – also known as WirelessMAN-Advanced

• 3GPP LTE Advanced – LTE Release 10, supporting both paired Frequency Division Dup-lex (FDD) and unpaired Time Division Duplex (TDD) spectrum

Each of these technologies will require further development before they can be commercially dep-loyed beginning in 2012. ITU has also recognized that the term "4G," may also be applied to the forerunners of these technologies, LTE and WiMax, and to other evolved 3G technologies "pro-viding a substantial level of improvement in performance and capabilities with respect to the initial third-generation systems now deployed." Heavy Reading conducted an analysis of mobile operator plans to deploy LTE networks world-wide, finding that all 11 LTE networks commercially launched by year-end 2010 are using LTE FDD technology. But with a limited supply of appropriate LTE FDD spectrum, major operators with TDD spectrum are closely monitoring China Mobile's large-scale TD-LTE field trials in major cities and commercial deployment plans that are driving economies of scale for LTE TDD base stations and devices supporting the primary 2.3GHz and 2.6GHz spectrum bands. LTE TDD is gaining significant momentum as operators are developing multiple deployment scenarios for LTE TDD to address their specific needs and opportunities. With more than 113 operators in some 46 countries already committed to LTE trials and deploy-ments, the most recent Pyramid Research 4G Subscriber Market Forecast predicts that LTE sub-scribership will grow from 18 million in 2011 to 422 million in 2015. This white paper presents a detailed analysis of the 22 countries in which Heavy Reading found operators planning LTE TDD deployments in six major regions, including Asia/Pacific, North America, Latin America, Europe, CIS/Eastern Europe, and Middle East/Africa. We found significant potential for LTE TDD sub-scriber growth driven by Asia/Pacific operators from 2011-2015, including in China, India, Japan, Korea, and Malaysia. Additional subscriber growth should occur as leading 4G operators transi-tion their existing WiMax networks to LTE TDD over the next two years. We also expect to see hybrid LTE FDD/TDD network development in Europe, Eastern Europe/CIS, and Middle East/ Africa beginning in 2012. This movement will benefit from the deployment of new multi-mode base stations and mobile broadband devices supporting both LTE FDD and TDD. Heavy Reading has also analyzed the key technology drivers, regulatory and market factors that will influence LTE TDD network deployments, and developed an operator business case demon-strating the TCO and ROI benefits of a commercial LTE TDD network, using WiROI 4G modeling tools. This methodology was used by Heavy Reading to segment the Pyramid Research LTE subscriber forecast by FDD and TDD technology.

• Global LTE FDD subscribership is forecast to grow from 12 million in 2011 to more than 264 million in 2015, driven largely by operators in Western Europe, Japan, and the US.

• Global LTE TDD subscribership is forecast to grow from 6 million in 2011 to nearly 158 million in 2015, based on commercial service from leading operators in Asia/Pacific and North America, including China, India, Korea, Japan, Malaysia, Australia, and the US.


Overall, this analysis resulted in a forecast in which operators deploying LTE FDD are expected to achieve 63 percent of the total LTE market, while LTE TDD operators are estimated to reach 37 percent share worldwide. This forecast supports the need for a broad ecosystem of multi-mode base stations and mobile broadband devices supporting both LTE FDD and TDD 3GPP until LTE Advanced becomes the common standard supporting both paired FDD and unpaired TDD spectrum.


II. LTE FDD & TDD Market Update, Year-End 2010 Over the past year, an extensive global technology ecosystem of mobile operators, vendors, and associations has emerged that supports the rapid end-to-end development of LTE FDD and TDD networks. As shown in Figure 1, the latest map published by the Global mobile Suppliers Associ-ation (GSA), more than 113 operators representing some 46 countries have committed to LTE trials and deployments as of November 2010. GSA estimates that 156 operators in 64 countries are already investing in LTE networks, and an additional 43 operators have pre-committed to LTE trials beginning in 2011. The tremendous momentum represented by these operator initiatives, supported by the vendor community, has propelled LTE from a period of technology trials and pilot testing into full commercial deployments beginning in the second half of 2010. This network deployment activity is expected to accelerate and drive subscriber adoption in 2011 and beyond. Figure 1: LTE Network Plans, Year-End 2010

Source: Global mobile Suppliers Association – GSA November 2010 Of the mobile operators committed to LTE network trials, 11 successfully launched commercial LTE networks and services in six countries spanning North America, Europe, and Asia by year-end 2010. As shown in Figure 2, there are currently five commercial LTE network deployments in Europe, three in Central Asia, two in the US, and four in Asia/Pacific. These initial LTE deploy-ments vary widely in size based on operator, coverage area, country market, and subscribers.

1. TeliaSonera – Norway 2. TeliaSonera – Sweden 3. Telenor/Tele2 Net4Mobility – Sweden 4. Telekom Austria Mobilkom – Austria 5. Mobyland and CenterNet Aero2 – Poland 6. Mobile TeleSystems and UCell – Uzbekistan 7. Kazakhstan – VimpelCom 8. MetroPCS – US 9. Verizon Wireless – US 10. NTT Docomo – Japan 11. CSL Ltd. – Hong Kong


Figure 2: LTE Commercial Network Deployments, Year-End 2010

REGION LTE DEPLOYMENTS MNO BAND SUBSCRIBERS

(MILLIONS)

Europe Sweden Telenor/Tele2 2.6 GHz 6 Europe Sweden TeliaSonera 2.6 GHz 2 Europe Norway, Finland TeliaSonera 2.6 GHz 3 Europe Austria Mobikom Austria 2.6 GHz 5 Europe Poland CenterNet/Mobyland 1.8 GHz 3

Asia Uzbekistan Mobile TeleSystems UCell – TeliaSonera 2.5-2.7 GHz 8

5 Asia Kazakhstan VimpelCom/KarTel 700 MHz 6 Asia Japan NTT Docomo 2.1 GHz 56 Asia Hong Kong CSL Ltd. 2.6 GHz 3

North America US MetroPCS AWS 1.7/2.1 GHz 7 North America US Verizon Wireless 700 MHz 92

Source: Heavy Reading, GSA, and company information The first commercial LTE networks were launched in Scandinavia by TeliaSonera in Stockholm and Oslo in December 2009. TeliaSonera selected Ericsson and Nokia Siemens Networks as suppliers of LTE RAN equipment and Ericsson as the supplier of the common core network to support the LTE network rollout across the region. TeliaSonera expects to offer its customers LTE network coverage in the 25 largest cities in Sweden alongside the four largest cities in Norway, including Oslo. Telenor and Tele2 have since partnered under their joint venture Net4Mobility to deploy LTE in Sweden using shared 900MHz and 2500MHz spectrum holdings. Net4Mobility has chosen Huawei to provide the equipment for its commercial LTE network deployment in Sweden. From Scandinavia, commercial LTE network rollouts extended into Central Asia and Uzbekistan, where Mobile TeleSystems deployed Huawei equipment for the world's third LTE commercial launch in July 2010. TeliaSonera's subsidiary UCell (Uzbekistan) followed suit in August 2010, launching its LTE service with ZTE equipment. Both operators are now planning to significantly expand the coverage of their LTE networks initially deployed in the capital Tashkent, leveraging their 2.5-2.7GHz spectrum. In neighboring Kazakhstan, Russian multinational operator Vimpel-Com is working with Alcatel-Lucent to conduct a live LTE network pilot using 700MHz spectrum in less-developed regions using a fixed broadband business model. The new Kazakh LTE network is also expected to cover the central districts of Amalty, the business capital of the country, and KarTel Vimpelcom is making plans for a commercial launch in 2011 under the Beeline brand. Poland became the fourth country with a commercial LTE network in September 2010, when CenterNet and Mobyland collaborated to launch LTE services by re-farming existing 2G spectrum in the 1.8GHz band. Rather than waiting for new spectrum allocations or incurring the cost of new spectrum acquisitions in the more common 2.6GHz band, the companies have planned a rapid LTE network rollout to gain a head start over more established rivals in Poland. The CenterNet/ Mobyland joint venture selected Huawei to deploy 700 LTE base stations covering 7 million POPs, or 20 percent of Poland's population, by year-end 2010. CenterNet and Mobyland have recently been acquired by the seventh Polish mobile network operator (MNO), Aero2, which is consolidating the resources of these three players to compete better with the four main market participants. In addition to developing an HSPA+ network in the 900MHz band over the past year, Aero2 has begun planning the deployment of the world's first commercial LTE TDD network using 2.5GHz TDD spectrum, to become operational in early 2011. Aero2 could become the first MNO to operate a hybrid LTE FDD/TDD network as it rationalizes its LTE network investments.


