GSA Report Embracing the 1800MHz Opportunity

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Embracing the 1800MHz opportunity: Driving

mobile forward with LTE in the 1800MHz band

www.gsacom.com

Prepared for the GSA by:

Innovation Observatory

Silvaco Technology Centre, Compass Point Business Park

St Ives, Cambridgeshire, PE27 5JL, UK

Tel: +44 (0)1480 309341

Email: [email protected]

November 2011

Sponsored by:

CSL Ltd, Deutsche Telekom, Elisa, Qualcomm, StarHub, and Telstra


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Copyright GSA Global mobile Suppliers Association 2011

The contents of this document are the property of GSA and are protected by copyright and other

intellectual property rights. All rights reserved. Reproduction of this publication in part for non-

commercial use is allowed if the source is stated. For other use, and any other enquiries, please

contact:

GSA Secretariat

Email: [email protected]

Tel: +44 (0)1279 439 667

GSA cannot and does not warrant the accuracy, completeness, currentness, non-infringement,

merchantability or suitability for a particular purpose of the contents herein.

Acknowledgements:

This report benefits enormously from the insights and experiences kindly contributed by LTE1800

operator pioneers including CSL Limited, Deutsche Telekom, Elisa, StarHub, TeliaSonera and Telstra,

and leading vendors Ericsson, Nokia Siemens Networks and Qualcomm . We would like to thank

these companies for their help.


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Foreword

Broadband access to the Internet is an essential requirement for a modern, productive and

progressive society. Adding mobility to broadband connectivity and enabling access to all that the

Internet offers today is a compelling proposition. Delivering high quality mobile broadband services

to a demanding public and to enterprises is the main business growth driver for thetelecommunications industry in all parts of the world, and demands huge investments. A new report

from Ericsson forecasts mobile data traffic will grow 10-fold between 2011 and 2016, mainly driven

by video. The efficiencies and performance capabilities of the latest system technologies, particularly

HSPA/HSPA+ and LTE, are attracting serious attention not only from the traditional telecoms players

but also from new sectors, like aviation, automotive, energy, retail, the travel industry,

transportation, content providers, and media.

Mobile communications systems need spectrum, in the right bands, at the right cost and plenty of it,

if the full potential of mobile broadband on a truly ubiquitous scale is to be fulfilled. The mobile

market success achieved over recent years has been enabled by networks designed for voice butwhich are experiencing increasing data usage. Operators therefore need a clear roadmap that

efficiently supports growth and delivers the best user experience of the services they offer. While

HSPA+ technology for the most part is supporting operator needs today, many are committed to

adding LTE to their networks, or plan to do so in the near term.

In the medium term, internationally harmonized spectrum in the 2.6GHz band, which is most suited

for LTE systems delivering high capacity in urban areas, should become available over time in most

parts of the world. While some operators have commercially deployed LTE on their networks in

2.6GHz, allocations in this band have not yet been completed in most of the largest economies.

Access to lower spectrum arising from the analogue to digital TV transition, the digital dividend, hasbeen identified in the 700 or 800MHz bands according to regional requirements. The current

position is similar to 2.6GHz, i.e., while some operators have deployed in this band and benefit from

its excellent coverage advantages, the spectrum is not yet generally available in all regions with the

notable exception of the United States where 700MHz is the main band for commercial LTE network

deployments.

The possibility to refarm 1800MHz spectrum for mobile broadband deployments is very appealing

from costcoverage and time to market viewpoints. This spectrum was originally assigned for GSM

voice and is available in substantial bandwidths across most of the world. This report shows and

explains from practical, economic and business perspectives why 1800MHz will emerge as a primeband for LTE deployments in virtually all regions of the world, and be important for international

roaming.

We trust that this report will provide the clearest signals to investors, policy-makers and all

stakeholders about the expanding opportunities being driven by the global interest in LTE1800,

backed by at least 23 firm deployment commitments, according to research by GSA. This momentum

already existing today, together with the reports conclusions, will further boost development of the

supporting ecosystem of user devices and chipsets for LTE operation in the 1800MHz band.

Alan Hadden, PresidentGSA Global mobile Suppliers Association


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Table of contents

Embracing the 1800MHz opportunity: Driving mobile forward with LTE in the 1800MHz band ........... 1Foreword ............................................................................................................................................. 3

Table of contents ................................................................................................................................ 4

Executive summary ............................................................................................................................. 5

Introduction ........................................................................................................................................ 6

LTE 1800 is a market reality ................................................................................................................ 7

Barriers to deployment are being removed ....................................................................................... 9

Spectrum liberalisation ................................................................................................................... 9

Availability of devices .................................................................................................................... 10

LTE device requirements ............................................................................................................... 13

Ability to run GSM and LTE side-by-side ....................................................................................... 15

Drivers for deployment of LTE are becoming more urgent .............................................................. 15

Imperative to create more capacity .............................................................................................. 15

The need to get to market faster .................................................................................................. 16

Benefits of deploying LTE in the 1800MHz band .............................................................................. 17

Theoretical operator case study the financial benefits of launching early in LTE1800 ................. 22

Cost and capacity analysis ............................................................................................................. 24

Revenue analysis ........................................................................................................................... 29

Conclusions ....................................................................................................................................... 30

Bibliography ...................................................................................................................................... 31


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Executive summary

The momentum behind deployment of LTE in the 1800MHz band is growing operators inall regions except North America are trialling LTE in this band. Operators in Europe, the

Middle East, and the Asia-Pacific region have now launched LTE services in the 1800MHzband.

