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Long Term Evolution (LTE) is a key buzz word in the mobile networks sector, but little has been written

about the opportunities and challenges that are brought forward by this new technology. This paper aims

to provide a snapshot of the likely changes it will bring to telecom operators and the mobile internet

service providers businesses. The paper shall also look at the adoption of LTE network worldwide via the

growth of 3G subscriber base from now until 2013. Asia Pacific seems to lead this growth with India and

China expected to be the major contributors. This paper also draws attention to two case studies, that of

TeliaSonera and Verizon Wireless of their successful deployment of the LTE network. The paper shall also

define LTE, in comparison to WiMAX.

LTE Business Readiness


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ContentsLTE global outlook and forecast Page 3

Case studies: Assessment of LTE success globally Page 17

What is LTE? Page 3

TeliaSonera: How dierent is the usage of LTE from 3G Page 17

LTE adoption & its challenges Page 13

Who are the early adopters of LTE? Page 6

Mobile data trac by devices Page 17

So how is it dierent from WiMAX? Page 3

Verizon Wireless: Leveraging on the dynamic eco-system of LTE Page 20

Forecast data for number of 3G subscribers by region Page 16

Ingredients to increase ARPU Opportunity for Network Operators Page 7

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LTE Global Outlook and Forecast

So how is it differentfrom WiMAX ?

Mobile Networks continue to grow at an exciting pace. There are 6 billion mobile phone subscriptions

in the world, with 1.2 billion of them using mobile internet. Today, one in five mobile phone subscribers

have access to fast mobile internet service (3G or better). Consumer demands for advanced services and

more connected lifestyles is pushing the mobile telecom industry to come up with technical solutions that

enable network operators to meet this demand of consumers. Working on the same lines, 3rd Generation

Partnership Project (3GPP) came up with a standard called Long Term Evolution (LTE).

What is LTE ?Simply put, LTE is just another way to give enhanced data speed and new services to consumers. LTE

does this by creating a new radio access network named Evolved UMTS Terrestrial Radio

Access Network (E-UTRAN), which supports all IP-based traffic. LTE has a new packet

core network called System Evolution (SAE), which will support E-UTRAN. Together,

these two will help network operators improve end-user throughputs, sector capacity,

reduce user plane latency and better multipath, mobility and power performance.

3GPP has set aggressive performance targets for LTE. It is relying on technologies like

Multiple-Input Multiple-Output system (MIMO), Orthogonal Frequency Division

Multiplexing (OFDM) & smart antennas to achieve these targets. One of the main

objectives of LTE is to minimize complexities in existing system infrastructure

and offer operators a simple upgrade path from current 3G networks.

LTE is developed by 3GPP, while WiMAX is a product of IEEE. LTE

and WiMAX, though are different technological standards,

yet posses many similarities. One cannot call them siblings,

but calling them blood-related would not be too wrong.


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- Regional LTE Product Line Manager at Alcatel-Lucent (Malaysia)

LTE will help telecom operators to give better data

usage experience to customers. In HSPA+ you have aspeed of maximum 42Mbit/sec per cell to be shared

by all subscribers connected to that cell but LTE gives

maximum of 300Mbit/sec per cell

Here is a brief comparison between two:

Speed:

LTE can achieve 300 Mbit/s on downlink & 75

Mbit/s on uplink. Whereas, WiMAX can give 128

Mbit/s on downlink & 56 Mbit/s on uplink.

Latency:

There is a good difference between latency of

these two technologies. Latency rate for LTE is

10ms while for WiMAX it is 50ms. Low latency

rate is important for real-time multimedia

services like online gaming & conferences as the

signal must arrive at the destination as soon as

possible

Roaming:

LTE provides roaming on all 3GPP networks.

However, roaming is not very easy to achieve

through WiMAX. This point is important for

network operators as International roaming

contributes substantially to their revenues

and also provides convenience to their

consumers.

SIM Card:

LTE, like GSM requires SIM card to operate.

