3 G Lte Vs. Mobile Wi Max Executive Summary (M2 E2 65)

European Mobile Broadband (EuMoBro) Mêlée between 3G LTE and Mobile WiMAX

M2E2-65November 2008

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©2008 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan M2E2-65.

Table of Contents

• Preamble 7-8

• Key Findings in the European Market 9-13- Key Findings for 3G LTE 10- Key Findings for Mobile WiMAX 12

• Overview of 3G LTE 14-18- Momentum Behind 3G+ Technologies 15- 3G Evolution 17- 3G LTE Objectives 18

• Key Drivers for 3G+ Technologies 19-27- World of Convergence 20- Unpredictable User Behaviour 21- Converged Presence Enabled Address Book 22- Converged Multimedia Applications 23- Live Mobile to TV Video Call Streaming 24- Interactive Multimedia Applications 25- Applications Driven by 3G LTE Operators –Priority Wise 26- Key Market Drivers and Restraints for 3G LTE 27

• 3G LTE Industry Demonstrations and Commitments 28-31- Key 3G LTE Trials and Demonstrations 29- Worldwide Operator Commitment to 3G LTE 30 - Intellectual Property Rights for 3G LTE 31

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Table of Contents (Contd…)

• Deployment Strategies and Change in Business Models 32-41- Frequency Bands Under Consideration for 3G LTE 33- Spectrum Re-use and Transition Scenarios –Inlay 34- Spectrum Re-use and Transition Scenarios –Overlay 35- Deployment Strategy 36- Scenarios for 3G LTE Deployment 37 - Potential Phases of 3G LTE Implementation 38- Business Models will Shift 39

• 3G LTE Performance Characteristics 42-44- 3GPP Technologies vs. Mobile WiMAX 43- Benefits of 3G LTE over existing cellular technologies 44

• 3G LTE Roadmap 45-48- CDMA Operators Migrating to 3GPP Technologies 46- Global Market Timing for 3G LTE 47- 3G LTE Roadmap in Western Europe 48

• 3G LTE Market Forecasts 49-57

• Recommendations- 3G LTE 58-60

• Conclusion- 3G LTE 61-63

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• Overview of Mobile WiMAX 64-70- Mobile WiMAX Standard 65- MIMO and Beamforming 67- 802.16d vs. 802.16e 68- Mobile WiMAX vs. Cellular Technologies 69- Global WiMAX Device and Chipset Ecosystem 70

• Mobile WiMAX Roadmap 71-74- Mobile WiMAX Roadmap 72

- Comparison of Mobile WiMAX Standards 73- Client Device Roadmap for Mobile WiMAX 74

• WiMAX Forum Certification 75-78- Update on WiMAX Forum Certification 76- Mobile WiMAX Certification Roadmap 77- Wave 2 Phase 2 Certification 78

• Commercial WiMAX Deployments in Europe 79-80

• Spectrum Auction Update 81-83- Delays in European Spectrum Auctions 82- Analysis of the Swedish 2.6GHz Auctions 83

• Enhancing Backhaul Capabilities 84-92

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• Key Market Drivers and Restraints for Mobile WiMAX 93-94

• Key Challenges for Mobile WiMAX 95-106- Key Challenges for Mobile WiMAX 96- IPR Issues for Mobile WiMAX 97- Battery Life of Client Devices 100 - Advantages of FDD over TDD 101- Voice Capacity Limitations for Mobile WiMAX 103- Is Mobile WiMAX Cost-Effective to Deploy? 104- Cost of 802.16e BTS Similar to Mobile Technologies 105

- Key Questions to Ponder on… 106

• Recommendations- Mobile WiMAX 107-110

• Conclusion 111-113

• Glossary of Terms 114-119

• About Frost & Sullivan 120-124

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Preamble

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Preamble

With more than 100 per cent mobile cellular penetration in Western Europe, not many cellular carriers have attained reasonable return on investments after spending billions of Euro in acquiring 3G spectrum and rolling out related networks. With GSM havingenjoyed immense success for voice communications, many envisioned that WCDMA would mirror similar success for mobile data applications. However, the technology was too immature when it was first rolled out in the European market in 2001, and did not live up to the hype that was generated about delivering high-speed mobile broadband.