More companies will deploy LTE in the 1800MHz band to take advantage of frequencyavailability (often 1800MHz frequency has already been allocated, has been sanctioned for

use for LTE services, and it is sometimes underused).

Providing initial widespread coverage with LTE in the 1800MHz band can be as much as 60%cheaper than covering the same area with LTE using higher frequency bands largely as a

result of not having to deploy new sites for coverage when those sites are not needed for

capacity. LTE in the 2600MHz band (or other high bands) can then be used to add capacity in

selected geographic areas.

Deployment of LTE 1800MHz can mean a faster time to market both because spectrum isalready available for refarming and because deployment of an LTE 1800 MHz network

requires fewer sites than an LTE deployment in a higher frequency band, so it takes less time

to roll it out.

Where spectrum availability has meant that it has been sensible to deploy LTE in anotherband in the first instance for instance in the 2600MHz band subsequent deployment

using spectrum in the 1800MHz band can mean improved geographic or indoor coverage at

lower cost.

LTE 1800MHz will not typically be deployed on its own. LTE deployed in the 1800MHz bandalone is unlikely to deliver sufficient capacity or coverage in the medium term. LTE1800 willneed to be complemented by LTE deployment in one or more other spectrum bands for

instance the 2600MHz band (for capacity) and in digital dividend spectrum (for rural and in-

building reach). It is evident that operators will deploy LTE across a range of spectrum bands

in order to maximise their capacity, and optimise their cost structures. LTE will also typically

be deployed as an addition to existing mobile broadband infrastructure (such as HSPA /

HSPA+ or EV-DO).

Whilst there is today a choice of LTE user devices working in 1800MHz spectrum, devicevendors need to accelerate the availability of LTE devices of all types to avoid limiting the

development of the market particularly outside the US.

Device vendors need to support multi-mode, multiband handsets, with LTE supported acrossthree or four frequency ranges (depending upon the region being targeted).

1800MHz is a prime band for LTE deployment in virtually all regions of the world, and islikely to be an important enabler for international roaming.


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Introduction

There is increasing global momentum behind LTE, with operators worldwide moving towards

deployment. In some cases they are already rolling out commercial services. However, there are

many countries in which operators have yet to introduce LTE. Even in countries where there is

widespread adoption of WCDMA, HSPA and HSPA+ services, and where mobile data networks aregroaning under the volume of data that smart phones and tablet computers are pulling from and

pushing to the network, many operators have yet to make the step.

They willhave to take that step at some point in order to remain competitive, and in order to take

advantage of the technological improvements that LTE can provide. If they dont, they will run short

of capacity, consumer experience will degrade and customers will move elsewhere. Whats more,

whilst the revenue per bit derived from delivering data services is much lower than the revenue per

bit that can be earned from delivering voice, in the most advanced mobile markets it is the provision

of data services (including the provision of content and applications) that is driving revenue growth.

Ensuring its ability to keep driving the data services market forward has to be a priority in any mobileoperators business plan.

One of the main barriers to entry for the launch of LTE services is the availability of suitable

spectrum. Operators do not all have access to all the spectrum they want and need for LTE. This is

slowing their ability to launch new services and drive new mobile technology out to their customers.

Regulatory bodies and governments around the world have been looking for blocks of frequency

that can be freed up, and are planning auctions of chunks of spectrum particularly in the 2.6GHz

band, and digital dividend frequency in the 700MHz and 800MHz bands. This can all be used for LTE,

and in some countries these auctions have already happened.

However, even where the 700MHz, 800MHz and 2600MHz frequency bands can already be used, it

does not make sense for operators to use them in isolation. And where auctions have not been

completed (or even scheduled), operators are prevented from launching LTE services unless they can

free up spectrum they already have. Experience shows that spectrum refarming and particularly

refarming of spectrum in the 1800MHz frequency range to support LTE has the potential to:

Help operators accelerate the launch of LTE services Significantly lower the overall cost of LTE deployment Contribute to the bank of capacity needed so that operators can provide their mobile

broadband customers with a high quality of service

Generate extra near-term revenue Deliver a better customer experience Provide early movers with a potential head start on competitors.

