A transition from WiMAX to LTE with · 2019. 7. 23. · Dual‐mode devices that support both WiMAX and LTE fit well within this trend toward multiple interfaces, but with an added

White paper A smooth transition from WiMAX to LTE with dual‐mode devices How operators can reduce upfront costs and gain flexibility as they migrate to LTE

Subscriber devices that support both WiMAX and LTE provide WiMAX operators multiple benefits:

Increased flexibility in managing the timing of their transition to LTE

Lower funding requirements at the beginning of LTE transition, due to a more gradual deployment of LTE infrastructure, with 19% capex and opex reduction during the first year of LTE deployment

Longer and more efficient use of existing WiMAX network resources

Easier introduction of LTE devices, which reduces or eliminates the need for device subsidies and forced device replacements when the WiMAX network is switched off

Cost savings of 4% over five years, due to increased efficiency in using available resources and to longer life span of devices in the market

White paper A smooth transition from WiMAX to LTE with dual‐mode devices

© 2011 Senza Fili Consulting • www.senzafiliconsulting.com |2|

1. The role of dual‐mode devices in the transition to LTE

Worldwide Interoperability for Microwave Access (WiMAX) has given greenfield operators the opportunity to launch wireless broadband services in countless markets—in emerging and developed countries, in urban and rural environments, as fixed broadband service or as a mobile service. Meanwhile, many longer‐established WiMAX operators have decided to transition to Long Term Evolution (LTE) because of the wide support for the new technology—and especially for its time‐division LTE (TD‐LTE) version, a radio access technology (RAT) very similar to WiMAX—and the advantages of converging to a single technology.

With the exception of some vertical niche markets, most WiMAX operators will migrate to LTE, but the pace and modalities of the shift will vary greatly depending on geography, service focus, spectrum availability, and funding. Some operators want to move to LTE as quickly as possible, as this will open new markets and business opportunities to them. This is the case at Yota. The Russian operator has announced plans for a quick transition to LTE that will enable it to become a wholesale operator providing other operators access to its network. Most operators are moving to LTE at a more relaxed pace. Most operators that are more focused on fixed services have not announced their LTE plans yet; they are likely to delay the move to LTE until the technology has matured and the ecosystem is established. In the meantime, they are better off continuing to expand their WiMAX footprint and gain market share.

Regardless of the urgency of the transition, operators are assessing the impact of the transition on their networks, subscribers and cash flow, exploring the benefits of different transition models, and understanding how they can prepare for the transition. This preparatory work is essential. While the availability of upgradable base stations and dual‐mode devices makes it possible for operators to switch to LTE without replacing entire networks, the transition will undoubtedly be disruptive and require considerable effort from the operators to ensure service continuity, especially for operators with tightly limited spectrum assets.

To ensure a smooth transition, operators need to develop a device migration strategy that complements the radio access network (RAN) transition. Dual‐mode devices’ role in this context is to contain the potential for disruption, and optimize the utilization of existing network resources. Dual‐mode devices are more expensive than single‐mode devices, but they can provide financial benefits that significantly outweigh these costs. With them, operators can use their existing network infrastructure longer and build their LTE network more slowly. Operators will be able to migrate subscribers organically to new devices at the end of the lifespan of the devices in use, instead of executing a massive device substitution program. The resulting capex deferral and more limited need to subsidize device upgrades will translate into cost savings and a better cash flow to the operator.

In this paper we explore issues faced by WiMAX operators planning to move to LTE and evaluating its device strategy. A total cost of ownership (TCO) model illustrates the implications of different ways to time the transition by employing different combinations of single‐mode (WiMAX or LTE) and dual‐mode devices (WiMAX and LTE), and quantifies the impact on infrastructure capex and opex and on device replacement costs.

The network migration to LTE “is going to be complicated because we need to deploy… We cannot switch off one network and switch on the other network, so there will be a period when the two networks will work at the same time, but we understand that this [transition] period will be two to three months. Of course it is going to be an issue of devices, because there are already many WiMAX devices in the market that will not support LTE, but we will make a special migration policy to help our customers to move.” Dennis Sverdlov, CEO at Yota



2. Transition options: network and devices

The decision between the TD‐LTE and frequency division duplex (FDD) LTE versions is often dictated by spectrum assets and regulatory constraints. Funding availability and ecosystem maturity substantially constrain when the LTE transition will start. From network and device perspectives, however, operators have multiple options. Some of the most common transition paths are listed in Table 1.