Telekom Austria acquired 2x20 MHz in the paired FDD band and 25 MHz in the unpaired TDD band for a total of €13.2, in the auction conducted by the Austrian regulatory authority (TKK) in September. In October, Telekom Austria's mobile operator, Mobilkom, became the first Austrian provider to commercially launch LTE under the commercial brand A1, with 49 base stations in Vienna and three stations in St. Pölten. A total of 14 paired and 9 unpaired frequency blocks were offered in this auction, in which Orange Austria acquired 2x10 MHz in the paired band, Hutchison 3G Austria received 2x20 MHz in the paired band and 25 MHz in the unpaired band, and T-Mobile Austria acquired 2x20 MHz in the paired band. Two LTE networks were launched commercially in Asia in late 2010. CSL, Hong Kong's leading MNO, launched the world's first combined LTE/DC-HSPA+ dual-carrier mobile broadband net-work in late November 2010. A month later, NTT Docomo commercially launched its "Xi"-branded LTE service, initially in Tokyo, Nagoya, and Osaka. Docomo has been testing LTE since June 2010 and is one of the first mobile operators to deploy new multi-mode base stations to support both existing 3G and new LTE FDD services. Docomo will benefit from a first-mover advantage in LTE and plans to gradually expand dual 3G/LTE service coverage to additional cities using this deployment method, which layers a 2.1GHz LTE network over its existing mobile network. CSL also commercially launched its LTE services in December 2010, initially only for corporations that participated in trials, with a full consumer launch scheduled for the first quarter of 2011. The CSL integrated LTE/DC-HSPA+ network now covers of 50 percent of the population, enabling down-load speeds up to four times faster than HSPA+, with corporate services to be followed by mass-market offerings when sufficient LTE smartphone devices will be ready for sale. With the imminent commercial availability of Verizon Wireless LTE services, MetroPCS was the first US mobile operator to launch commercial LTE services in September 2010, in select cities including Las Vegas, Dallas-Fort Worth, and Detroit. MetroPCS is using AWS spectrum, and Ericsson recently extended the reach of MetroPCS LTE data service into the New York, Boston, and Sacramento metro areas. Verizon Wireless launched its new LTE services in December, with initial availability in 38 major US markets covering approximately 110 million POPs, along with 60 airports. Verizon Wireless is fully leveraging its nationwide contiguous 700MHz spectrum for the world's largest LTE network to achieve extensive in-building LTE coverage, and plans to extend its LTE coverage to 200 million POPs in 2012 and 285+ million POPs when the network is com-pleted in 2013. Verizon Wireless is also working with rural wireless operators to use their towers along with Verizon's 800MHz spectrum and equipment from its primary network vendors Ericsson and Alcatel-Lucent, to extend the coverage of its 4G LTE network to a broader customer base. Each of these operators is being driven by competition to be a first mover in LTE, to offer cus-tomers a 4G mobile broadband user experience. They are all investing heavily in multiple network platforms to maintain their legacy networks while deploying new LTE infrastructure. For example, the Verizon Wireless 4G LTE network – dubbed the fastest, most advanced 4G mobile network in the US – has initially been deployed as an "overlay" of eNodeB radio base stations on its existing native CDMA network, using many existing cell sites and backhaul infrastructure. In addition to the capital to build out its LTE network, Verizon Wireless currently invests approximately $8 billion annually to support some 43,500 cell sites and maintain and expand its nationwide 2G CDMA voice and 3G EVDO data networks. This is understandable, since Verizon has announced that it will begin selling a CDMA 3G iPhone 4 beginning in February and that four new 4G LTE smart-phones from HTC, Samsung, LG, and Motorola will offered by the middle of 2011. Many operators are also investing in HSPA+ RAN equipment and IP-capable backhaul to offer true high-speed mobile broadband performance, as a key interim step to 4G LTE. For example, both AT&T and T-Mobile USA are upgrading their HSPA+ networks to 21 Mbit/s in the US, and each is carefully optimizing coverage and capacity within their given spectrum allocations and available equipment, while planning their move toward an all-IP mobile broadband network. Now that Verizon Wireless has commercially launched its LTE services, both T-Mobile USA and AT&T are starting to promote their HSPA+ networks as supporting 4G mobile broadband services.


Rather than laying out a roadmap for LTE using new spectrum, however, T-Mobile USA recently launched a major new ad campaign declaring its HSPA+ network to be "4G" today, featuring the first wave of HSPA+ smartphones and an HSPA+ enabled netbook. T-Mobile USA has also started charting a path to upgrade its network to the 84 Mbit/s level of the HSPA+ standard, which uses MIMO antennas on handsets and base stations. T-Mobile USA has enough AWS 1700MHz spectrum for its current plans to squeeze more life out of its existing HSPA+ network infrastruc-ture, and it can bond the AWS spectrum with 1900MHz PCS spectrum to offer 42 Mbit/s in most cities. That requires double the spectrum of 21 Mbit/s, so T-Mobile USA may need to buy addi-tional spectrum in upcoming AWS auctions. T-Mobile USA and Nokia Siemens Networks have successfully promoted the future releases of HSPA+ as a proposed "Long Term HSPA Evolution" (LTHSPAE) standard, and its key features were accepted during the plenary meeting of 3GPP RAN in December 2010. By initiating technical work and study items, 3GPP hopes to make this standard, which combines up to eight carriers and offers peak data rates of up to 672 Mbit/s, ready for commercial deployment in 2013. AT&T has recently responded, saying that "the nation's fastest mobile broadband network is get-ting faster with 4G" – HSPA+ is available now and faster LTE service is "coming soon." AT&T is investing to upgrade its HSPA+ mobile broadband network and enhanced backhaul to deliver faster speeds. AT&T has also been promoting the use of WiFi to complement its 3G+ network, since it operates the largest nationwide network of more than 23,000 WiFi hotspots. AT&T has activated millions of 3G iPhone 4 smartphones, and has restricted some of its most bandwidth-intensive applications, such as Facetime, to WiFi connectivity. Although it has been actively investing in the expansion of its HSPA+ network and WiFi coverage, AT&T has renewed its focus on LTE in the race to 4G. With the commercial launch of the Verizon Wireless LTE service and T-Mobile USA's initiatives to position HSPA+ as a 4G service, AT&T has LTE trials underway in Baltimore and Dallas and has announced plans to commercially launch a data-only LTE service in mid 2011, with 20 LTE devices to be offered in the second half of 2011, including smartphones, tablets, modems, and mobile hotspots. AT&T's LTE deployment plans will leverage its 700MHz and AWS spectrum, along with the additional 700MHz spectrum recently acquired from Qualcomm for $1.9 billion. AT&T ultimately plans to largely complete its LTE network buildout covering 70 million to 75 million POPs by the end of 2013, claiming it will be the only carrier to offer two layers of mobile broadband technology delivering 4G speeds: HSPA+ and LTE. AT&T has also confirmed its plans to introduce voice over LTE technology by 2013.