The experiences of the operators that have already refarmed 1800MHz spectrum for LTE show quite

clearly that refarming 1800MHz spectrum will be beneficial to all operators, regulators and device

vendors, and the opportunity should be grabbed.

This paper reviews the state of launch of LTE in the 1800MHz band, and considers the pros and cons

of refarming spectrum in the 1800MHz band for LTE. It demonstrates there is a significant


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opportunity cost to delaying the introduction of LTE and waiting for bandwidth in other frequency

ranges, rather than launching sooner using the 1800MHz frequency band.

LTE 1800 is a market reality

LTE services have now been launched as commercial services in 1800MHz spectrum on tennetworks: Aero2/ Mobyland in Poland, CSL Ltd in Hong Kong (for indoor coverage), TeliaSonera/

Omnitel in Lithuania, M1 in Singapore, Deutsche Telekom in Germany, TeliaSonera/ LMT in Latvia,

Teliasonera/ Telia in Denmark, TeliaSonera in Finland, Telstra in Australia, and Zain in Saudi Arabia.

This is almost one-third of all commercial LTE launches so far (see the GSAs latest report Evolution

to LTE rev 2 at

http://www.gsacom.com/downloads/pdf/gsa_evolution_to_lte_report_121011.php4).

Beyond these early adopters deployments, trials, studies and consultations related to LTE in the

1800MHz band are underway in many more countries: Belgium, Brazil, Croatia, Estonia, France,

Georgia, Greece, Indonesia, Malaysia, Namibia, Philippines, Russia, Slovenia, South Africa, SouthKorea, Spain, Sweden, Thailand, United Arab Emirates, and the UK. Furthermore, in those markets

where one or more LTE 1800MHz networks have already been launched (for instance Australia),

additional operators are also testing services.

Trials and deployments of LTE in the 1800MHz band worldwide

By mid-October 2011 185 network operators in 66 countries had committed to deploy LTE, and 103

were expected to be offering commercial services by the end of 2012. These operators, as well as

additional service providers involved in pre-commitment trials, and those yet to have started testing


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LTE, should all look to the potential of LTE 1800MHz where spectrum in this frequency band is

accessible.

Early deployments have largely been LTE FDD deployments but there has been significant interest in

LTE TDD too. Operators in Australia, China, Denmark, France, Germany, India, Ireland, Japan,

Malaysia, Oman, Poland, Russia, Sweden, Taiwan and the US have been testing and are in mostcases deploying or planning to deploy LTE TDD. Two operators in Saudi Arabia Etisalat and STC

have already launched LTE TDD networks commercially.

Patterns of LTE 1800MHz deployment are emerging. Where 700800MHz frequency is available

some operators, for example in Germany, are using that to reach remote white spots (unserved

areas) in some cases because this is a regulatory mandate. Others are using it to drive in-building

urban coverage, as lower-frequency signals penetrate buildings better than signals at higher

frequencies. LTE 1800MHz is being used to increase bandwidth in high-demand areas, with fall back

to HSPA+ or Dual Carrier HSPA+ for widespread data coverage, possibly in addition to LTE in digital

dividend spectrum bands. In areas where 2.6GHz frequency is available, this is also used to addcapacity in urban areas.

Emerging patterns of frequency usage

Operators are also using LTE in the 1800MHz band to enable them to introduce initial LTE services

whilst waiting for governments to make additional spectrum available in the 700800MHz and

2600MHz ranges. We will see many multiband deployments; LTE deployments in different frequency

bands are complementary. LTE 1800MHz offers a mid-point compromise technology, with better

geographic coverage per cell site than LTE 2600MHz (but less system capacity), and greater network

capacity than LTE in the 700MHz or 800MHz frequency band (but inferior geographic coverage per

cell site). The comparison between LTE1800 and LTE2600 is explored in a hypothetical case study

later in this paper.


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Barriers to deployment are being removed

Barriers to deployment of LTE services in the 1800MHz frequency range are steadily being removed,

making the launch of services much more attractive for operators. The two principal barriers, namely

legal ability of operators to re-use frequency in this band for the provision of LTE services, and the

availability of attractive devices, have been substantially lowered in most markets, if not completelyovercome.

Spectrum liberalisation

1800MHz frequency is widely available. It is estimated that licences to deploy services at 1800MHz

have been awarded to over 350 operators worldwide, in nearly 150 countries. This frequency has

traditionally been awarded for the provision of GSM services. In some cases those awards were

technology-specific, and did not allow use of the frequency for WCDMA or LTE service provision. In

other cases the awards were technology-neutral. In any case, in many regions national regulators

have removed or started to remove the regulatory barriers to refarming spectrum in the 1800MHz

band for use in WCDMA and LTE networks.