WiMAX does not require a SIM card. Looking

at the popularity of GSM networks, it sure is a

disadvantage for WiMAX.

Power Consumption:

LTE uses SC-FDMA modulation in uplink

channels, hence requires less power than

WiMAX. This results in longer battery time of

mobile device for LTE.

LTE WIMAXSpeed

Latency

Modulation

MIMO

FDD/TDD

Mobility

300 Mbit/s Downlink75 Mbit/s Uplink

10ms

OFDMA (downlink)SC-FDMA (uplink)

Yes

FDD for full duplex on two 5 MHz channels

Operates with a target up to 350 km/h

128 Mbit/s Downlink56 Mbit/s Uplink

50ms

OFDMA (downlink)OFDMA (uplink)

Yes

TDD for half duplex on one 10 MHz channels

Operates with a target up to 120 km/h


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Worldwide LTE adoption(chosen countries)

Who are the early adopters of LTE ?

Norway - TeliaSoneraPoland - Mobyland and CenterNet

Austria - Mobilkom AustriaSweden - TeliaSonera

USA - MetroPCS

Source: Solidiance Analysis

Armenia - Vivacell-MTS

Singapore - M1Saudi Arabia - Zain

Singapore - SingTel

Philippines - Smart Communications

Saudi Arabia - STC

Saudi Arabia - Mobily

Uzbekistan - MTS

Uzbekistan - UCell

Hong Kong - CSL

India - Bharti Aritel

Srilanka - Dialog Axiata

Japan - NTT DoCoMo

Korea - SK Telecom

Korea - LG Uplus

Launched Dec 15 2009Launched Sept 7 2010

Launched Oct 19 2010Launched Dec 15 2009

Launched Sept 21 2010

Launched Dec 20 2010

Launched Jun 20 2011Launched Sept 21 2011


Launched Apr 16 2011



Launched Jul 28 2010

Launched Aug 2010

Launched Nov 25 2010

Launched Apr 10 2012

Launched May 7 2011


Launched Jul 1 2011

Launched Jul 1 2011

TeliaSonera was the first operator to launch commercial LTE service in the two Scandinavian countries

Norway & Sweden. 15 new operators were added to this list in 2010, 31 in 2011 and other 9 launched LTE

services in the beginning of 2012. LTE is fast becoming a global standard and Asian operators are certainly

not going to watch the party from outside, CSL Hong Kong and NTT Docomo have already launched their

LTE services. Middle Eastern operator are also picking up pace in launching LTE.


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Computing Device Sales 2011

Smart Device boom:

Non-PC devices are replacing PC devices at a fast rate. Consumers want everything to be mobile as

manufacturers are providing them with devices that can handle high amount of data transfer while

they are on a move. Devices like iPhone and Blackberry are already a phenomenon in major Asian

cities like Singapore and Jakarta which implies that users are tech savvy and will be willing to adopt LTE

devices in future

Ingredients to increase ARPU Opportunity for

Network Operators

- LTE Project Manager, ZTE (Hong Kong)

LTE is the new GSM, it is the sort of standard we were

waiting for. It is technologically advance and much

more stable than WiMAX, it provides similar mobility

as GSM and enables quick updates to its system

46%Smartphones

Laptops

Desktops

Tablets

Netbooks

25%

18%

6%

5%Source: Solidiance Analysis


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Usage of mobile devices as a primary internet device is also increasing in Asia. 44% of mobile web users

in Indonesia never use internet on desktop PCs. Other prominent countries in this category are India,

Thailand and China. Users are opting for either smart phones or laptops/net books to meet their web

needs.

70%Egypt

59%India

57%South Africa

55%Ghana

54%Kenya

50%Nigeria

44%Indonesia

32%Thailand

30%China

25%USA

Percentage of mobile Web users who never or infrequently use the desktop Web (2011)



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Source:Portio Research

Cloud computing & Software as a Service:

It is already becoming the talk of the town as network hosted information and applications allow

subscribers to upload and download data at ease from anywhere. Network operators can build an eco-

system around this and use software as a Service.