III. Outlook for LTE FDD & TDD Network Deployments After an extended period of trials and initial network deployments, the LTE vendor community is gearing up for a period of accelerated network deployments. As shown in Figure 3, the LTE eco-system is expanding from a select group of RAN base station suppliers to include a wide range of technology specialists supplying Ethernet backhaul and Evolved Packet Core (EPC) solutions, chipsets and devices to support multiple operator deployments strategies. Figure 3: Vendor Ecosystem Ready for LTE Deployments in 2011

VENDOR

END-TO-END LTE NETWORK

SOLUTIONS (BASE STATIONS,

EPC & PACKET BACKHAUL)

LTE/HSPA MULTI-MODE BASE

STATIONS

LTE/WIMAXMULTI-MODE BASE

STATIONS

EVOLVEDPACKET

CORE

PACKET BACK-HAUL

LTE FDD/TDD

CHIPSETS &DEVICES

Alcatel-Lucent

Ericsson

Fujitsu

Huawei

NEC

Nokia Siemens

Motorola

Samsung

ZTE

Cisco-Starent

Tellabs-WiChorus

Juniper Networks

Ciena

Dragonwave

Hitachi

Altair

Beceem-Broadcom

Qualcomm

Sequans

ST Ericsson

Source: Heavy Reading Several leading infrastructure vendors, such as Ericsson, Alcatel-Lucent, and Nokia Siemens Networks, provide end-to-end LTE network solutions including RAN base stations, EPC, and packet backhaul. Most Tier 1 vendors have initially aligned LTE equipment availability timescales, with the first wave of mobile operators deploying single-mode eNodeB LTE base stations in FDD spectrum bands, as well as single-mode LTE TDD base stations supporting the 2.3GHz and 2.6GHz bands for China and India. We believe this focus will shift toward multi-mode base sta-tions during 2011.


The first wave of commercial LTE networks is initially being supported by only USB data cards or embedded modems offering high-speed mobile Internet access for notebook and netbook com-puters. New LTE operators are looking for a growing portfolio of LTE smartphones to become available from vendors such as Apple, RIM, Samsung, Motorola, HTC, Nokia, and LG starting in early 2011. MetroPCS has been offering the Samsung Craft as the first LTE-compatible mobile handset, and Verizon is preparing to announce its first Android-powered LTE smartphones and tablets to be available in 2011 from suppliers including Motorola and HTC. As indicated in Figure 4, Qualcomm is among the first chipset manufacturers that has announced single-chipset solutions for both varieties of LTE (FDD and TDD) and legacy technologies (DC-HSPA+, EVDO, and EDGE), allowing for development of a single dongle-type device supporting all of the above. The first pre-commercial, single-baseband chipsets supporting both LTE TDD and LTE FDD became available at the end of 2010, and several vendors including Samsung, LG, HTC, RIM, and Motorola have recently announced commercial availability of LTE TDD single-mode smartphones and tablets by the middle of 2011. It is critical that LTE smartphones and handsets that support both FDD and TDD in multiple spectrum bands become available and cost-competitive in 2011 or early 2012. Figure 4: Single Chipset Solutions for EDGE, HSPA+, EVDO & LTE (FDD & TDD)

Source: Qualcomm LTE TDD has gained significant momentum with China Mobile's commitment to conduct several large-scale TD-LTE network field trials. China Mobile currently serves 18.8 million TD-SCDMA 3G mobile broadband subscribers, and TD-LTE is positioned as the natural evolution of TD-SCDMA in China. China Mobile plans to use 50 MHz of TDD spectrum from 2570-2620 MHz at Band 38 for outdoor TD-LTE deployment and 50 MHz from 2320-2370 MHz at Band 40 for indoor TD-LTE network deployment. China Mobile invested US$30 million in the first phase of the friendly user trials to explore the technical and commercial performance of TD-LTE networks and supporting devices. China Mobile has also established an open interoperability testing lab, with seven sys-tem vendors and six terminal chipset vendors participating to date. China Mobile has built 11 TD-LTE trial networks to date, and plans to invest an additional US$225 million to deploy more than 3,000 indoor and outdoor LTE TDD base stations, for eight more pre-commercial field trials net-works covering more than 100 million POPs (population covered) from the beginning of 2011. China's Ministry of Industry and Information Technology recently granted permission for China Mobile to conduct large-scale TD-LTE field trials with more than 100 LTE TDD base stations and 5,000 terminal devices in each of the following six major cities: Guangzhou, Hangzhou, Nanjing,


Shanghai, Shenzhen and Xiamen, As result of these commitments, TD-LTE infrastructure from multiple vendors and single chipset solutions for LTE FDD/TDD are ready for the deployment of large-scale trials and initial commercial usage. China Mobile is hoping to launch commercial TD-LTE services during 2012, in order to meet the growing demand for mobile data services, while also bolstering its TD-SCDMA (3G) and WiFi deployments in the interim. Over the next year, many mobile operators will be deploying commercial LTE networks using both FDD and TDD spectrum bands, and the first wave of mobile WiMax operators will consider migrating to LTE networks using 2.5GHz or 2.3GHz TDD spectrum. As such, the leading telecom infrastructure vendors are recognizing the need to support multiple spectrum bands and duplex-ing modes on their new base station platforms beginning in 2011. Several vendors have begun to promote LTE TDD as an alternate path to 4G for WiMax operators with 2.3GHz or 2.5GHz TDD spectrum using hybrid WiMax/LTE base stations, and have highlighted the need for a business case to guide operators in their network transition from WiMax to LTE. One leading vendor that still supports WiMax operators offers the following guidance on near-term considerations, while providing them a smooth transition to LTE TDD over the next year:

• WiMax on 2.3GHz bands will continue serve the immediate need for wireless broadband.

• Inexpensive WiMax terminals are available now, but terminal development momentum is shifting fast toward LTE TDD.

• LTE TDD ecosystem will be positively impacted by deployments in China, India, and Japan.

• Coexistence of WiMax and LTE TDD running in parallel is the key, not necessarily evolu-tion of WiMax gear into LTE TDD.

• Technology development is too fast for current WiMax base stations and equipment to survive future LTE TDD requirements.

An industry consensus is clearly building that many existing WiMax operators will be migrating their networks to LTE TDD over the next few years. Sprint currently relies on Clearwire's 2.5GHz spectrum and its extensive network of WiMax base stations to support its 4G services commer-cially available in 70 US markets. In March 2010, Sprint and Clearwire were among a group of operators and vendors that petitioned the 3GPP standards body to start work on specifications that would allow LTE TDD to be deployed in the US using 2.6GHz band spectrum, which is cur-rently used for mobile WiMax. The proposal has been accepted by the 3GPP, and the specifications for the 2.6GHz Clearwire band (2496-2690 MHz) for LTE TDD in the US is scheduled to be completed by March 2011. Clearwire has since been conducting technology trials of both LTE FDD and LTE TDD, as well as testing the coexistence of LTE and WiMax utilizing its spectrum holdings in Phoenix. Clearwire is considering the deployment of a hybrid LTE FDD and/or LTE TDD network on a common base station platform, along with its existing WiMax network. As shown in Figure 5, the industry is now at a tipping point where the strategy to overlay single-mode LTE eNodeB base stations may no longer be sustainable, as the deployment and mainten-ance of multiple networks drives up both capital and operating expenses. These wireless network infrastructure overlays also create complexity in radio access and backhaul networks, service platforms, and ultimately the protocols and frequency bands that must be supported in end-user mobile devices. The RAN vendor ecosystem is now gearing up to offer next-generation, multi-mode base station platforms with a common baseband unit and RF modules using multi-standard radios that support multiple standards and services in a single rack and cabinet. In the fourth quarter of 2010, many of the leading vendors have announced the commercial availability of new multi-mode RAN infrastructure equipment promising improved coverage and performance, with lower power consumption and operating cost compared to legacy single-mode base stations.