In Europe for instance, rules about how 900 and 1800MHz spectrum might be refarmed for LTE

services have been adopted by the European Commission and are due to be implemented by

Member States by the end of 2011. (That does not mean of course that the frequency is

automatically free to use there may be many customers using it for GSM services but it does

mean any regulatory barrier is set aside. It does not mean either that every national regulatory body

will meet the deadline, but in Europe the writing is on the wall for frequency allocations tied to

specific technologies.)

Finland has not only mandated spectrum refarming already, but it also allocated additionalfrequency in the 1800MHz band. When the Minister of Communications announced in April 2009

that TeliaSonera, Elisa and DNA had been allocated extra frequency, she stated that this move would

enable 4G networks to be deployed with substantially wider coverage and at a lower cost than in

2600MHz networks, and that consequently services could be provided in rural as well as built-up

areas. 1

Refarming strategy options

If operators hold frequency in the 1800MHz band that was allocated to support GSM services they

can take three potential routes: they can continue to use it for provision of GSM services, or

(assuming the regulatory environment allows) they can refarm it for HSPA services, or they can

refarm it for provision of LTE services. (LTE has been standardised for multiple bands, including 3GPP

E-UTRA Operating Band 3.)

One key factor in favour of deployments in the 1800MHz frequency band is that this band has the

potential to become one of the primary bands for provision of LTE services. There are many different

frequency ranges being proposed and adopted for LTE services worldwide, but there is likely to be

convergence on a few frequency bands to avoid the ecosystem becoming too fragmented, and

opportunities for device economies of scale being reduced. Spectrum in the 1800MHz band is widely

1http://www.lvm.fi/web/fi/tiedote/-/view/867823


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available in Asia-Pacific, Europe, the Middle East and Africa and also parts of South America, and has

the potential to be one of, if not the most, common bands .

Whats more, frequency in the 1800MHz band is typically available in reasonably large contiguous

blocks operators often have 1025MHz of frequency, which is sufficient to support LTE service

launches and to deliver the full benefits afforded by LTE. It also is easier to refarm than the 900MHzfrequency band, which is still much more heavily used for the provision of GSM services. In Finland

and Germany for instance, where LTE using 1800MHz has been commercially introduced by

operators, 900MHz was the primary band for GSM services, so the 1800MHz spectrum was relatively

straightforward to refarm.

It is important to note that whilst there are operators with spare capacity in the 1800MHz band for

which migration is relatively straightforward, there are other operators particularly in emerging

markets who are fully using their GSM allocations in dense urban areas, and many handsets are

GSM-only. Migrating customers to the core WCDMA band (2100MHz), for instance, means providing

a new handset in those markets an expensive proposition otherwise migration is less easy toachieve.

GSM functionalities like dynamic frequency channel allocation and orthogonal sub-channel

technology have emerged to help this process though, and long-term use of GSM-only phones can

be expected to decline in all regions. Customers are migrating to WCDMA devices (for instance

operating in the 2100MHz frequency range), meaning that where 1800MHz has been reserved for

GSM it will become increasingly under-utilised, and increasingly available for LTE. This is not yet the

state of affairs everywhere, but it is the case now in some Western European markets and is

expected to come to pass in other regions around 2013 to 2015.

Availability of devices

The availability of LTE devices compatible with 1800MHz is improving. Operators will ultimately

require multi-mode, multi-band devices, and a great range of form factors and options. This will be

critical for driving LTE and future mobile broadband take-up and usage.

Operators already tell us they will need smartphones and tablet devices that can operate in multiple

modes (including LTE FDD, LTE TDD, GSM, HSPA and WiFi) and across multiple frequencies to

support multi-band services in the home country, and to support roaming overseas.

Backward compatibility with HSPA and / or CDMA EV-DO networks (to enable handover of services

to earlier generation networks) is particularly important in the context of LTE1800 being deployed in

hotspots and HSPA being used to provide national coverage. The leading chipset manufacturers

already provide support for all major LTE frequency bands in their chipsets but naturally adding

complexity adds cost, so ultimately operators may agree to common regional specifications.

In the meantime, in the context of LTE in general, the range of devices has grown, and according to

the GSA, at the end of October 2011 there were 197 LTE devices available on the market.

As the figure below shows, the devices are currently predominantly orientated for data-only services

(dongles, routers and modules accounted for 75% of all devices available at the end of October

2011), but LTE smartphones are already available in the US and are increasing in availabilityelsewhere. Operators that have launched services have indicated to us that LTE smartphones with


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1800MHz capability are becoming available now, with laptop modules, tablets and other devices

expected to arrive en-masse in 2012. Dongles and home routers are already available. This means

that operators should not be holding back on deploying LTE 1800 because of perceived device

constraints.

Source: GSA, end October 2011

Of all the LTE devices available, 41 are believed to be 1800MHz compatible about 21% of them.