Leveraging on Web 2.0:

LTE allows network operators to leverage on the applications and services provided by web 2.0 to serve

their consumers with personalized products.

Automatic initiation of Multiple, simultaneous sessions:

Mobile browsers can initiate multiple, simultaneous connections from the device, to the network, to

download security updates, refresh local mini-databases, and enable applications. This gives more

control to networks to personalize content for users.

Data usage on a high in Asian markets

Data is fast replacing voice and SMS as the major contributor to ARPU for network operators in Asia.

Market is led by Philippines and Japan, closely followed by Korea and Singapore. So, there is a fast

growing need in Asian markets for enhanced data speed and new services.

Top five operators in the world by proportion ofrevenues derived from data (2011)

Smart Philippines

Philippines

Japan

Japan

Japan

Globe

SoftBank

NTT Docomo

KDDI


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- Praneet Mehrotra - Prinicipal, Solidiance Asia Pacic

With the inception of 3G, India is witnessing a change in

the telecom spectrum and LTE would be a logical nextstep for the market. Local Indian handset manufacturers

along with a wide array of mobile software companies

would give LTE a perfect platform to launch

Usage of mobile devices as a primary internet device is also increasing in Asia. 44% of mobile web users

in Indonesia never use internet on desktop PCs. Other prominent countries in this category are India,

Thailand and China. Users are opting for either smart phones or laptops/net books to meet their web

needs.

32.6%

42.1% 37.9

%

46.3%

34.6%

19.1

%

20

%

34.1%

33.7% 32.2

% 27.4%

31.5%

41.1%38.3

%29.1%

Japan

Pakistan India

Korea China

Mobile Internet time at home

Mobile Internet time at Work

Mobile Internet time on the go

Source: ITU

Percentage of mobileinternet usage in some

Asian countries (2011)


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Mobile behaviour in Japan, United States and EU5 (UK, Germany, France,

Spain & Italy) - 2010. Percent of total mobile audience (Age 13+)


Source: Portio Research

A comparison of mobile usage behaviour amongst Japan, US and 5 European countries reveal that

Japanese users at an average use more data services than users of any other country used in this

comparison. Japan has always been a benchmark in mobile technology in Asia and like Japan, if other

Asian countries start to provide high data speed to customers, their ARPU from data would substantially

rise.

Japan USA EuropeUsed Browser

Used Applications

Instant Messaging

Email

Retail Site

Classifieds

Travel Service

Maps

Traffic reports

Weather news

Bank Accounts

Financial News

Social networkingor blog

Watched TV and/orvideo

Played Games

Accessed social media/entertainment

Accessed Financial Services

Accessed Retail/Travel/Weather

59.3%

42.3%

3.3%

54.0%

7.2%

4.2%

3.3%

15.7%

12.6%

34.1%

8%

16.1%

17.0%

22.0%

16.3%

59.3%

42.3%

3.3%

54.0%

5.5%

6.6%

4.7%

16.0%

8.2%

22.3%

9.4%

10.0%

21.4%

4.8%

22.5%

59.3%

42.3%

3.3%

54.0%

4.1%

4.2%

4.1%

10.8%

5.9%

13.7%

7.1%

7.2%

14.7%

5.4%

24.1%

Cost per Mb on LTE is much lower for telecom operator as

compared to WiMax or 3G


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Spectrum Harmonization:

One of the key benefits of GSM networks has been seamless roaming across countries

and continents, largely because of harmonized spectrum spanning large parts of the

world. LTE infrastructure is being designed to operate in different spectrum bands

of different sizes, however, ranging from 1.25 MHz to 20 MHz. To truly support

seamless global roaming, harmonized spectrum will be needed otherwise the

burden is shifted to terminals e.g., handsets or mobile devices to support

multiple frequency bands, which adds time, expense, complexity and

inefficiency to the equation.