Table 1. The transition to LTE: Options

No overlay

The operator switches from WiMAX to LTE without establishing a temporary overlay network.

Spectrum: This option is likely to be selected only by operators that have insufficient spectrum to support both WiMAX and LTE, because this transition model is the most expensive, disruptive, and fraught with risk.

Network: The existing WiMAX infrastructure has to be disposed of, unless upgradable equipment has been installed. Nevertheless, operators may need to add new WiMAX base stations during the transition, to increase capacity because the operator’s subscriber base is growing.

Devices: The operator has to replace all WiMAX devices with LTE devices in an extremely short period, making the transition a very demanding and expensive customer service process.

Fast transition

This transition model is well suited to operators that intend to move their subscribers to LTE quickly, over 2–3 months. In some cases this process may be carried out at a different time in each market. Unless dual‐mode devices are used, however, a market‐by‐market transition limits subscribers’ ability to access the network outside their market.

Spectrum: This model is best suited to operators with little spectrum, for which a protracted transition may result in an inefficient use of resources, especially if dual‐mode devices are not used.

Network: WiMAX base stations are decommissioned quickly and, as in the no‐overlay scenario, the operator may need to increase the overall number of base stations faster than if the WiMAX network were left on.

Devices: Unless the operator deploys a large number of dual‐mode devices before starting its LTE deployment, the replacement of legacy WiMAX devices in a short period is going to be costly and challenging.

Gradual transition

This is the operationally easiest and most cost‐effective option for most operators, because it allows them to leverage the existing WiMAX infrastructure for a few years, and to manage the subscriber transition to new devices effectively. The TCO model presented in this paper is based on this transition option, assuming that the operator will operate the WiMAX and LTE networks for two years.

Spectrum: Operators will move from WiMAX to LTE gradually by changing the relative split between the two technologies. At the beginning, with few LTE subscribers, most spectrum will remain allocated to WiMAX. Later, the operator will assign more spectrum to LTE as required by subscribers.

Network: At the end of the transition period, WiMAX base stations are disconnected or upgraded to LTE.

Devices: Unless dual‐mode devices are used, the operator has to replace devices as dictated by network availability and capacity. In areas where LTE provides more capacity than WiMAX, the operator may need to switch some WiMAX subscribers to LTE to make sure there are sufficient network resources available to them.



Long‐term coexistence

LTE deployment is either complementary to WiMAX, targeting areas where the operator needs to increase capacity or expand coverage, or it is treated as a completely separate network.

Spectrum: This option is limited to operators that have sufficient spectrum to support two networks in the medium to long term.

Network: The WiMAX network continues to operate side by side with the new LTE network.

Devices: Unless the operator is exclusively providing fixed service and WiMAX and LTE are offered in different markets, dual‐mode devices provide a great advantage and cost‐saving opportunity in this case, because they allow subscribers to have access to the entire network served by the two RATs.

We assume that in all cases the operator will eventually run an LTE‐only network, and that the main difference among options is the length of the transition period during which both WiMAX and LTE operate. Generally, a faster transition to LTE requires more upfront effort and investment than a protracted one in which subscribers can use both networks longer and move to new LTE devices gradually. Although less disruptive, longer transition periods are often not suitable, though, because they require spectrum assets that most operators do not have.

From a device perspective, the operator must decide whether to use single‐mode devices only, or a mix of single‐mode and dual‐mode devices (Figure 1). When an operator opts to deploy only single‐mode devices, subscribers can use only one network at a time. In this case device replacement has to follow the LTE deployment closely, to avert the risk of congestion on one network while the other is underutilized. With dual‐mode devices, operators have more flexibility to plan the transition as desired, and to use network resources more effectively.