Figure 5: Operator Plans for LTE TDD Deployments in 2011 & Beyond

Source: Qualcomm and Heavy Reading Sprint is the first major mobile operator committed to deploying a converged mobile network of multi-mode base stations to strengthen its 3G voice, push-to-talk, and broadband data services while expanding its 4G technology options. The phased implementation of the Sprint Network Vision initiative beginning in 2011 will be a major leap forward since the new converged network will support multiple air interfaces and radio frequencies using one multi-mode base station plat-form at each cell site. Remote radio heads directly connected to antennas on existing towers will decrease signal loss and increase coverage, while reducing power consumption and ground space requirements. With the announcement of world-class vendors for this project, Sprint is planning to implement a packet backhaul network and an IP-based packet core located at the network edge that supports multiple RAN technologies as well as rapid application and device innovation. Heavy Reading believes the Network Vision initiative will allow Sprint to cost-effectively introduce LTE to com-plement its current WiMax 4G services in the future, and could provide the foundation for Sprint to be the first US operator to deploy multi-mode base stations supporting both LTE FDD and TDD modes under LTE Advanced. Yota is a WiMax network operator with 700,000 subscribers in Russia that recently announced plans to invest to begin deployment of LTE networks in Russia beginning in 2011. Looking to benefit from LTE's economies of scale and service attributes, Yota has issued a request for pro-posal to the main mobile infrastructure vendors with $100 million committed for LTE base sta-tions. Yota plans to complete its LTE equipment procurement for 15 new markets, plus the five main markets in Russia where it's already operational with WiMax by year-end 2010. These plans are based on the deployment of LTE FDD base station technology already deployed in the Rus-sian city of Kazan, rather than LTE TDD. Yota claims to have enough spectrum to deploy FDD technology, however, the Russian operator has been facing regulatory challenges as it tries to deploy LTE using its existing 2.5GHz spectrum originally licensed for WiMax. This delay is push-ing Yota's LTE deployment into 2011, when the use of LTE FDD/TDD multi-mode base stations will provide additional options and flexibility. Vividwireless is the latest WiMax operator considering a migration to LTE TDD, in part based on the arrangement it has to lease 15 MHz of its 2.3GHz band spectrum to EnergyAustralia. The Australian government recently selected EnergyAustralia to lead a Smart Grid demonstration project, and the electric utility is now planning to migrate to LTE TDD technology using its existing spectrum due to concerns over cybersecurity. Both EnergyAustralia and Vividwireless plan to maintain their WiMax network, while deploying more than 150 sites with LTE TDD technology.


IV. LTE Operator Survey Results Heavy Reading recently conducted an extensive global survey of mobile operators planning LTE deployments over the next three years, as part of a multi-client study that also contains case studies of leading 4G mobile operators. Overall, more than 100 service provider professionals were surveyed for their views on the transition to LTE, representing approximately 50 different MNOs. In this section we present those survey results that provide insights into the LTE network deployment strategies and service launch plans that are relevant to the use of LTE TDD spectrum and technologies. As indicated in Figure 6, the operator survey confirmed that 2010 has been a period for technical lab evaluation and field testing, with only 25 percent of operator respondents reporting plans to launch commercial LTE services by year-end 2010. Based on the success of these early efforts, LTE trials and commercial deployments are expected to ramp up in 2011. However, a number of operators will not start significant trial activity until 2012. North America is expected to lead LTE deployment, followed by Europe and then Asia. While there are a few notable exceptions to this statement (e.g., Japan), across a broad view of the data this is a well-supported finding. Spec-trum allocation and GDP per capita are perhaps the biggest reason for this skew. European LTE deployments gain momentum beginning in 2011, the majority of Asian respondents do not expect initial commercial LTE deployments until 2012 or beyond. Figure 6: Operator Timing of Commercial LTE Deployment by Region

Source: Heavy Reading Survey of Mobile Operators 2010 Figure 7 presents our interpretation of these survey results, grouping operators into three phases of LTE deployment. The early adopters, representing 25 percent of operator respondents, expect to launch a data-only service using USB modems before the end of 2010. Although 2011 and 2012 are the key years for commercial launches, 28 percent of respondents don't intend to launch commercial LTE services until 2013 or later. We expect Phase 2 to begin in mid 2011 as the first wave of LTE smartphones, tablets, and embedded netbooks are introduced, and the first dual-mode devices supporting both FDD and TDD are introduced. The threshold for mass-market LTE appears to be 2014 when 46 percent of respondents believe more than 20 percent of subscribers will have an LTE device. This is the tipping point for the push into the true mass-market, when high-speed data and voice will be integrated over LTE; by 2016 a majority of operators (76 percent) expect more than 20 percent of subscribers to make use of LTE services. According to the majority of respondents, LTE coverage will be focused on urban


areas, although 25 percent are targeting an aggressive nationwide rollout. As expected, US oper-ators with 700 MHz are far more bullish on broad national deployments than Europeans with 2.6GHz spectrum. Interest in network sharing remains strong among operator survey respon-dents, with LTE viewed as a trigger for fresh discussions on how these efforts can help mitigate deployment costs. How and when depends very much on local market conditions. Figure 7: Three Phases of Operator LTE Deployment

Source: Heavy Reading Survey of Mobile Operators 2010 As indicated in Figure 8, the preferred frequency bands for LTE deployment are 700 MHz + AWS and 2.6 GHz + 800 MHz, with most operators intending to use both a low and high band. There is strong interest in 1.8 GHz, especially among operators in Asia and Europe, even though termin-als are expected to lag other bands by several years. Respondents that selected 2.6 GHz in Phase 1 tended to pick 800 MHz, 900 MHz, and 1.8 GHz in Phase 2. Respondents that selected 700 MHz were most likely to select only one frequency. Figure 8: Frequency Bands for LTE Deployments

Source: Heavy Reading Survey of Mobile Operators 2010 (n=102) Mobile operator attitudes regarding the use of LTE TDD spectrum and technology are hard to judge. Interest in the coexistence of TDD and FDD systems is high, but most operators surveyed were unclear about the role it will play out and how they would make use of LTE TDD spectrum. The survey data presented in Figure 9 is both positive and negative on the outlook for LTE TDD beyond China, depending on how you choose to interpret it.


Figure 9: Mobile Operator Attitudes Toward LTE TDD & FDD

Source: Heavy Reading Survey of Mobile Operators 2010 In general, the survey results reveal a cautious and phased effort to leverage FDD and TDD spectrum in LTE network deployments planned over the next five years.

• 19 percent of operators surveyed plan to lead with an LTE TDD network.

• Another 12 percent plan both FDD and TDD LTE deployments within three years.

• 45 percent of respondents will lead with FDD, with the potential to add TDD in the long or medium term.

• Only 25 percent of respondents plan to lead with FDD and are unlikely to use TDD. There are several deployment scenarios identified by operator respondents being considered for hybrid 3G, LTE FDD, and TDD network rollouts, summarized in Figures 10 and 11. Operators see their continued investment in 3G HSPA+ networks as a guarantee of ubiquitous voice and mobile broadband coverage, as well as global roaming. LTE coverage plans tend to be focused on urban areas, although US operators with 700MHz spectrum are far more likely to be bullish and aggressive regarding broad nationwide deployments than Europeans with 2.6GHz spectrum. Figure 10: 3G, LTE TDD & FDD Network Deployment Scenarios by Spectrum Band

Source: Nokia Siemens Networks and Qualcomm


Operators surveyed tend to see the following unique roles for LTE FDD and TDD spectrum in their hybrid network rollout strategies.

• Macro-cell networks: In its large-scale LTE trials, China Mobile will use LTE TDD ma-cro-cell base stations in 2.6GHz spectrum for outdoor and 2.3GHz TDD for indoor cover-age, and several vendors are focusing their efforts on these indoor coverage solutions. In India LTE TDD macro-cell base stations can be used to support 2.3GHz Broadband Wireless Access (BWA) networks.

• Hybrid networks: A practical deployment scenario for countries like Germany is to use LTE FDD base stations for national/outdoor coverage and employ LTE TDD base sta-tions in urban and dense suburban areas, where high capacities are required. This hybrid scenario offers opportunities for India BWA licensees to deploy multi-mode macro-cell base stations supporting both 3G HSPA+ and LTE TDD in 2.3GHz band where they can rely on network sharing partnership agreements with other 3G and BWA service provid-ers to ensure service availability through national roaming.

• LTE TDD pico and femtocells: The ideal LTE TDD deployment scenario (from a cost point of view) for is an urban area, where delivering a high traffic handling capacity per square kilometer is paramount. In this approach, additional capacity would be deployed using a TDD micro/picocell layer in high traffic urban areas. LTE TDD femto/picocells can also be used to significantly improve indoor coverage complementing FDD macrocell network coverage.

• LTE TDD migration from WiMax: Over the next year, the first wave of mobile WiMax operators will consider migrating to LTE networks using hybrid WiMax/LTE base stations on their 2.5GHz or 2.3GHz TDD spectrum. These operators will need vendor support to guide their transition LTE TDD network as either complementary or as a replacement of their WiMax network.