Only three of those devices were phones. These 1800MHz devices included:

Supplier Device type Model LTE operating frequencies2 Other modes

BandRich Router BandLuxe PR51 800,1800,2600 DC-HSPA+BandRich Router BandLuxe R501 800,1800,2600 DC-HSPA+BandRich USB modem BandLuxe C501 1800,2600 DC-HSPA+

Cisco ModuleEHWIC-4G-LTE-G 800,1800,2600,Others DC-HSPA+

Dovado Router 3GN700,800,1800,2600,AWS,TDD2300,TDD 2600,Others

DC-HSPA+,EV-DO

Dovado Router 4GR 700,800,1800,2600,AWS,TDD2300,TDD 2600,Others DC-HSPA+,EV-DO

Dovado Router TINY700,800,1800,2600,AWS, TDD2300,TDD 2600,Others

DC-HSPA+,EV-DO

GCT Module GDM7240 700,800,1800,2600,AWS,Others

2Note: there are many 3GPP-defined bands that fall under the heading of 700 MHz, including:

Band 12: (Lower 700 MHz) 699 MHz - 716 MHz / 729 MHz - 746 MHzBand 13: (Upper C 700 MHz) 777 MHz - 787 MHz / 746 MHz - 756 MHzBand 14: (Upper D 700 MHz) 788 MHz - 798 MHz / 758 MHz - 768 MHz

Band 17: (Lower B, C 700 MHz) 704 MHz - 716 MHz / 734 MHz - 746 MHz

APAC Digital Dividend (APAC700): 698 - 806 MHzIf a device is shown here as operating in "700 MHz" please consider this simply as a starting point for your own

investigation directly with the vendor concerned to determine exactly which band(s) are supported

30

11

10

2

27

70

47

LTE devices available by form factor

Modules Tablets Notebooks PC Cards

Smartphones Routers Dongles

Source: GSA - Global mobile Suppliers Association


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chipset

Huawei Module EM970 700,800,1800,2600,OthersEV-DO,HSPA+

Huawei Router B593 800,1800,2600,Others HSPA

Huawei Router

E589 personal

hotspot 700,1800,2600,Others HSPA

Huawei USB modemE392 FDD andoptional TDD 800,1800,2600,Others DC-HSPA+

Huawei USB modem E397 700,1800,AWS,Others DC-HSPA+Huawei USB modem E398 700,800,1800,2600,AWS DC-HSPA+

Huawei USB modemE398 T MobileSpeedstick 800,1800,2600,AWS DC-HSPA+

Huawei USB modemE398 VodafoneK5005 800,1800,2600 DC-HSPA+

IP Wireless USB modemUSB-032038-AL-03-EU 800,1800,2600

Motorola USB modem USB-LTE 7110 700,800,1800,2600 Not declared

NetComm RouterLiberty LTEWiFi 800,1800,2600,Others DC-HSPA+

Nokia USB modem RD-3 700,800,1800,2600,Others HSPA+Novatel

Wireless Module Expedite E373 800,1800,2600,Others DC-HSPA+

Qualcomm ModuleMDM9225chipset

700,800,1800,2600,AWS,TDD2300,TDD 2600,Others

DC-HSPA+,TD-SCDMA

Qualcomm ModuleMDM9625chipset

700,800,1800,2600,AWS,TDD2300,TDD 2600,Others

DC-HSPA+,EV-DO, TD-SCDMA

RenesasMobile Module MP5225 800,1800,2600,TDD2600,Others DC-HSPA+Renesas

Mobile Module SP2531800,1800,2600,TDD2600,Others DC-HSPA+

Samsung Phone Galaxy Nexus 700,800,1800,2600 HSPA+Samsung Phone Galaxy S II LTE 800,1800,2600 HSPA+

Samsung TabletGalaxy Tab 8.9LTE 800,1800,2600 DC-HSPA+

Sierra Wireless ModuleAirprimeMC7710 800,1800,2600,Others HSPA+

Sierra Wireless USB modem AirCard 313U 700,800,1800,2600,AWS DC-HSPA+

Sierra Wireless USB modem AirCard 320u 800,1800,2600 DC-HSPA+

Sierra Wireless USB modem

ATTUSBConnectMomentum 4G 700,800,1800,2600 DC-HSPA+

ST-Ericsson Module Thor M700700,800,1800,2600,TDD2300,TDD 2600,Others

ST-Ericsson Module Thor M720 700,800,1800,2600,Others HSPA+

ST-Ericsson Module Thor M7400700,800,1800,2600,TDD2300,TDD 2600,Others DC-HSPA+

ZTE Phone V5L 800,1800,2600 HSPA

ZTE Router

MB91 mobile

hotspot 800,1800,2600,Others DC-HSPA+ZTE Tablet V11L 800,1800,2600 HSPA


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ZTE USB modem AL621 1800,2600 HSPA+ZTE USB modem MF820 1800,2600,Others HSPA+ZTE USB modem MF820D 800,1800,2600 HSPA+


Operators are pressing for a broader range of LTE devices in general, with some in Europe concernedthat the range of devices available to them (in terms of the range of form factors, and numbers of

different devices of similar form factor) is more limited than that in the US, and operators in the

Asia-Pacific region are arguing that the smartphones available on LTE are not sufficiently attractive

to encourage consumer demand.