In US, 700 MHz band has already been auctioned for LTE. However,

European countries are trying to free 800 MHz band for LTE. One other

option is 2.6 GHz band and it can serve as harmonized spectrum.

However, there are a couple of important attributes to the 2.6 GHz

frequency band. First, relatively poor propagation characteristics

will significantly impact indoor coverage, an issue already quite

visible in the 3G HSPA networks deployed in the 2.1 GHz band.

Second, poor propagation characteristics also translate

into smaller cell radius, hence the need for more cells,

which adds expense and complexity. Lastly and most

importantly, frequency has a direct impact on network

costs, as both op-ex and cap-ex increase significantly

with higher frequency.

LTE adoption & its challenges


In Asia, most probably we will use 2.6 GHz band. It has its advantages and

disadvantages, on the up-side governments will have a wider bandwidth to

offer to operators as compared to 800MHz or 900MHz band so operators

can make use of full capacity of LTE. However, a higher frequency means

poor coverage, so operators will have to invest more in cell sites


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Voice over LTE:

In LTE, most of the standardization work has

been focused on the data aspects and voice has

been somewhat neglected. Different operators

are giving different priority to this issue; in fact,

some of the early adopters are looking at data-

only services for their initial LTE network rollouts.

Clearly, the full op-ex and cap-ex benefits of LTE

can only be realized when all traffic types are

carried over a single, unified core. The issue of

standardization of voice over LTE gets even more

complicated when we bring into the mix the

interlocking of LTE with different types of legacy

networks including GSM, HSPA, CDMA2000,

WiMAX and Wi-Fi.

Devices & Terminals:

One of the key aspects to look into is the availability

of devices for LTE. When will they be available?

How would they look like? Would they support

other technologies (GSM, CDMA,

3G) as well? Network operators

might start their service with data

cards and dongles but the advent of

LTE smartphone will change the whole

landscape of LTE adoption.

Many carriers are not rolling out LTE

nationwide in their domains so for an LTE

device to have the ability to drop back to

another technology network is also a must.

LTE devices need to support Multiple Input/

Multiple Output (MIMO) in order to deliver

high data rates but this directly increases a

devices complexity. One of the interesting

things to watch will be whether the initial

devices will support only 2x2 MIMO or

whether some vendors will launch devices

supporting 4x4 MIMO from the start. This

choice is directly related to battery life, and

while data cards and dongles might get

enough juice from their hosting laptops and

netbooks but smart phone designers have

critical design challenges in front of them in

terms of balancing battery life with MIMO

support.

Consumers expectation management:

Consumers have traditionally been paying

little amount of money for their data plans

as many operators have followed the flat

rate business model. It is yet to be seen how

network operators will be able to charge

premium prices to customer for LTE usage.

AT&T in US claims that iPhone drives 30

times more traffic than average feature

phones but looking at ARPU we find iPhone


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users are not even paying 3 times more than an

average feature phone user.

Co-existence of 2G, 3G and LTE networks:

Network operators can not shut down their

existing networks as they have a huge subscriber

base on legacy networks. The challenge is how to

manage multiple networks? Operators currently

enjoy significant roaming revenues from their

GSM networks. Parting from this high margin

revenue stream is not going to be easy. The issue

also ties to spectrum re-farming, which is

expensive. Switching off GSM networks would

enable operators to re-farm that spectrum,

but there are many strict regulations around

this spectrum in different countries including

complete nationwide coverage requirements.

Alternatively, operators might consider

keeping their 2G networks going for a while

and switch off their 3G networks first and

migrate those 3G users to LTE.

Asia Pascific 40%

19%

10%

10%

9%

7%

5%

Western Europe

US & Canada

Latin America

Eastern Europe

Africa

Middle East

Forecast data for number of 3Gsubscribers by region

Asia Pacific will lead the growth in 3G subscriber base in coming years. India and China will be the

major contributors.