Figure 11: LTE TDD & FDD Network Deployment Scenarios

SCENARIO DETAILS

Macro-Cell Networks

China Mobile LTE TDD trials will use 2.6 GHz for outdoor and 2.3 GHz for indoor Opportunities for India BWA macro-cells in 2.3GHz band

Pico and Femtocells

Extend FDD macrocell network coverage with indoor TDD femto/pico cells Use TDD to provide indoor coverage and capacity

Hybrid Networks

National/outdoor coverage using LTE FDD and LTE TDD for urban/suburban capacity Multi-mode 3G HSPA+ and LTE TDD macro-cell base stations

LTE TDD From WiMax

LTE TDD as alternative to or migration from WiMax LTE TDD to complement WiMax in selected cities or in parallel nationwide

Source: Heavy Reading based on Survey of Mobile Operators 2010 Based on these survey results and LTE network deployment scenarios, our conclusion is that many European operators will be deploying hybrid LTE networks using both FDD and TDD spec-trum available in the 2.6GHz band to optimize national/outdoor and urban/indoor coverage and capacity. We also expect to see deployment of pure LTE TDD networks by mobile operators in China and India with spectrum in the 2.3GHz and 2.6GHz bands, and by current WiMax opera-tors with 2.5GHz and 2.3GHz spectrum, in the 2011-2013 period.


V. Mobile Operator LTE TDD Network Deployment Plans The world's leading mobile operators are actively acquiring new spectrum and investing heavily in mobile broadband network technologies in an effort to keep pace with competitors, subscriber demand, and device innovation. Each of these operators is planning to provide its customers a 4G-like mobile broadband user experience, but with different technology choices based on their current 3G network technology and spectrum position.

• LTE overlaid on EVDO Rev. A or B, as the Verizon Wireless or KDDI LTE networks • LTE as the next step in the evolution from W-CDMA and HSPA+ mobile broadband • LTE as an alternative to Mobile WiMax for greenfield mobile broadband services

We have summarized by region the network evolution plans of leading mobile operators that have announced plans for LTE, highlighting whether they are likely to deploy LTE FDD or TDD. LTE TDD is becoming a globally accepted technology, providing a 4G evolution path for operators with EVDO, TD-SCDMA, and WiMax networks. It is also becoming truly complementary to LTE FDD, as many governments are now auctioning globally assigned spectrum for mobile broadband. There are significant spectrum resources suitable for LTE TDD across a wide range of frequen-cies, including the 2.3GHz (100 MHz) and 2.6GHz bands (50 MHz). Due to increasing demand for LTE spectrum bands, LTE TDD will be able to exploit global economies of scale similar to LTE FDD. Further, LTE FDD and LTE TDD have a clear, smooth evolution toward LTE Advanced. The growing number of operator commitments to LTE TDD network deployments is detailed below. The North American operators listed in Figure 12 have all announced plans to use FDD spectrum to deploy LTE in either the 700MHz or AWS band. In addition to the LTE plans of US operators discussed above, we have provided some information on the planned LightSquared LTE network to be deployed in the L-Band 1.6GHz band and Canadian operators that have recently joined the LTE movement. In October 2010, Rogers Wireless announced the launch of a comprehensive LTE trial in the Ottawa area, initially using AWS spectrum. Rogers is working with the regulator Industry Canada to secure a development license to also use 700MHz spectrum for the trial. Bell Canada and Telus have jointly launched a HSPA+ network, which will be upgraded to LTE starting in 2011. To date, no Canadian operators have announced plans to deploy LTE TDD; however, Canadian rural broadband provider Barrett Xplore included a requirement in recent contracts that the WiMax network being deployed using 3.5GHz spectrum can be easily migrated to LTE TDD. Figure 12: Leading MNOs Planning LTE Deployments in North/Latin America

COUNTRY MOBILE OPERATOR SPECTRUM BAND DATE

US MetroPCS AWS 1.7/2.1 GHz 2010

US Verizon Wireless 700 MHz 2010

US AT&T 700 MHz 2011

US LightSquared L-band 1.6 GHz 2011

Canada Rogers Wireless 700 MHz 2011

Canada Bell Canada/Telus AWS 1.7/2.1 GHz 2011

Mexico America Movil 2.6 GHz 2011

Colombia UNE EPM 2.5 GHz 2011

Chile Entel PCS 2.6 GHz 2011

Brazil Telefónica Movistar AWS 1.7/2.1 GHz 2011

Argentina Telefónica Movistar AWS 1.7/2.1 GHz 2011 Source: Heavy Reading, GSA, and company information


Pyramid Research recently updated its assessment of LTE in Latin America, predicting incum-bent, new entrant, and existing challenger operators to begin deploying LTE networks within the next three years. As LTE gains momentum globally, service providers are eager to capitalize on the opportunity to deliver wireless broadband services. However, the availability and allocation of spectrum suited to LTE and spectrum caps remain stumbling blocks for operators in Latin Ameri-ca. While multiple regulators in the region have plans to allocate both residual 3G spectrum and new spectrum suited to LTE, delays in allocation processes are also hindering the regional LTE deployment outlook. Even with recent traction in regulator licensing plans, we do not expect sub-stantial LTE deployments across the region before the 2013-2014 timeframe. There is some evidence of LTE network trial activity and deployment plans across the region, such as Telefónica's planned deployments across multiple nations in Latin America. Telefónica Movistar is currently conducting LTE field trials in Brazil and Argentina using existing spectrum holdings in the AWS band. These field trials are a continuation of laboratory testing, and operator activity around LTE trials and deployment plans will begin to take shape in 2011. In Argentina, Telecom Personal launched its LTE trial in 2Q10 using 2.5GHz spectrum, while Telefónica Movi-star is in active LTE trials and Claro has also announced LTE trial plans in the country. The pending allocation of 4G spectrum in Brazil is also highly anticipated as a facilitator of LTE operator plans regionally. VIVO launched a trial in 2Q10, and Claro has announced LTE plans in Brazil. However, Brazil's 2.5GHz band will not be freed from use by MMDS operators until the middle of 2013. In Colombia, UNE EPM recently acquired 50 MHz of spectrum in the 2500MHz band and announced plans to use it for LTE. In Chile, the telecom regulator has announced plans to conduct an auction for 4G LTE spectrum in the 2.6GHz band in December 2010 and expects to conclude it by mid 2011. Entel PCS conducted the first LTE field trial in Latin America at Univer-sidad de Chile, but it does not expect to begin deploying a commercial LTE network until 2012. All four of Mexico's wireless operators – Telefónica, Nextel, Iusacell, and America Movil/Telcel – recently won spectrum in two auctions for the AWS 1.7GHz and 1.9GHz bands, designed to ex-pand capacity for 3G mobile broadband services. The Mexican government has finally overcome a deluge of lawsuits to deliver additional 3G spectrum to operators. Telefónica Movistar has con-ducted LTE trials in 2010, and America Movil has expressed plans for LTE migration that may exploit its newly acquired AWS spectrum, which it holds across all of Mexico's competitive license regions. But new auctions for 4G LTE spectrum are unlikely until 2012 or 2013, when these HSPA+ networks are fully deployed and begin to generate returns on operator investments. As depicted in Figure 13, Europe is enjoying accelerated interest in LTE along with the global groundswell of activity. With LTE networks commercially launched in Sweden, Norway, Poland, and Austria, more than 12 of the 17 Western European countries have reported technology trials, and LTE trials are rife across the region. In Western European activity LTE is also enjoying burgeoning trial activity in Germany, France, Italy, Spain, and the Czech Republic. The 2.6GHz "IMT Extension Band" is the focus of LTE trial and deployment activity in Western Europe, and many regulators have conducted auctions of the 50 MHz of TDD spectrum in the "IMT Extension Center Gap" Band 38 (2570-2620) to complement the 140 MHz of FDD paired spectrum in Band 7 (2500-2570/2620-2690). There has been a reasonably clear trend that FDD spectrum attracts higher bids than TDD spec-trum, but this is not always the case, and the relative valuations can vary significantly. In the 2.6GHz spectrum held by the Netherlands in April 2010, five operators divided 130 MHz of paired spectrum but left nearly 70 MHz of TDD spectrum unsold as it was perceived to be suited only for WiMax. However, in the case of Finland the result was reversed with the TDD spectrum priced at a premium to FDD. The Austrian regulator RTR recently concluded the auction of 140 MHz of paired FDD spectrum and 50 MHz of unpaired TDD spectrum to the four incumbent operators Telkom, Hutchison, T-Mobile, and Orange. The relative prices paid for paired and unpaired spec-trum in Austria was confusing, as Hutchison paid less in total for its 65 MHz of paired and un-paired spectrum than T-Mobile, which only acquired 40 MHz of paired spectrum.


