|
Mobile & Wireless
LTE comes out of the lab
Incorporating IMS accelerates deployment schedules and new applications
by Michael Kennedy
The majority of the worldwide mobile operators have reached a consensus that LTE (Long Term Evolution) will be their 4G wireless standard — yet widespread commercial deployments seem to be off in the distant future.
My discussions with vendors at the recent CTIA trade show in Las Vegas, however, indicate that initial deployments will begin within a year and that 2011 will see large-scale commercial deployment. This accelerated deployment schedule appears to be due to the use of IP Multimedia Subsystem (IMS), an architectural framework that enables modular development by multiple systems vendors, and LTE’s use of TCP/IP which leverages many existing hardware and software systems. On the demand side LTE addresses many mobile operator business issues.
Mobile services revenues continue to grow much more rapidly than wireline services. AT&T’s wireless services revenue, for example, grew 13 percent last year while its wireline revenues were down 3 percent. However, wireless subscriber additions are slowing down due to market maturity — AT&T postpaid customers increased by 9 percent last year. Mobile operators must turn to a combination of increasing revenue from existing customers, finding new revenue sources and decreasing costs to sustain profitability growth. LTE is a tool that can be used to implement all three strategies.
LTE can be used by mobile operators to increase revenue from existing customers through its use of TCP/IP, its more efficient use of existing spectrum, and its support for multiple frequency bands. The combination of TCP/IP and broadband service gateways makes it easy to extend service coverage across multiple networks including other mobile networks, Wi-Fi and even wireline networks. This helps resolve the wireless coverage issue that is still a problem in many places in the U.S.
LTE offers substantial improvements in data communications bandwidth. Target peak data rates are 100 Mbps on the downlink and 50 Mbps on the uplink. This makes it feasible to offer new services to existing customers such as High Definition Video. Finally, the pervasive use of TCP/IP lets wireless users tap into a wide variety of existing applications including gaming, presence and location based-services, collaboration, and Machine-to-Machine (M2M) communications.
LTE reduces cost through its use of converged IP infrastructure. Earlier wireless technologies employ TDM-based technologies for voice and IP for data. Convergence itself reduces cost by combining all traffic as IP. This reduces the number of network elements, ports and network links by nearly 50 percent. Network convergence also increases port sizes by consolidating traffic onto common ports. This further reduces cost because large ports have lower unit costs ($/Gbps) than smaller ports. The rule of thumb is that a ten time increase in bandwidth results in a three time increase in cost. Also, Ethernet switches, IP routers, and softswitches are much less costly to build and operate than are circuit switches and digital cross connect systems.
Mobile backhaul is one area where cost reductions are particularly attractive. Substituting IP/Ethernet-based solutions for TDM (especially T1 lines) can reduce wireless backhaul costs. A wide-range of vendors offer such solutions. Though IP/Ethernet also makes sense for 3G systems it is made even more attractive by LTE’s use of a converged IP network.
LTE’s use of converged TCP/IP technology also makes it easier to create business models where revenue is generated from non-subscriber sources such as advertising, content delivery, financial services, and business services tie-ins. Cable television pioneered this business model when it began developing programming such as HBO, ESPN, CNN and MTV as a means of giving cable subscribers exclusive content that was not available through broadcast television. Internet businesses such as Google, Amazon.com, and E-Trade provide more recent models.
Alcatel-Lucent recently announced a multi-industry initiative called ng Connect. Its purpose is to link media, computing, consumer electronics, applications vendors, retailers and others together to expedite the deployment of new services over next generation networks (especially wireless.) LTE’s linkage to these efforts is that it provides affordable, reliable and manageable bandwidth needed to make the applications economically viable. Users pay for the perceived value of an application rather than for the bandwidth. A recent Cisco Systems study calculates the price of a video application at 0.017 cents per megabyte while text messaging is priced at $20 per megabyte. LTE’s capability to deliver large amounts of low cost bandwidth is obviously vital to a wireless video business model.
The downside of bringing converged IP infrastructure to mobile wireless networks is that it opens up the same network neutrality issues that the wireline industry is faces. One example is Skype for the iPhone. Currently voice services account for about 80 percent of U.S. mobile wireless revenue. Increased use of Skype could cut into this revenue just as Internet video downloads threatens the Video on Demand revenues of the cable television operators.
My view is that the rapid growth of the mobile market combined with its track record of finding new and innovative applications for mobile subscribers will leave enough room for content providers and mobile operators to prosper despite an increase in market competitiveness.
Michael Kennedy, a monthly Telecom Engine columnist, is the co-founder and Managing Partner of Network Strategy Partners, LLC (NSP) — management consultants to the networking industry. He can be reached at mkennedy@nspllc.com.
|