Ever since then, the 3GPP/3GPP2 group have worked intensively in upgrading networks to support feature-rich, high bandwidth consuming mobile data applications. Carriers are now trialing various 3.9G mobile broadband technologies so as to increase their ARPU and remain profitable in the long term. Additionally, many fixed and greenfield operators with no cellular spectrum and network assets are looking at alternative non-cellular technologies so as to provide a competitive market to the cellular world and attain significant market share in the mobile telecommunication space by having a core IP network and launching services based on the Internet business model in contrast with the cellular's proprietary networks that have traditionally adopted a “walled-garden approach” for new data services.

This research service is a continuation of our coverage in the mobile broadband wireless access domain and will strategically analyze the market opportunity for Mobile WiMAX and 3G LTE in the European market. It will provide a detailed analysis of the key drivers, restraints and challenges for both these technologies, and provide recommendations and strategies for the various players within the mobile telecommunications ecosystem. Frost & Sullivan has spoken to key industry participants with vested interests in both these technologies and will clarify on the myths, hype and continuous debates that has been associated with the technologies ever since it has being specified in the mobile broadband wireless access domain.

It will also look on the key social, economical, political and technology factors associated with both the mobile broadband technologies and analyze the feasibility of rolling out these new technologies considering the recent financial crunch and the high rates of inflation in the European markets. Shifts in business models, IPR issues and deployment strategies and scenarios for both Mobile WiMAX and 3G LTE has been taken into account, and the study will provide a holistic view of the assumptions required for the market forecasts and in accordance provide the roadmaps and deployment timelines for Mobile WiMAX and 3G LTE.

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Key Findings in the European Market –3G LTE favoured over Mobile WiMAX

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©2008 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan. M2E2-65

Key Findings for 3G LTE

• Many operators view 3G LTE being initially used for hot zones rather than providing a nationwide coverage.

• As cell sites are expensive and difficult to acquire, many operators will re-use their existing cell sites as much as possible, thereby limiting the footprint.

• Benefiting from the current economic crisis would be ‘deep pocketed’ 3G LTE proponents who could potentially acquire innovative Mobile WiMAX players at much lower costs considering that smaller WiMAX companies will find it difficult to get VC funding and close huge customer deals. As both Mobile WiMAX and 3G LTE are based on OFDMA technologies, such acquisitions will enable the ecosystem to support one global 3.9G technology, thereby leading to better economies of scale and high uptake of new 3G LTE services.

• Mobile operators will aggressively promote VoIP over 3G LTE so that its cellular service revenues are not cannibalized by alternatives such as VoWLAN through dual-mode WiFi/cellular devices. 3G LTE operators will promote fixed-to-mobile substitution by providing alternatives to VoIP and broadband services delivered over DSL/FTTx technologies –this will especially be the case in rural areas devoid of DSL/FTTx technologies.

• Mobile operators must fully maximize from their HSPA deployments before eventually deploying 3G LTE. Many operators will leapfrog from HSPA to 3G LTE as the window of opportunity for HSPA+ (or) HSPA Evolved is insignificant when compared to 3G LTE.

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Key Findings for 3G LTE (Contd…)

• A key priority of the cellular camp is to ensure that 3G LTE/SAE will be a ratified standard by March 2009. Further delays could give a competitive advantage for Mobile WiMAX from a standards point of view.

• With the London Olympics in 2012, European mobile operators will seek to attain huge revenues through live broadcasting of sport events directly to the mobile client device using 3G LTE.

• Location based directory services and targeted advertisements will benefit from the enhanced speed of 3G LTE. This will be a key feature for foreigners attending the Olympic event in 2012.

• Worldwide delays attributed to WiMAX Forum certification and spectrum auctioning for Mobile WiMAX will enable 3G LTE to compensate on the time lost in ratifying the standard.

• This will enable cellular carriers to roll out networks much faster than WiMAX service providers due to its tacit knowledge in WAN deployments and being able to re-use its cell sites, thereby enabling its existing customer base to adopt 3G LTE and have a personal broadband experience across various client devices.

• Operators must have minimum channel bandwidths of 20MHz so as to realize the high performance characteristics of 3G LTE.

• New frequencies are needed to fulfill capacity demands for high bandwidth data consuming applications - nearly 1 GHz of extra spectrum will be needed after 2015.