At least one operator is known to have refarmed its 1800MHz frequency to launch HSPA+ services

one of the reasons for this was that it decided there was a better choice of low-cost devices to

support its service. Although this has not become a mainstream trend, the second generation of LTE

handsets must not only be 1800MHz compatible, but must also be competitive with other

technologies, addressing concerns about choice and attractiveness of the devices that are madeavailable to operators, if the full power of mobile broadband on LTE is to be unleashed.


LTE device requirements

Patterns of spectrum availability and signalled operator intentions mean that device manufacturers

must make available devices capable of delivering services across a variety of network types and

frequencies. These variations differ by region, as the figure on the next page shows:


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Patterns of frequency usage by region

Device vendors need to support operators by introducing as soon as possible a full range of devices

compatible with LTE 1800MHz. These devices must be multi-mode, multi-band devices, and the full

range of form factors is required including tablets and smartphones if operators are to take

advantage of their LTE network launches.

Countries in the Asia-Pacific region have opted to deploy LTE on a particularly large mix of

frequencies. In addition to 800MHz and 1800MHz being used in South Korea, in Japan 2.1GHz isbeing used by NTT Docomo, Emobile is using 1500MHz, KDDI 800MHz, and Softbank has spectrum in

the 2.5GHz band it bought from PHS operator Willcom. In Australia Telstra has launched LTE using

1800MHz. In Taiwan operators have access to spectrum in the 2.3GHz and 2.5GHz bands that was

originally provided for WiMAX. India has already auctioned frequency in the 2.3GHz band, with

auctions of 700MHz and 2.5-2.6GHz bands planned. In China the 2.3GHz band is also available.

Digital dividend frequency in the 698-806MHz bands is also likely to be used in the region.

In addition to handsets capable of serving operators with FDD networks, vendors must also service

the growing volume of operators planning LTE TDD networks. As discussed previously LTE TDD

networks are now planned or being trialled in all regions of the world.

The figure below summarises the key requirements of operators in different regions:


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Main frequency bands for LTE by region

* See footnote number 2 on page 11 explaining the various 700MHz spectrum bands

Ability to run GSM and LTE side-by-side

There is still some lingering concern in some countries that provision of both GSM and LTE in the

1800MHz band could cause interference with voice services. Our research amongst operators with

live commercial services has confirmed that they have faced no problems with interference.

In some markets Europe for instance rules have been established about how GSM and LTE should

co-exist in 1800MHz spectrum. These were designed to avoid interference problems with existing

services. In addition industry 3GPP specifications have been established regarding the deployment of

guard bands to prevent interference. Operators running LTE in the 1800MHz band confirm that

these measures work, so concerns about interference are unfounded and should not be used to

justify delays.

Drivers for deployment of LTE are becoming more urgent

Imperative to create more capacity

One of the biggest drivers for the deployment of LTE1800 is the need to open up additional capacity

for the delivery of mobile broadband services. The challenges created within mobile networks by the

tremendous growth in data service usage and consequent data volumes by customers with dongles,

smartphones and tablets are well documented. The figure below for instance shows Ciscos forecast

for mobile data traffic to 2015.


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Source: Cisco VNI Index 2011

As more customers take up data services the challenges will only grow, with greater pressure being

exerted in all areas of the network. The one area of a mobile operators network that does not have

near-infinite potential capacity is the access network. There are finite limits to the amount of

bandwidth that base stations with a given frequency asset can provide and those limits in WCDMA

and HSPA+ networks are not sufficient to serve customers with the speeds they need and want.

Once capacity has been reached within a cell, more capacity can only be added to the network by

adding new cell sites. This is both tremendously expensive, takes time, and in practical terms is

increasingly hard to do as there is a real lack of potential new suitable locations for cell sites in urban

areas.

In this context, as one contributor to this study put it: Operators need to consider the most

profitable way of utilizing their total spectrum assets today and in the future.

By refarming 1800MHz spectrum for use by mobile broadband radio technologies operators can gain

the additional capacity offered by these later generation technologies, as well as improvements in

speeds and other important aspects of performance like latency.

Operators do have the alternative costly options of cell splitting, adding micro- and picocells, or

waiting for new spectrum to become available, but by delaying they risk reducing customer

satisfaction and increasing churn to rivals who are accelerating deployment of new generation

technologies. Furthermore, in urban areas operators may still run out of capacity.