Figure 1. Device strategies for the transition to LTE: Single‐mode case and dual‐mode case (bottom two bars), mapped against the network technology transition (top bar). Source: Senza Fili Consulting



Mobile devices increasingly support multiple radio interfaces, because this is a requirement to get the best coverage and throughput in networks that are no longer as homogeneous as the early Global System for Mobile Communications (GSM) or Code Division Multiple Access (CDMA) networks. Today’s smartphones typically support second generation (2G) technologies like GSM, third generation (3G) technologies like High‐Speed Packet Access (HSPA), and Wi‐Fi. Smartphones like the HTC EVO™ 4G support WiMAX in addition to cellular and Wi‐Fi interfaces.

Dual‐mode devices that support both WiMAX and LTE fit well within this trend toward multiple interfaces, but with an added advantage. Because WiMAX and LTE share an overlapping radio interface and, in most cases, WiMAX operators moving to LTE plan to use the same spectrum band, supporting both interfaces is easier and less expensive than adding a fundamentally different one. Substantial cost savings come from the use of a single baseband chipset and shared radio frequency (RF) components for both WiMAX and LTE. In the device market, where volume dictates the commercial viability of a product, these cost savings and the ability to reuse components are essential to creating a cost structure that will make these devices attractive to manufacturers and cost effective for operators, even though the market for dual‐mode WiMAX /LTE devices is only a subset of the LTE market.



3. TCO model for single‐mode and dual‐mode devices

To understand the cost drivers behind different device strategies and determine whether WiMAX operators stand to benefit from the use of dual–mode devices, we present a TCO model based on a WiMAX operator of medium size that has launched service over the past few years and plans a transition to LTE. The key assumptions for the operator are listed in Table 2, with the timeline shown in Figure 2.

Table 2: Assumptions for WiMAX operator in TCO model

Period Five years.

WiMAX network

The operator has a commercial network with 3,000 WiMAX base stations, each with a capacity of 50 Mbps. Network utilization is set at 20% at the beginning of Year 1. During Year 1, WiMAX base stations may be installed to cope with subscriber demand.

LTE network

The operator starts building out the LTE network in Year 2 and the transition, during which both LTE and WiMAX are available, lasts two years. At the end of Year 4, the LTE network covers the entire WiMAX footprint, and the WiMAX network is turned off. Network utilization is set at 33% in Year 5 (as a reference point, Vodafone network utilization in Europe is 36%).

Subscribers 500,000 subscribers at the beginning of Year 1, growing to 1.9 million by Year 5, assuming an annual growth of 40%. Churn is set at 4%.

Traffic On average, a dongle subscriber generates 10 GB/month, a smartphone subscriber 2 GB/month in Year 1. Traffic increase per year is 10% for dongle users and 20% for smartphone users.

Devices

In Year 1, 50% of subscribers have dongles, 50% smartphones. By Year 5, the split is 20%/80% between dongle and smartphone users.

In Year 1, the average selling price (ASP) for single‐mode dongles is US$50; for single‐mode smartphones the ASP is US$400. Dual‐mode devices cost an additional US$10 in Year 1, and US$7 in Year 5.The price decline per year is 8% for dongles and 6% for smartphones (both single‐mode and dual‐mode devices). Life span for dongles is three years; for smartphones it is four years.

Capex US$140,000 per LTE base station, including equipment, installation, and commissioning.

Opex The annual cost to operate a base station is US$41,000. This includes maintenance, rent, power, and recurring backhaul charges.

Dual‐mode case

Starting in Year 1, all old devices at the end of their lifespan are replaced with dual‐mode devices, until the WiMAX network is shut down. At this point, all new devices are single‐mode LTE and do not support WiMAX.

Single‐mode case

As soon as the LTE network is deployed, all new devices are single‐mode LTE devices. When the WiMAX network is switched off, all WiMAX devices are replaced with LTE devices.



Figure 2. Timeline of transition to LTE in the TCO model. Source: Senza Fili Consulting

The model compares two cases:

Single‐mode case: the operator uses only single‐mode devices, switching gradually to LTE devices as it deploys the network.

Dual‐mode case: the operator starts introducing dual‐mode devices during Year 1, ahead of the availability of LTE, to facilitate the transition.

The transition will take place over two years, during which both the WiMAX and LTE networks are operational. When the WiMAX network is switched off in Year 4, all WiMAX single‐mode devices are replaced, but dual‐mode devices are still in use, even though the adoption of new dual‐mode devices is discontinued.