Projected number of 3G subscribers 2013



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Source:Solidiance Analysis

97%92%

82%

73%

71%

69%

58%

56%

Japan

Singapore

South Korea

Portugal

Australia

Sweden

Canada

USA

Top countries - 3G Penetration 2011

- ex-Network Strategist , Telia Sonera Sweden

Subscriber response has been really good for LTE services. It is not a

cheap service but it sure does help network operators to catch the

top-tier or the most profitable group of customers. LTE will remain to

be seen as a premium service and customers will be willing to pay high

price for it at least for 2 more years


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1500000

2009 Laptops & other Mobile-Ready Portables

Smartphones

Home Gateways

Non-Smartphones

2010

2011

2012

2013

3000000

Case Study: TeliaSonera How different is the usage of LTE from 3G?

TeliaSonera was the first operator in the world to deploy LTE, and launched LTE

services commercially to customers in Norway and Sweden on 15 December 2009.

A survey conducted by TeliaSonera on its customers habits on their first 100

days of using LTE showed a marked difference in the usage patterns and data

consumptions of LTE users, compared to 3G users. The average smartphone

user consumes about 375 MB of data a month, but users of LTE consume 15

GB a month. This is equivalent to the amount consumed by the typical

wired broadband user, which is 14.9 GB a month according to Cisco.

TeliaSoneras LTE users have been taking advantage of the enhanced

speed of LTE, which is ten times the speed of a typical 3G connection.

A survey of the networks LTE users found

54 percent would not consider returning to 3G at present

46 percent surf the web more frequently when away

from home

26 percent say they are working more on a mobile

basis

23 percent say they are downloading larger files to

a greater extent than previously

Mobile data traffic by devices

Case study: Assessment of LTE success globally


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16 percent say they began surfing more after the introduction of LTE

23 percent say they watch more online TV

28 percent listen to more Web radio and music services like Spotify

12 percent have increased their online gaming frequency

According to TeliaSoneras CTO of mobility services, Lars Klasson, streaming video is a

significant contributor to the new traffic on the network as more people are using the fast LTE

connection to watch streamed TV channels, with some even using their laptops at home as a

second TV

The rapid overall growth in demand for data has led to a surge in TeliaSoneras mobile data revenues

in the Nordic region, leading to an increase in 2010 Q4 profits by 8 per cent to US$818m

TeliaSonera LTE Pricing and Availability

After an initial grace period where TeliaSonera charged a nominal fee of US$0.56 a month for

unlimited access to stimulate interest and adoption. TeliaSonera has now introduced a three-tiered

pricing plan in Sweden .

Initially, only Samsung LTE dongles were available for accessing the network, but TeliaSonera and

Samsung have recently launched a laptop with a 4G modem, which is also backward compatible

TeliaSonera and Spotify

In 2009, TeliaSonera signed an exclusive 2-year agreement with Spotify, a Swedish music streaming

service. A study by Informa Telecoms & Media, utilizing real data from TeliaSonera and Spotify,

estimated that an operator in Western Europe with 20 million customers could potentially generate

US$106.3 million of revenues from partnering with a music streaming service. This is on top of other

benefits such as reduced churn, increased ARPU, brand awareness and increased lifetime customer

value. Spotify has helped TeliaSonera to differentiate itself from its competitors, as over half of

Spotify/TeliaSonera customers said that they were more likely to stay with Telia as a result of the

partnership with Spotify). The partnership allows Telia to leverage on Spotifys strong brand presence,

especially with those under 30, and effectively tackle the challenge of targeting young subscribers.

Source: Light Reading, TeliaSonera

Price(per month)

Name ofPlan

Bandwidth Fair UsageLimitation

Mobile BroadbandTotal 4G

Mobile BroadbandStor (Large)

Mobile BroadbandMellan (Medium)

US$92

US$56

US$46

10 to 80 Mbps

10 to 20 Mbps

5 to 10 Mbps

30 GB

20 GB

10 GB


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Case Study: Verizon Wireless

LTE and its dynamic eco-system

Verizon has long been known for

its walled garden approach, but is

abandoning this model in the face of 4G.