The need to get to market faster

For some operators, refarming spectrum is simply the only way they will get to launch LTE services

soon. Where regulators are unlikely to be in a position to release digital dividend spectrum (700MHz

or 800MHz) for a few years, or where auctions of frequency in other bands (such as 2.6GHz) are not

0

5

10

15

20

25

2010 2011 2012 2013 2014 2015

TBperyear(millions)

Annual mobile data traffic

North America

Western Europe

Asia Pacific

Japan

Latin America

Central Eastern Europe

Middle East and Africa


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expected imminently, or indeed where operators have lost such auctions, or failed to gain sufficient

bandwidth allocation in such auctions, operators have no alternative but to refarm spectrum.

For instance the Indonesian regulator is not expected to release spectrum in the 2.6GHz band for

two or more years. In Australia it is likely to be a couple of years before the release of new spectrum

bands. And in the UK the auction of frequency for LTE services is not now anticipated to start beforeQ4 2012. Even once spectrum has been auctioned it does not necessarily become immediately

available for use. For instance there may be a delay before it can be used because the frequency

bands bought are used to provide another service such as analogue TV which will take some time to

decommission and switch off.

Refarming could enable operators with 1800MHz frequency to bring forward LTE deployment by

two, three or even more years in some cases, and could also offer significant competitive advantage

over rivals that do not own suitable 1800MHz assets that they can use.

Benefits of deploying LTE in the 1800MHz band

Assuming that operators are bought into the business case for introducing LTE services in the first

place, and that they have the opportunity to refarm frequency to support them, operators can

potentially reduce the cost of their LTE deployments by using frequency in the 1800MHz band.

LTE1800 offers a number of advantages:

Potentially, no spectrum acquisition costs (there may be annual usage fees) Potentially lower capex on LTE network deployment because fewer sites are needed, and

consequently less equipment is required as compared to higher frequency bands

Lower operational expenditure (ongoing opex) as a result of that reduction in the number ofsites and equipment.

LTE can potentially be launched in the 1800MHz band without having to buy new spectrum

Spectrum is a limited resource, and it is an expensive resource. Whilst recent auctions have shown

that operators are not willing to pay for LTE spectrum the exorbitant sums they paid a decade ago

for spectrum to support WCDMA services, the right bands of spectrum and sufficient quantities of

spectrum can still be costly to acquire.

Recent auctions of 700800MHz and 2.6GHz spectrum in various countries have shown that the cost

per MHz per head of population can range from less than $0.01 to nearly $2, meaning in the latter

case substantial outlay for an operator. Where an operator has existing frequency it can refarm for

the launch of LTE it can save itself millions of dollars.

As the figure below shows though, it is not always the case that the 1800MHz frequency comes free

of charge. In Singapore in February 2009 the spectrum costs for frequency in the 1800MHz band

were S$500k for a 5MHz allocation. However, a 5MHz slot auctioned in March 2011 cost S$22m. In

recent auctions in South Korea, SK Telecom bid 995 billion Won (about $930 million at the spot

exchange rate at that time) to win the 20MHz of frequency up for grabs in the 1800MHz band. Korea

Telecom in contrast got 10MHz of frequency in the 800MHz band and paid about 260 billion Won

($240 million). In Sweden, the Swedish regulator PTS announced the results of stage one of the

auction of spectrum in the 1800MHz band in October 2011. Net4Mobility HB and TeliaSonera both


18/32

won new blocks of spectrum. NetMobility acquired 2x10MHz of spectrum for $65.15 million, whilst

TeliaSonera paid $139.39 million for 2x25MHz of spectrum.

Recent auction prices for spectrum price per MHz per head of population

Using LTE 1800MHz as part of the mix can help to reduce the capex of LTE deployment

It is in the area of capital expenditure to deploy the physical LTE infrastructure that use of the

1800MHz band really benefits operators.

LTE1800 offers a potential cell coverage area that as a rule of thumb and for the same given

amount of spectrum is approximately twice as large as a 2.6GHz cell. This means that an operator

needs to deploy far fewer base station sites in order to achieve the same given geographic coverage.

Savings can be the order of 2054% of sites depending upon the local characteristics3. Because it is

at a lower frequency, LTE1800 will also provide better in-building coverage than LTE2600.

At the same time, an LTE network at 1800MHz is compatible with an existing 1800MHz

infrastructure established to propagate GSM services in that frequency band. In other words the

existing base station sites can be used. This means where an operator has an existing network it has

the potential to side-step most of the enormous investment associated with erecting towers and

fences, installing shelter, power and air-conditioning equipment, laying roads, finding suitable

buildings and getting antennas on to roof tops. It is also possible for an operator to re-use other

assets including feeders, antennas (though these might need retuning) and cables, and to minimize

the investment in additional hardware.