For simplicity, the model assumes that new LTE base stations will be installed. For most operators, at least some of their existing WiMAX base stations are not upgradable to WiMAX, so new base stations are often required. Furthermore, most of the new LTE base stations are deployed due to increased traffic loads, and upgrades would not suffice. For the operator considered in the TCO model, in the best case only a subset of the LTE network will be the result of RAN upgrades. In this scenario, we expect the capex to be lower (with the difference depending on the type of upgrade available), but the cost drivers remain the same.

While the specific results are tied to our model operators, we expect the cost drivers and high‐level results to be highly comparable across operators when size and other operator‐specific parameters and assumptions are taken into account.



Figure 3. Device types in use among subscribers in the dual‐mode and single‐mode cases. Source: Senza Fili Consulting

The TCO model is capacity driven. The expected number of subscribers, the traffic they generate, and the devices they use (Figure 3) determine the number of LTE base stations that the operator deploys, and when (Figure 4). With an increase in the number of subscribers, the WiMAX network might no longer be able to meet the traffic load, and the operator would then need to replace some WiMAX devices with dual‐mode or LTE single‐mode devices, a forced substitution, to provide sufficient service.1 The infrastructure capex and opex, as well as the device replacement costs, are directly driven by throughput requirements. For simplicity, we assume that the initial WiMAX footprint is sufficient to provide coverage and that the LTE network is planned to be coextensive with it—that is, the operator does not need to install additional LTE base stations for coverage only.

The total number of LTE base stations needed in Year 4 and Year 5 is the same for both the single‐mode and dual‐mode cases because, at this point, the WiMAX network is no longer operative and the traffic load is the same regardless of whether single‐mode or dual‐mode devices are used. Similarly, in Year 1, no LTE base station is deployed in either case. The difference between the two

Figure 4. LTE base stations: new and total count. Source: Senza Fili Consulting

1. We assume that, during the transition period, the operator will no longer deploy WiMAX across the entire footprint



cases is substantial, however, in Year 2 and Year 3. In the single‐mode case, the operator needs more base stations deployed in both years, because all new subscribers and all subscribers with a new device can access only the LTE network.

As a result, in the single‐mode case the existing WiMAX network is underutilized during the transition (37% of WiMAX capacity is unused in Year 3) because the number of WiMAX devices is limited. The operator could choose to support more WiMAX devices during the transition to increase WiMAX network utilization, but doing so would create the need for a larger number of forced device substitutions when the WiMAX network is switched off in Year 4, and this approach is not likely to be cost effective.

The timeline of the deployment differs substantially in the two cases. In the single‐mode case, the operator has to deploy almost seven times as many base stations in Year 2 as in the dual‐mode scenario, and 38% more in Year 3, to meet subscriber demand.2 As we will see in the next pages, this has a major impact on the capex cash flow for the LTE build‐out. In Year 4, the balance is reversed in the dual‐mode case, with the operator having to compensate for the smaller number of base stations deployed in Year 2 and Year 3 (compared to the single‐mode case) to complete the LTE rollout.

Many operators are likely to deploy LTE in new markets as they transition their WiMAX networks to LTE. To keep our focus solely on the transition from WiMAX to LTE, deployment activity beyond the WiMAX footprint in not included in the TCO model. Furthermore, the TCO model does not take into account any capacity increase that may be needed to accommodate roaming, wholesale, machine‐to‐machine (M2M), or other traffic not generated by the projected subscribers.

The TCO model assumes that operators use dual‐mode devices with a single baseband chipset that supports both WiMAX and LTE, in both TDD and FDD variants; this is less expensive than using one chip for WiMAX and a second chip for LTE, so we expect operators to provide single‐chipset dual‐mode devices whenever possible. This assumption in the TCO allows us to keep the incremental cost of adding the second RAT interface to US$10.

2. Of course the operator may decide to deploy LTE base stations more quickly. In this case the cost savings will be more evenly distributed across Year 2 and Year 3, but

the difference disappears by Year 4 and Year 5, when the total number of LTE base stations is the same.