• By 2013, there will be around 22.42 million 3G LTE subscribers with service revenues totaling to €9,685.44 million in Western Europe.

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Key Findings for Mobile WiMAX

• If the 2.5GHz spectrum auctions in major European markets do not take place by 2009, then the window of opportunity for Mobile WiMAX will be insignificant when compared to 3G LTE. However, the WiMAX Forum can counter this restraint by certifying Mobile WiMAX equipment/client devices in the 3.5GHz as the European Commission is encouraging member countries to allow mobility in the 3.5 GHz. The flip side to this alternative is that most of the test beds for Mobile WiMAX worldwide is focused in the 2.5GHz and creating a new test bed just for the European market can be a very costly proposition. But even if this were to happen, it would be highly challenging to attain huge economies of scale for an exclusive “3.5GHz 802.16e” WiMAX Forum certified product, when the globally accepted frequency band for Mobile WiMAX is in the 2.5GHz. In this deep rooted global economic crisis, such investments would be highly risky as operators and terminal vendors would take a very long time to get a return on their investments (déjàvu of 3G).

• Some of the key members of the WiMAX Forum have changed their stance on the market opportunity for Mobile WiMAX in Europe and expressed their intentions to migrate to 3G LTE if the markets shifts that way, considering that they have the necessary expertise in OFDMA/MIMO technologies -which are also the building blocks for 3G LTE. Companies such as Motorola have officially stated that about 85 percent of the basic application software and platform technology that they have developed for Mobile WiMAX can be re-used for LTE products.

• The major trump card for Mobile WiMAX is Intel and the same could be said of Ericsson’s vested interest in 3G LTE. Despite the varied interest for both firms in delivering high speed mobile broadband, Ericsson recently agreed to make HSDPA/HSUPA modules for Intel’s Moorestown Mobile Internet Device (MID) platform due to be launched in the 2009-2010 timeframe. Moorestown is the successor to Intel's Centrino Atom platform and codenamed 'Menlow'.

• If Mobile WiMAX does not take off globally, many believe that it will eventually converge with the TDD flavor of 3G LTE. However, key proponents of 3GPP have clearly indicated that this would be “wishful thinking” as it could lead to a delay to the ratification of the 3G LTE standard and lead to further delays in the commercial roll-out of 3G LTE worldwide.

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Key Findings for Mobile WiMAX (Contd…)

• The market for Mobile WiMAX will be negatively impacted if Sprint-Nextel’s Mobile WiMAX network does not deliver as promised in terms of mobility, performance characteristics and offering interoperable client devices from various terminal vendors.

• Though many companies have received the WiMAX Forum certification stamp for Mobile WiMAX based on Wave 2 Phase 1, Nokia and Nokia Siemens Networks, key proponents for Mobile WiMAX deployments, have not yet obtained the WiMAX Forum stamp for their products.

• QUALCOMM’s recent licensing agreement with Nokia also includes non-cellular technologies such as WiMAX, with Nokia agreeing not to use any of its IPR directly against QUALCOMM but rather enable the same into QUALCOMM chipsets. With the Mobile WiMAX market in its nascent phase, additional royalties to QUALCOMM are likely with the emergence of new client devices supporting WiMAX technology be it smartphones, Ultramobile PC's (UMPCs), tablet devices, mini-laptops and various consumer electronic devices.

• However, QUALCOMM has suggested that if client devices do support both WiMAX and cellular technologies, then it could potentially extend the cellular royalties to WiMAX at no additional costs. Having said that, the initial client devices for Sprint-Nextel's Xohm WiMAX service will be devoid of any cellular technology and the jury is out there if the IPR saga will arise once again between QUALCOMM and the members of the WiMAX Forum.

• Nevertheless, many within the industry regard Intel’s competitive advantage is that it does not get “emotionally involved” with a technology (even Mobile WiMAX) unless it make commercial business sense. The agreement with Ericsson has raised quite a few eyebrows within the Mobile WiMAX camp as the intention of Mobile WiMAX is to target next generation mobile internet devices. Hence, many view such an agreement to be a backup strategy for Intel if the uptake of Mobile WiMAX does not blossom as expected worldwide.

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3 G Lte Vs. Mobile Wi Max Executive Summary (M2 E2 65)