LTE Rollout Not Economically Viable Until 2015

Users hoping for faster mobile broadband connections are going to be disappointed after analyst house Informa Telecoms & Media warned that it would not be economically viable to upgrade the UK’s mobile broadband network to LTE (Long Term Evolution) until 2015.

Informa said that due to the dense deployment needed to meet coverage requirements in the UK, HSPA networks will be able to handle current and future traffic demands in the medium-term.

And it said that it does not expect traffic congestion to start appearing until 2013 and even then only in certain hotspot areas.

Not Economically Viable

“As such, large-scale LTE deployments do not offer an economically viable solution to meet traffic demand, unless user behaviour changes significantly, putting additional strain on mobile broadband networks,” said the analyst house.

“UK mobile broadband operators are faced with fierce competition while margins from voice are shrinking,” said Dimitris Mavrakis, a senior analyst for Informa. “Even though there is growing demand for mobile data by smartphones and USB modems, current UK mobile network deployments are so dense that it would make the introduction of LTE both an investment heavy and somewhat unjustifiable decision.”

“By upgrading current HSPA networks, UK mobile operators will be able to meet traffic demands and alleviate capacity constraints until 2015, after which the upgrade to LTE may be justifiable since economies of scale for hardware will have reduced infrastructure costs,” he added. “Plus, a complete LTE ecosystem will be established, including handsets and portable devices”.

Mobile Data Overload

However many experts are concerned at what they see as data overload on mobile phone networks caused by the increasing use of smartphones. Indeed, most mobile operators in the UK have already dropped their “unlimited data plans”.

And user dissatisfaction with dongels was highlighted in June when mobile broadband price comparison site, Broadband Expert, said there had been a 57 percent drop in the number of people it helped sign up for mobile broadband in the last twelve months. Moreover, it said sales had crashed by over 50 percent year-on-year.

Informa has estimated that a new LTE deployment will cost an additional $58 million (£36 million) compared to upgrading existing networks, assuming that the LTE deployment begins during 2013.

LTE Deployments

Elsewhere in the world, Scandinavian mobile operator TeliaSonera already has two LTE networks in Oslo and Stockholm. Meanwhile in the UK, O2 said in December last year that it had tested LTE in Slough in partnership with Huawei. In the US, Clearwire began a LTE trial in Arizona back in August.

Informa’s LTE predictions clashed somewhat with that of Juniper Research, which in August said that LTE or WiMAX would start to make their presence felt in 2012.

Juniper said that LTE’s main markets would be the developed nations of North America, Western Europe, the Far East and China, which together will account for 90 percent of the market by 2015.

But earlier in the year, Dell’Oro Group warned that LTE was being hampered because mobile operators are still dealing with the costs of upgrading their 2G networks to 3G.

Ofcom meanwhile continues to examine how it can free up valuable spectrum in the UK, and has recently announced a consultation about how a new form of wireless communication called “white space technology” will work in practice.