Figure 13: Leading MNOs Planning LTE Deployments in Europe


Sweden Telenor/Tele2 TeliaSonera

2.6 GHz FDD 2010

Norway TeliaSonera 2.6 GHz FDD 2010

Austria Mobikom Austria 2.6 GHz FDD 2010

Poland CenterNet/Mobyland

Aero 2 1.8 GHz FDD 2.5 GHz TDD

2010 2011

France Orange 2.6 GHz FDD 2011

Germany Vodafone

T-Mobile (DT) Telefónica O2

800 MHz FDD 2.6 GHz FDD 2.6 GHz TDD

2011

Italy Telecom Italia, Wind 2.6 GHz FDD 2011-2012

Spain Telefónica Vodafone

2.6 GHz FDD 2011

Czech Republic Telefónica 02 2.6 GHz FDD 2010 Source: Heavy Reading, GSA, and company information Regulators and operators in Europe are also looking to exploit existing or new spectrum alloca-tions in lower bands, including 1800MHz and 800MHz spectrum as the latter is allocated and prospectively becomes available across the region. Regulators are increasingly moving to permit technology neutrality at 900 MHz and 1800 MHz, facilitating LTE operation in traditional bands. In Germany, Vodafone will be the first operator to launch commercial LTE services using 10 MHz of 800MHz FDD spectrum with LTE-only USB modems, initially focusing on "white spots" or 1,000 municipalities where there is inadequate broadband service, and will use other bands to cover the rest of Germany by the end of 2011. Deutsche Telekom/T-Mobile plans to launch commercial LTE services in areas without DSL access in April 2011. Telefónica O2 Germany conducted its first pilot LTE network in Munich using 2.6GHz spectrum and began LTE trial deployments in rural areas using 800MHz "digital dividend" spectrum best suited to cover hard-to-reach areas. O2 will begin commercialization of hybrid LTE FDD/TDD networks in 2011, serving up to 1,500 locations across Germany using LTE FDD for outdoor coverage and LTE TDD for urban capacity. There is considerable LTE trial and deployment activity in the CIS and Central/Eastern Europe. In Eastern European emerging markets, service providers are aiming to leapfrog 3G-UMTS in favor of LTE to deliver residential and commercial broadband services that cannot be supported with substandard fixed infrastructure. There are notable trials in Croatia, the Czech Republic, Greece, Hungary, Lithuania, Russia, Slovakia, and Ukraine. VimpelCom is running LTE trials in Russia, while Yota is struggling to gain regulatory approval to deploy LTE using 2.5GHz spectrum origi-nally licensed for WiMax. MTS VivaCell has launched a commercial test operation of the first LTE network in Armenia. The Central Asian CIS republics have become an unlikely focus of early LTE deployments, with operators vying to conduct trials and launch services to assert LTE leadership in the region. Two live LTE networks are now operating in the main cities of Uzbekistan, while Kazakhstan now has a live LTE trial in the 700MHz band. Pyramid Research has identified Saudi Arabia, the United Arab Emirates, Bahrain, and South Africa as early LTE adopters in the Middle East and Africa, having initiated LTE spectrum auctions and operator network trials. Operators planning commercial LTE deployments in this region include Zain, STC, Mobily, and Etisalat. The Asia/Pacific region is emerging as the fastest-growing and potentially largest market for LTE, especially LTE TDD. Figure 14 summarizes initiatives of the leading operators in the largest and most progressive markets in Asia. We have carefully reviewed the recently published Wireless


Intelligence LTE forecast for the Asia/Pacific region, which predicts that several Asian countries will drive LTE network deployment and mobile broadband services to boost productivity, enhance GDP, and build more efficient, information-based economies. China is expected to lead this re-gional movement and account for nearly half the total number of LTE connections in Asia/Pacific by 2015. In addition to China, the largest and fastest-growing LTE markets in Asia/Pacific will in-clude India, Japan, South Korea, Australia, Malaysia, Singapore, Hong Kong, and Taiwan. Figure 14: Leading MNOs Planning LTE Deployments in Asia/Pacific


Japan

NTT Docomo Emobile (eAccess) Softbank/Willcom

KDDI

2.1 GHz (FDD) 1.5 GHz (FDD) 2.5GHz (TDD)

800 MHz (FDD)

2010 2010 2011 2012

South Korea SK Telecom Not yet allocated 2011

China China Mobile 2.3 GHz (TDD) 2.6 GHz (TDD)

2011

Hong Kong CSL Ltd. PCCW

2.6 GHz (FDD) 2.6 GHz (FDD)

2010 2011

Taiwan Chunghwa Telecom

FarEasTone 2.6 GHz (FDD) 2011

Malaysia Maxis

Celcom DiGi

2.6 GHz (TDD) 2.6 GHz (FDD)

2011

India Reliance Infotel, Qualcomm, Aircel, Bharti Airtel, Tikona,

Augere, MTNL, BSNL 2.3 GHz (TDD) 2011

Australia Telstra Optus

2.6 GHz (FDD) 2.1 GHz (FDD)

2011

Source: Heavy Reading, GSA, and company information After China, Japan is one of the leading markets for LTE activity. The Japanese LTE market leader is currently NTT Docomo, which has been testing LTE since June and commercially launched its "Xi"-branded LTE service initially in Tokyo, Nagoya, and Osaka in December 2010. Docomo is one of the first mobile operators to deploy new multi-mode base stations to support both existing 3G and new LTE FDD services. Docomo is planning to invest ¥3.4 billion ($41 mil-lion) over the next three years to deploy LTE base stations. Docomo will benefit from a first-mover advantage in LTE and plans to gradually expand dual 3G/LTE coverage to additional cities using this deployment method, which layers a 2.1GHz LTE network over its existing mobile network. Docomo's domestic rivals KDDI, SoftBank Mobile, and Emobile (eAccess) are all planning LTE launches in 2011 and 2012, while supporting high-bandwidth mobile services via their HSPA+ networks in the meantime. KDDI is also providing mobile WiMax services via its joint venture, UQ Communications, using 30 MHz in the 2.5GHz spectrum band. UQ has approached the Japanese government for additional spectrum in the 2.5GHz band to offer WiMax 2 services later in 2011. SoftBank recently agreed to acquire Willcom, offering bankruptcy protection for this Japanese provider of XGP next-generation Personal HandyPhone Service. Softbank is reviving the wireless network of bankrupt Willcom with investments from Alcatel-Lucent, Ericsson, Nokia Siemens Networks, Huawei, and ZTE. If successful in gaining court approval, Softbank is expected to use Willcom's national 2.5GHz spectrum license to roll out an LTE TDD network through this new venture, now named Wireless City Planning, to compete with Docomo beginning in 2011.


