LTE Networks Promise Massive Financial Returns

New research has predicted the likely financial returns for mobile operators in the United States deploying 4G LTE networks.

And the conclusion is that the costly investment will be worth every penny.

4G Returns

In the US, Verizon Wireless, AT&T and other leading mobile operators have been racing to expand their Long Term Evolution (LTE) networks, in an investment that a new Juniper Research report says will heartily pay off down the line.

By 2017, Juniper expects 4G LTE service revenues to exceed $340 billion (£219bn), representing 31 percent of total service revenues from all mobile services – 4G, 3G and 2G. By contrast, 2013 LTE revenues are expected to total just over $75 billion (£48bn).

With 4G subscriptions on the rise over the last 12 months, Juniper believes that by 2015, consumer subscriptions will exceed those of the enterprise segment, which currently dominates. Still, despite their growing numbers, consumers will only account for less than 50 percent of the operators’ total revenues.

But with the increased penetration of LTE services and capable smartphones and connected devices, the operators will need to “develop clear pricing strategies to transition customers,” advised Juniper.

“Overall, they will have to present customers with innovative services that will meet users’ requirements and, crucially, that users will attach value to,” report author Nitin Bhas said in a Feb. 13 statement. “Operators will have to review their tariff structures to balance the need to monetise the greatly increased data throughput, yet still offer attractive packages.”

In the US, Verizon and AT&T have shifted their focus to plans that focus on buckets of high-speed data that multiple devices can sip from. Verizon currently offers LTE in 475 cities. AT&T, which also has an Evolved High Speed Packet Access (HSPA+) 4G network, now offers 4G LTE in 141 markets. Sprint originally pushed out a 4G WiMax nework, but now has LTE in 58 markets, with more than 100 more scheduled to come online in the “coming months.”

T-Mobile is coming late to LTE, but by 2014, it says its network will cover more than 200 million people. (Verizon currently covers nearly 274 million people; by year-end 2014, AT&T plans to cover 300 million.)

Frank Sickinger, T-Mobile’s senior vice president of B2B services, said that its timing is nonetheless “perfect,” CIO magazine reported 13 February. He told the publication that while early LTE adopters misfired a lot because of a lack of options, T-Mobile will be able to go out with “proven but still bleeding-edge equipment.”

Large Footprints

“It’s not just about having LTE, it’s about building a massive LTE footprint,” Sickinger added, according to the report. “We already have sites that are lit up with LTE. But for us, it’s about having the entire network modernised [ahead of launch].”

Having a footprint means also having spectrum, and all the major carriers have been manoeuvring to buy up what they can or else merge to increase their shares.

According to Juniper, spectrum’s “twin issues” – availability and cost – are critical determinants in how quickly carriers around the world are rolling out LTE.

“LTE can represent a substantial investment that will take several years to recoup,” said the report. “This is, however, critical, bearing in mind that at the outset only a comparatively small number of subscribers will be LTE-capable.”

Carriers in North America, China and the Far East, it added, will account for the “vast majority,” or 70 percent of the revenues LTE generates.

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Originally published on eWeek.