As noted by Lowell McAdam, president

and COO of Verizon, collaboration

and openness are the new paradigm in

the wireless industry, and innovations in

applications and use are increasingly coming

from beyond the company. In response to this,

Verizon plans to transform its business model

by opening its network, applications and location

technologies to outside developers

The International Consumer Electronics Show (CES)

in January 2011 saw Verizon announcing a slew of

new partnerships to add to its value added services offerings for its LTE customers. Slacker Radio, an

Internet radio service, announced that an optimized application for the Verizon Wireless 4G LTE Mobile

Broadband network will be available on select 4G smartphones. It will provide Verizon Wireless 4G

LTE customers with high-fidelity audio and high-resolution album art in addition to artist profiles and

album review, making for a highly personalized music experience. Users will also be able to cache their

favourite stations for offline playback. Other music streaming services such as Rhapsody, MOG and

Tune Wiki also announced the release of exclusive mobile applications on the Verizon Wireless 4G LTE

network, creating a plethora of choices for Verizon LTE users

Verizon Wireless 4G LTE customers will also have the ability to watch their home TV on their 4G

smartphones through a monthly subscription to Sling Media, which will include the Slingbox, theSlingPlayer application and networking accessories. The significantly faster connection and reduced

latency of the 4G LTE network will enable subscribers to enjoy a higher video quality. The on-demand

premium mobile TV and movie service BitBop also announced at CES that it would be available to

Verizon Wireless customers on both the 3G and 4G LTE Mobile Broadband networks, with additional

functionality for 4G LTE customers in the form of higher-quality video streams and downloads

Mobile gaming will also get a boost, with Gameloft stating at CES that Lets Golf! 2 will be available on


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certain 4G smartphones on the Verizon 4G LTE network. The game is Gamelofts first high-definition

game that can be played over the LTE network, featuring multiplayer capabilities that can be accessed

without a Wi-Fi connection

Another value added service offered by Verizon Wireless comes from its partnership with 4Home

Connected Solutions, enabling customers to monitor and control their homes and energy consumption

remotely using select smartphones. The 4G LTE network ensures that customers can enjoy faster

response times and real-time, high quality video streaming. This service taps into a growing demand

for mobile and online home monitoring applications, with a survey by Parks Associates revealing that

50% of survey respondents were interested in an online application for energy management

Verizon and Skype

Verizon Wireless is also building on its partnership with Skype (first announced in February 2010)

by enabling customers to make Skype-to-Skype video calls on its 4G LTE network. Skype mobile will

be deeply integrated into a range of 4G smartphones with front- and rear-facing cameras,

and these smartphones will be made available by mid-2011. Skype mobile on the 4G LTE

network offers an enhanced user experience due to the low latency of the network, and

also meets a growing demand for mobile video calling.


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Solidiance is a dedicated B2B marketing and growth strategy and g consultancy firm

focused on the Asia Pacific Region.

What We Do

We help multinational clients understand the Asian market landscape by profiling industries

and competition, sizing the markets, segmenting customers, analyzing distribution channels,

determining the best locations, preparing investment feasibility studies, identifying suppliers,

reviewing potential joint ventures or acquisitions, and delivering market entry and growth strategy

in Asia.

What Were Focusing On

Our industry experience is centered on industrial applications, green buildings, cleantech, technology,

and healthcare. Our Asian market entry and growth strategy services provide the required insights

and the necessary roadmap to capture a profitable market share in the region.

Specialties

Asia marketing & competitive strategy, Asia innovation consulting, Asia market intelligence, Vietnam

market research, Indonesia market research, Asia market entry & growth strategy, Asia B2B research,

Asia pricing & distribution strategy, Asia M&A due dilligence.

Additional Details

Solidiance has offices in China, India, Indonesia, Malaysia, Singapore, Thailand and Vietnam. We are

fast expanding and always on the lookout for exceptional people.

OurClients

About Solidiance


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