Both SK Telecom and KT have announced plans to expand their investments in WiBro services in South Korea, and SK Telecom recently updated its plans for LTE trials in Seoul in 2011. The CEO of SK Telecom recently unveiled the company's new strategic direction for 2011, both in Korea and internationally. Although no specific LTE spectrum has been allocated in South Korea, SK Telecom has announced plans to cap its investment in WiBro and launch its initial commercial LTE services in Seoul in 3Q11, with plans to expand coverage to the Seoul metro area and six additional metros in 2012, with nationwide coverage by 2013. SK Telecom has also successfully completed a joint LTE TDD field trial with China Mobile that was initiated in August 2010. The objective of the trial was to verify the functionality and performance of LTE TDD with pre-commercial equipment in a live over-the-air network. The test results have demonstrated that LTE TDD performance meets the industry target, just like LTE FDD technology. SK Telecom is also in talks to invest around US$100 million in LightSquared, the US-based LTE network operator. Significant activity in LTE network development is also anticipated in other leading Asia/Pacific countries, including India, Indonesia, the Philippines, and Vietnam. In these less developed coun-tries, access to high-speed BWA-enabled mobile broadband is expected to facilitate a wide varie-ty of socio-economic benefits that will empower education, improve health services, boost trade, and drive innovation. As regulators begin to award LTE spectrum in these countries, the expan-sion of broadband connectivity across the region is expected to sustain economic development through enhanced levels of productivity. Indian mobile operators collectively paid $14.6 billion for 3G spectrum and $8.3 billion for BWA licenses in spectrum auctions conducted earlier in 2010. As a result of auction bidding, none of the operators was able to secure a nationwide 3G license for 5 MHz of spectrum in the 2.1GHz band, which would have cost $3.7 billion. India's winning bidders have spent billions over the past six months preparing for their 3G service launches through the extensive use of tower sharing, managed network, and professional service agreements. Government-owned operators, BSNL and MTNL, have been offering 3G services since 2009, but Tata Docomo was the first of India's seven private sector licensees to commercially launch its 3G services in late 2010, followed by Vodafone Essar, Aircel, Idea, Bharti Airtel, and Reliance Communications. With more than 600 million mobile subscribers growing at 18 million to 19 million per month, these operators must use 3G and mobile broadband services to secure their position with the rising middle class in urban centers and to boost ARPU among the mass market in small town and rural areas. Following on the heels of widespread 3G network and service launches, six Indian operators will likely turn their attention to deploying BWA networks using their 20 MHz of 2.3GHz spectrum in 2011. As indicated in Figure 15, only Reliance Infotel was able to acquire BWA spectrum in each of India's 22 circles (regions) nationwide, at a cost of $2.74 billion. Reliance Infotel has ambitious plans to offer ultra-high-speed broadband Internet to reach 120 million subscribers in India over the next three to four years. The second BWA license was divided by region among five opera-tors, including 3G licensees Aircel and Airtel, wireless broadband operators Tikona and Augere, and US-based wireless technology leader Qualcomm. In addition to government-owned BSNL and MTNL, only two 3G auction winners, Bharti Airtel and Aircel, also acquired BWA spectrum. While Aircel acquired BWA spectrum licenses in eight circles, Airtel emerged as the highest com-bined auction bidder, securing BWA spectrum in four circles and 3G spectrum in 13 circles. The challenge for India's BWA licensees is to leverage wireless technology to rapidly deliver af-fordable and scalable broadband networks throughout the country. Although the mobile industry is highly advanced and competitive, the broadband market in India is largely undeveloped. With 80 million Internet users in India, only 9 million, or 6 percent of India's population, has broadband connections. The more than 100 ISPs have fallen far short of the government's goal of 20 million broadband users by year-end 2010. India suffers from low computer penetration and the average broadband speed of 256 kbit/s in India is significantly slower and more expensive when com-pared with developed countries. This challenge could be addressed by launching affordable BWA services along with new low-cost tablet computers Reliance has also been reported to be sourc-ing from Taiwan that can be priced at less than $170 (Rs 8,000) with an embedded BWA modem.


With its bid of more than US$1 billion to acquire BWA spectrum in four circles, including Delhi and Mumbai, Qualcomm has succeeded in prioritizing LTE TDD as the technology of choice for im-plementing BWA networks in India. Qualcomm's goal is to attract operator partners into its BWA venture to ensure deployment of a LTE TDD network and then to exit the venture. Qualcomm has already accepted investments from two Indian companies – GTL and Tulip Telecom, Qualcomm's BWA spectrum is likely to be split into two blocks, and Aircel has shown interest in the Mumbai and Kerala circles, while Bharti is interested in the Delhi and Haryana circles. It has become clear that several of the successful bidders are planning to use LTE TDD technology to deploy their BWA mobile broadband networks. As Indian operators complete their 3G launches, Qualcomm and Ericsson have been conducting joint LTE TDD technology demonstrations. Reliance Infotel has also conducted LTE TDD field trials with Ericsson, building confidence in the timely availabili-ty of LTE TDD technology. In addition to Reliance, Aircel and Airtel are likely to deploy LTE TDD technology along with their 3G HSPA+ networks to initiate BWA services in the second half of 2011. Given these trends, India could become the leading testbed for deploying a nationwide LTE TDD network using new multi-mode 3G/4G base stations. Figure 15: LTE TDD Emerging as Technology of Choice for India BWA 2.3 GHz

SERVICE AREA RELIANCE INFOTEL

BWA

BHARTI AIRTEL

3G

BHARTI AIRTEL

BWA AIRCEL LTD 3G

AIRCEL BWA

QUALCOMM BWA

TIKONA BWA

Delhi $502 $743 $502

Mumbai $514 $727 $514

Maharashtra $205 $205

Gujarat $138 $138

Andhra Pradesh $237 $308 $308 $237

Karnataka $346 $354 $346 $354 $0

Tamil Nadu $463 328 328 463

Kolkata $117 $117 $122

Kerala $58 $70 $58

Punjab $74 $74 $72

Haryana $27 $27

Uttar Pradesh (E) $32 $82 $32

Uttar Pradesh (W) $41 $115 $41

Rajasthan $22 $72 $22

Madhya Pradesh $28

West Bengal $16 $28 $28 $16

Himachal Pradesh $5 $8 $5

Bihar $22 $45 $45 $22

Orissa $14 $22 $14

Assam $7 $9 $9 $7

North East $5 $9 $9 $5

Jammu and Kashmir $5 $7 $7 $5

Total in USD (Millions) $2,877 $2,753 $742 $1,455 $770 $1,100 $237 Source: Heavy Reading from India Department of Telecommunications (DoT) telecom


Figure 16: India's BWA Coverage Circles

Source: Heavy Reading from India Department of Telecommunications (DoT) telecom


VI. LTE TDD Business Case for Malaysia According to Pyramid Research, Malaysia is one of the largest and fastest-growing telecom mar-kets in the Asia/Pacific region, due to aggressive investment by operators in broadband over the next five years, spurred in part by the government's plans for a high-speed fixed and mobile broadband networks. As indicated in Figure 17, there are four major mobile operators in this highly competitive mobile market – Maxis, Celcom, DiGi and U Mobile – but none of them has more than 40 percent market share. These mobile operators are making heavy 3G investments to cope with mobile broadband demand, and each will want a return on their 3G network invest-ments before commercially deploying 4G networks. For example, Maxis continues to build out its 3G network, as its monopoly over the Apple iPhone is ending and DiGi will begin selling iPhones at year-end 2010. Maxis and Celcom have both received licenses to conduct LTE field tests, and have initiated trials with technology vendors to gain insight into 4G services. Ultimately any stand-alone LTE system would be integrated into Maxis's extensive HSPA network to provide seamless user experience across LTE and existing 2G/3G/HSPA technologies. The early successful trial of LTE will allow Maxis to gain a better understanding of 4G technology and the value it can deliver to its customers. Figure 17: 3G & WiMax Competition Drive Mobile Broadband in Malaysia

3G MOBILE OPERATORS WIMAX OPERATORS 2.5 GHZ

Maxis REDtone

Celcom YTL Communications

DiGi Packet One

U Mobile Asiaspace Source: Heavy Reading, GSA, and company information The Malaysian government also granted four 2.3GHz-band WiMax licenses in 2007, with a goal to achieve at least 40 percent population coverage with wireless broadband in their license areas. Malaysia is one of the most competitive mobile broadband markets in the world, with two opera-tors deploying nationwide 4G WiMax networks, YTL and Packet One. Packet One has already secured 218,000 subscribers for its WiMax network by the end of 3Q10, and is accelerating the pace to reach 280,000 WiMax subscribers, extending coverage to 45 percent of the Malaysian population by year-end 2010. YTL recently launched 4G service in November 2010 using the "YES" brand, with 65 percent coverage in Malaysia. The other two operators have also launched commercial WiMax services with regional coverage, with REDtone providing fixed and nomadic wireless broadband services primarily in East Malaysia.