4. Comparing costs in single‐mode and dual‐mode cases

The adoption of dual‐mode devices results in cost savings for operators (Figure 5), mostly driven by a more gradually paced deployment of LTE base stations and devices, and by the more extensive use of existing WiMAX network resources during the transition. Figure 5 shows a comparison of costs for the two cases and the cost savings (as a percentage of cumulative costs up to any given point in the timetable) that accrue to operators adopting dual‐mode devices. For all cost drivers in the dual‐mode case, the cumulative percentage in cost savings decreases over time, because costs shift toward the second half of the five‐year period. As a result, the operator in a dual‐mode case sees two effects: a shift forward in the cash flow (which can be calculated by the yearly opex and capex in Figure 5) and overall cumulative cost savings (i.e., the percentage in cumulative cost savings in Year 5 in Figure 5).

Figure 5. Financial summary of the single‐mode and dual‐mode cases. Positive cost savings values denote lower costs for the dual‐mode case. Source: Senza Fili Consulting



The biggest impact is generated by infrastructure capex, with cumulative cost savings of 55% in Year 2. Of course, the cumulative cost savings disappear in Year 4 and Year 5, because the operator has to deploy the same overall number of base stations. Postponing the capex to a time when there are more paying subscribers and spreading out the efforts over time are huge advantages to most WiMAX operators—especially because many of them are greenfield operators with limited access to capital and, especially in emerging markets, limited engineering resources for the rollout. As a result, operators may see additional costs savings due to the more efficient use of staff resources, which TCO the model does not include because they are highly dependent on the operator’s environment.

More limited, but still substantial, cost savings in the dual‐mode case come from the opex over the five‐year period, peaking at Year 3, when the operator has to support a higher number of active WiMAX and LTE base stations. During Year 4 and Year 5, the opex is the same in both cases because the same number of base stations is active; but, unlike in the capex case, there is a residual cumulative cost saving in Year 5 opex because of the higher number of base stations during Year 2 and Year 3. The cumulative opex savings peak at 13% in Year 3 and dip to slightly over 8% by Year 5.

The timing of cost savings for devices is different from that for infrastructure. The device costs3 in Figure 5 include:

Organic device replacements that would have taken place regardless of the LTE deployment (here the difference between the two cases is the additional marginal cost of US$10 for dual‐mode devices).

Forced replacements that provide subscribers with new devices as the WiMAX network is turned off or has insufficient capacity.

During the first three years, only organic device replacements are needed, in the same numbers for both the single‐mode and dual‐mode cases. Since the dual‐mode devices are more expensive, during the initial three years the dual‐mode case entails a higher cost (4% in Year 2 and Year 3) than the single‐mode case. In the last two years, the balance is reversed, as the single‐mode case requires forced replacements and the dual‐mode case does not. As a result, in Year 4 the operator has to replace 36% more devices in the single‐mode case than in the dual‐mode case, leading to a cumulative cost savings of 6% in Year 4. This percentage drops to 4% in Year 5, as the number and cost of replaced devices is the same for both cases. Because fewer devices are replaced in the dual‐mode case, its cost of transitioning subscribers to LTE is lower.

The TCO model compares the total cost of device replacement for both organic and forced replacements, and does not take into account the impact of device subsidies. Actual cost savings in the dual‐mode case may be substantially higher if the operator decides to subsidize forced replacements. This is very likely if the operator wants to keep churn down—most subscribers will not be willing to pay for a device when their current one works well and the change is required by the operator’s upgrade plans. Because the dual‐mode case entails fewer forced replacements, it translates into lower subsidies and a higher percentage of total device costs paid for by subscribers.

The sources of cost savings in the dual‐mode scenario vary through time. In Year 2, 81% of cost savings come from capex and 23% from opex, and devices actually add 5% to the costs. In Year 5, cost savings are split between infrastructure opex (74%) and devices (26%).

3. The TCO model includes the additional device costs associated with the transition to LTE without making any assumption as to whether the operator pays for them

through device subsidies, or whether they are passed onto the subscribers.



The device and infrastructure financial summary in Figure 5 adds together the cost savings from infrastructure capex and opex and devices, reflecting the two main cost‐saving drivers in the dual‐mode case:

During the two‐year transition period, the operator can deploy the LTE network more gradually, thus reducing the size of the initial investment. The 19% cost savings in Year 2 are due mainly to the effect of the postponed capex, which has a large impact on the cash flow. The overall capex investment by Year 5 is the same in both cases, because regardless of whether devices are single‐mode or dual‐mode, the operator deploys the same number of base stations.