The Malaysian Government has recently announced plans to offer nine 20MHz blocks of 2.6GHz spectrum that can be used for any 4G services, including LTE FDD or TDD or WiMax, but which cannot be used until after January 1, 2013. Each of the interested operators have been asked to submit a 4G business case to the Malaysian Communications and Multimedia Commission (MCMC), which is also conducting closed-door consultations with the four mobile operators about re-farming 2G spectrum in the 850MHz, 900MHz, and 1800MHz bands for 3G. One of the original WiMax licensees, Asiaspace, owns 30 MHz of TDD spectrum in the 2.3GHz band originally targeted for WiMax service and 25 MHz of L-Band spectrum for mobile TV broad-casting. Asiaspace recently signed a non-binding memorandum of understanding with Qualcomm to explore future deployment of LTE TDD technology in Malaysia as a strategic alternative. Asia-space is examining the business-case implications of deploying a 4G network with LTE TDD technology interoperable with 3G for Malaysia's mobile operators. Wireless 20/20 developed a preliminary 4G business case for Malaysia at the request of Heavy Reading using the WiROI 4.0 business planning tool. The first scenario for a WiMax network is presented in Figure 18. The business case was developed for a national deployment, offering a range of services for residen-tial and business customers. A parallel case with the same deployment assumptions was devel-oped for LTE TDD. The result of this business case is shown in Figure 19, allowing a comparison between the two technologies for a Malaysian network deployment with similar assumptions. In this example, the time-to-market advantage of WiMax may play out as a disadvantage. This business case forecasts that as the fourth WiMax operator competing in the Malaysian market, Asiaspace would need to deploy 5,000 WiMax base stations for coverage and capacity. It would attract only 1.9 million wireless broadband subscribers over a 10-year period, based on the com-petition with the other WiMax operators that have a head start on the fourth operator entering the market. This would limit the operator's revenue to an estimated $700 million to $800 million, re-sulting in a 44 percent internal rate of return and $240 million in net present value in 10 years. Figure 18: Malaysia 4G Business Case Scenario – WiMax

Source: Heavy Reading and Wireless 20/20


Figure 19 depicts the business case for a comparable LTE TDD deployment. While both systems have similar coverage characteristics, this case assumes there may be some capacity advantage for LTE TDD. Based on these assumptions, the business case estimates that Asiaspace would need only 3,800 LTE base stations to achieve nationwide coverage and the needed capacity growth using the same 30 MHz of 2.3GHz spectrum. As the first Malaysian LTE operator, Asia-space would be able to tap into the existing large cellular mobile subscriber base by partnering with one or more 3G incumbent operators. The only limiting factor is that WiMax currently enjoys a greater diversity and lower cost for wireless modems and mobile broadband devices. This near-term advantage is likely to turn toward LTE TDD after one or two years, as the LTE ecosystem matures and more low-cost hybrid FDD/TDD devices become available. Based on these assump-tions, the WiROI 4G model forecasts Asiaspace can accelerate revenue growth by attracting 3.4 million subscribers through its partnership over 10 years and leveraging the economies of scale to achieve a 71.5 percent internal rate of return and $890 million in net present value in 10 years. Figure 19: Malaysia 4G Business Case Scenario – LTE TDD

Source: Heavy Reading and Wireless 20/20 On the basis of this comparative business case, we conclude that 2011 will be a transitional year for WiMax operators that have not already established a large installed base of wireless broad-band subscribers. Any newly licensed operators may choose to leverage the rapidly maturing LTE TDD ecosystem, and those early in their network deployment process may find it economi-cally attractive and viable to migrate to an LTE TDD network. This is especially true if they select a vendor whose base stations are flexible and can cost-effectively transition from WiMax to LTE TDD. This would allow operators to take advantage of any near-term device cost advantages for a WiMax deployment and the long-term advantage of aligning with mobile operators on LTE TDD. This analysis will vary from market to market, depending on market and competitive factors.


VII. LTE Operator Deployment & Subscriber Forecast Global standardization and regulation, led by industry organizations, vendors, and regulators, has resulted in the nearly global adoption of two distinct and well-defined unpaired bands for LTE TDD, namely the 2.3GHz and 2.6GHz bands. The industrialization of LTE TDD advancing side by side with LTE FDD and the rapid development of the LTE TDD ecosystem are also driving the global wave of TDD spectrum allocation and auctions around the world. Global interest in adop-tion of LTE TDD technology is growing due to the scarcity and high price of available spectrum in existing paired bands. Unpaired bands compatible with LTE TDD are becoming available for new or existing mobile operators looking for new spectrum resources. Figure 20 identifies the opera-tors with TDD spectrum in the 2.3GHz and/or 2.6GHz bands suitable for LTE in 22 countries across the six major regions worldwide. Figure 20: LTE TDD Trials Planned in 2011-12 Using 2.3GHz & 2.6GHz TDD Bands

REGION COUNTRIES 2.3 GHZ 2.5/2.6 GHZ OPERATORS

Asia/Pacific

China 50 MHz 50 MHz China Mobile

Hong Kong 90 MHz 50 MHz China Mobile – Peoples

Taiwan – 90 MHz FarEasTone, Chunghwa Telecom

Korea 90 MHz 70 MHz (TBC) SK Telecom

Japan – 95 MHz Softbank/Willcom

India 40 MHz 20 MHz Reliance Infotel, Qualcomm, BSNL, Aircel, Bharti Airtel, Tikona, Augere, MTNL

Vietnam 100 MHz >20 MHz VNPT Group, Viettel, FPT Telecom, CMC and VTC

Malaysia 100 MHz 60 MHz Asiaspace

Singapore 50 MHz 184 MHz SingTel, StarHub, MobileOne

Australia 100 MHz Planning Vividwireless

New Zealand 70 MHz 65 MHz Woosh and Kordia

Western Europe

Germany – 50 MHz Telefónica 02

Finland – 50 MHz Pirkanmaan Verkko Oy

Norway – 50 MHz 40 MHz Everest Wireless Partners, Telenor

Sweden – 50 MHz 3 Sweden

Eastern Europe/CIS

Poland 50 MHz Aero2

Russia 20-40 MHz Yota – Scartel

Middle East/ Africa

Saudi Arabia 50 MHz Zain, STC, Mobily

UAE 50 MHz Etisalat

Bahrain 50 MHz Zain

North America US – 50 MHz Clearwire/Sprint

Latin America Brazil – 50 MHz Telefónica Movistar Source: Heavy Reading and Pyramid Research This analysis demonstrates the potential for significant LTE subscriber growth from 2011-2015, driven by operators with TDD spectrum in Asia/Pacific markets, including China, India, Japan, Korea, and Malaysia. Additional subscriber growth should occur as leading 4G operators transi-


tion their existing WiMax networks to LTE TDD over the next two years. We also expect to see hybrid LTE FDD/TDD network development in Europe, Eastern Europe/CIS, and the Middle East/ Africa beginning in 2012. This movement will benefit from the deployment of new multi-mode base stations and mobile broadband devices supporting both LTE FDD and TDD. Pyramid Research recently compiled its year-end 2010 4G Subscriber Market Forecast covering both WiMax and LTE growth in more than 100 countries through 2015. This forecast is summa-rized in Figure 21. The figure shows that total WiMax subscribership will grow from 13 million at year-end 2010 to more than 22 million in 2011, and to more than 65 million in 2015. Over the same period, LTE subscribership is forecast to grow from 18 million in 2011 to 422 million in 2015. In the effort to segment the Pyramid Research LTE subscriber forecast by FDD and TDD, Heavy Reading applied a market-share percentage based on its analysis of the operators in 22 countries identified in Figure 20. This methodology yielded the following results:

• Global LTE FDD subscribership is forecast to grow from 12 million in 2011 to more than 264 million in 2015, driven largely by operators in Western Europe, Japan and the US.

• Global LTE TDD subscribership is forecast to grow from 6 million in 2011 to nearly 158 million in 2015, based on commercial service from leading operators in Asia/Pacific and North America, including China, India, Korea, Japan, Malaysia, Australia, and the US.

Figure 21: LTE Subscriber Market Forecast 2010-2015

Source: Pyramid Research and Heavy Reading

Ltetdd Wp Phase2 Final v3

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