The dual‐mode case, however, brings long‐term savings (4%) despite the higher cost of the devices, because the operator can make do with keeping a smaller number of base stations active, thus reducing its capex.



5. A comparison across transition scenarios

In the TCO analysis in the previous pages we focused on a base‐case scenario in which the operator migrates to LTE over two years. What happens if we look at a different transition period? We explored this issue by creating four additional scenarios, defined in Table 3, with transition periods ranging from three months to three years, with an additional one in which the WiMAX network is kept active throughout the five‐year period.

The three‐month transition is very challenging in terms of resources and funding, and we do not expect it to be widely adopted. Similarly, the long‐term coexistence scenario is likely to be confined to operators that have sufficient spectrum to operate two networks side by side, one using WiMAX and one LTE, and can do so at a low opex.

A comparison across scenarios (Figure 6) shows that the fast‐switch scenario is the least affected by dual‐mode devices (only 1% cost savings by Year 5). The graph on the left in Figure 6 shows the yearly cost for the dual‐mode case only to compare the cash flow requirements for operators choosing a different length of transition period. Other things being equal, the shorter the transition time, the higher the upfront investment is.

Table 3: Scenario definitions

Fast switch

Fast transition over three months, with the WiMAX network turned off at the end of the transition period.

Dual‐mode case: dual‐mode device deployment starts in Year 1, with all WiMAX devices replaced by LTE devices by Year 3.

Single‐mode case: LTE device deployment starts in Year 2, with all WiMAX devices removed by Year 3.

One‐year transition

LTE and WiMAX both operate during Year 2, with the WiMAX network disconnected in Year 3.

Dual‐mode case: Dual‐mode devices introduced in Year 1, LTE devices in Year 3. Dual‐mode devices are still in use in Year 5.

Single‐mode case: LTE devices are introduced in Year 2. All WiMAX devices are replaced by LTE ones by Year 3.

Two‐year transition

Base case, analyzed in the previous section. LTE and WiMAX both operate during Year 2 and Year 3, with the WiMAX network disconnected in Year 4.

Dual‐mode case: Dual‐mode devices introduced in Year 1, LTE devices in Year 4.

Single‐mode case: By Year 4 all devices support LTE.

Three‐year transition

WiMAX and LTE both operate from Year 2 to Year 4.

Dual‐mode case: Dual‐mode devices introduced in Year 1, LTE devices in Year 5.

Single‐mode case: WiMAX and LTE devices coexist until Year 4. No WiMAX device in use in Year 5.

Long‐term coexistence

WiMAX and LTE operate side by side from Year 2 to Year 5.

Dual‐mode case: Dual‐mode devices introduced in Year 1 and used through Year 5. LTE‐only devices not used.

Single‐mode case: WiMAX and LTE devices operating from Year 2 to Year 5.



Figure 6. Scenario analysis: percentage cumulative savings for dual‐mode case, and dual‐mode‐case costs for infrastructure and devices combined. Source: Senza Fili Consulting

Because the time during which both WiMAX and LTE networks are active is so short in the fast‐switch scenario, dual‐mode devices have a limited impact in either deferring capex or lowering opex. When the WiMAX network is switched off, most devices still use WiMAX only, and they need to be replaced. Dual‐mode devices would bring more relief if they could be deployed for a few years ahead of the deployment, but this approach creates an unnecessary delay in the transition to LTE—as operators wait for subscribers to adopt dual‐mode devices organically—that operators prefer to avoid.

At the other extreme is long‐term coexistence. It generates the highest cost savings (12% by Year 5). This is because the continued use of the WiMAX infrastructure reduces the number of LTE base stations to be deployed and gives the operator more flexibility to replace devices organically.

The one‐year transition scenario delivers the most impressive cost savings during the transition phase in Year 2, as the operator embarks on a transition that requires fewer base stations to be deployed in Year 2 than in the fast‐switch scenario. A similar but less pronounced effect is present in the two‐year transition scenario.

The three‐year transition scenario’s cumulative cost‐savings pattern during the initial years is similar to that of long‐term coexistence, as the network buildout is driven by the same traffic requirements in both scenarios. The cost savings remain higher for the long‐term coexistence scenario because of the continued use of the WiMAX network.



6. Conclusions

WiMAX operators that have decided to move to LTE face a wide range of options in how to transition to the new technology, and how quickly to do so—in terms of both RAN equipment and subscriber devices. In the TCO model presented in this paper, we compared the transition costs for both infrastructure and devices in two cases: one in which the operator uses devices that operate in a single mode, either WiMAX or LTE, and the other in which the operator uses dual‐mode, single‐chipset devices that support both WiMAX and LTE during the transition. We assumed that the operator completes the transition in two years and that by the end of the period it has 1.9 million subscribers, all using the LTE network and 63% using smartphones.

Our analysis shows that an operator that adopts dual‐mode devices the year before the LTE network is launched can achieve a cumulative cost savings of 4% by the end of Year 5. Even more important, dual‐mode devices provide cost savings of 19% during Year 2, allowing operators to deploy the RAN infrastructure more gradually and to replace subscriber devices organically, all of which improves cash flow during the transition. The results are summarized in Table 4.

The transition to LTE widens the addressable market and brings new business opportunities to WiMAX operators, but it will also impose a burden on operators’ financial and operational resources. Dual‐mode devices give WiMAX operators the flexibility to reduce the impact of the transition to LTE by diluting it through time and minimize its impact on subscribers.

Table 4. Comparison of single‐mode and dual‐mode cases

Single‐mode devices case Dual‐mode devices case

Lower cost per device More efficient network utilization during transition period

Forced replacement of devices as a one‐time occurrence, but subsidies may be required to avert churn

Gradual replacement of devices, with limited or no subsidies

Suitable for very fast transition to LTE Slower transition to LTE is possible and indeed advantageous

with dual‐mode devices

Higher capex and opex during initial transition phase Capex and opex are shifted toward a later stage,

because the WiMAX network resources can be used longer

A faster transition requires higher investment and more resources during initial part of transition

A gradual, slower transition is easier to manage, involves less risk, and costs less



About Senza Fili

Senza Fili provides advisory support on wireless data technologies and services. At Senza Fili we have in‐depth expertise in financial modeling, market forecasts and research, white paper preparation, business plan support, RFP preparation and management, due diligence, and training. Our client base is international and spans the entire value chain: clients include wireline, fixed wireless and mobile operators, enterprises and other vertical players, vendors, system integrators, investors, regulators, and industry associations.

We provide a bridge between technologies and services, helping our clients assess established and emerging technologies, leverage these technologies to support new or existing services, and build solid, profitable business models. Independent advice, a strong quantitative orientation, and an international perspective are the hallmarks of our work. For additional information, visit www.senzafiliconsulting.com or contact us at [email protected] or +1 425 657 4991.

About the author

Monica Paolini, PhD, is the founder and president of Senza Fili. She is an expert in wireless technologies and has helped clients worldwide to understand technology and customer requirements, evaluate business plan opportunities, market their services and products, and estimate the market size and revenue opportunity of new and established wireless technologies. She has frequently been invited to give presentations at conferences and has written several reports and articles on wireless broadband technologies. She has a PhD in cognitive science from the University of California, San Diego (US), an MBA from the University of Oxford (UK), and a BA/MA in philosophy from the University of Bologna (Italy). She can be contacted at [email protected].

© 2011 Senza Fili Consulting, LLC. All rights reserved. This white paper was prepared on behalf of Sequans Communications. The views and statements expressed in this document are those of Senza Fili Consulting LLC, and they should not be inferred to reflect the position of Sequans Communications. The document can be distributed only in its integral form and acknowledging the source. No selection of this material may be copied, photocopied, or duplicated in any form or by any means, or redistributed without express written permission from Senza Fili Consulting. While the document is based upon information that we consider accurate and reliable, Senza Fili Consulting makes no warranty, express or implied, as to the accuracy of the information in this document. Senza Fili Consulting assumes no liability for any damage or loss arising from reliance on this information. Trademarks mentioned in this document are property of their respective owners.

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A transition from WiMAX to LTE with · 2019. 7. 23. · Dual‐mode devices that support both WiMAX and LTE fit well within this trend toward multiple interfaces, but with an added