3According to one of the equipment vendors interviewed for this report the cell coverage improvement of the

1800MHz band compared to the 2.6GHz band is in the range of 3dB (urban environment) to 5 dB (suburbanand rural environment) using antennas with the same gain. Using antennas of same physical size this

difference can be reduced by about 1.5dB. The resulting difference of 1.5dB to 3.5dB will translate into a

coverage difference in urban areas of about 12% and in suburban and rural areas of up to 30%. By using highergain antennas this coverage difference can be eliminated or reduced, but of course these cost more to deploy

and run.


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Because they are using the same physical locations, operators also have the potential to deploy a

single RAN base station infrastructure capable of operating in a mixed mode and serving both GSM

and LTE (and in the case of a software-defined-radio (SDR) approach, to remotely adjust the

resources applied to these services using a software upgrade). This avoids the needs to run multiple

separate access network architectures. It is an option operators can consider where they need to

modernise their GSM and WCDMA networks anyway.

In reality operators are unlikely to achieve a 1-to-1 mapping and might in fact have a network

optimised for both GSM1800 and WCDMA2100. But even where the 1800MHz coverage advantage

is not fully used because the network is denser than it otherwise needs to be, other advantages

manifest themselves: end users get higher data rates at the cell edge, and uplink power

consumption of devices is reduced.

Another network efficiency gain results from the IP transformation of the backhaul links, which is

typically done at the time when a base station becomes an HSPA+ or LTE site in order to

accommodate the increased traffic volumes. The IP links introduced for LTE1800 could also be usedto transport the GSM traffic more efficiently.

Using LTE 1800MHz as part of the mix can also help to reduce on-going opex of LTE

In addition to reduced capex, deploying LTE in 1800MHz can also mean reduced opex in comparison

with deployments that only use frequency in the 2600MHz band. First, the overall site rental bill is

lower because fewer sites are needed, fewer backhaul connections are required, and less power,

cooling, and maintenance spend is required. Moreover, where the GSM and WCDMA cell sites have

been modernised at the same time as the LTE deployment (for instance through deployment of

modern multi-mode base stations), they also cost less, as newer technologies require less power,

less physical space etc. There is also an opportunity to combine the backhaul for the GSM, WCDMAand LTE services.

Finally, although they will be available in HSPA+ networks, SON (Self-Organising Network4)

techniques are expected to be introduced earlier in LTE than for HSPA and will therefore have an

impact on opex, with lower costs for retuning.

So, not only do operators potentially reduce their cost of LTE deployment by using LTE1800 to

achieve widespread coverage, they also have the opportunity to drive down ongoing costs of

running their GSM and WCDMA networks. By waiting for spectrum in new bands rather than

deploying on refarmed 1800MHz spectrum now, they lose out on potential infrastructure efficiencygains and cost savings in the short term, and they also risk higher capex in the longer term even

allowing for likely reductions in the cost of LTE equipment over the coming years.

Accelerating LTE deployment in 1800MHz can have top-line benefit too

Deployment of LTE services will help operators to drive data revenues. Many services that can be

delivered over LTE can also be delivered over HSPA+, which makes it difficult to accurately assess the

likely extent of extra revenue. Nonetheless, LTE does offer the opportunity to:

Deliver extra revenue by enabling the provision of new types of services Serve as a lever with which to charge more for mobile data subscriptions.

4Covered by a variety of standards from 3GPP (http://www.3gpp.org)


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New types of services might include HD mobile video-based services for emergency services, true

on-demand mobile TV, video-based mobile advertising, wireless DSL, and high-quality online mobile

gaming (which offers experiences that are consistent with the fixed network now). LTE data roaming

will also be a new revenue stream and it is one which 1800MHz is well-placed to serve. As

discussed previously it is a commonly available band, and could be important for facilitating

roaming.

LTE operators have the chance to charge more for LTE services they can market the improved

downlink, and substantially improved uplink, capabilities LTE brings. LTE also offers an improved

experience in other ways, such as lower latency. Early adopters will pay more to get such services.

Appropriate service tiers and packages can be introduced from the outset to ensure very heavy users

pay an appropriate price per bit getting the business models right should ensure more revenue

from customers who will be creating many multiples of the traffic they currently generate.

By waiting for spectrum in other frequency bands, and not deploying in 1800MHz, operators risk

losing out on early ARPU uplift. Operators able to launch LTE early in 1800MHz also have thepotential to win market share. The opportunity to achieve this will vary from country to country, will

depend upon the amount of head start an operator can gain by frequency refarming, and will

depend upon how aggressively it markets services, but single-digit share gains over the course of a

couple of years might not be unreasonable. However, handset availability is absolutely critical

without availability of attractive devices first-mover advantage is diminished.

Even without the launch of new services, the improved customer experience for mobile Internet

might be sufficient to attract customers.

Delivering a better customer experienceLTE in general offers the potential for substantially improved mobile broadband experience. It offers

high peak rate downlink and uplink speeds, much lower latency, and advanced quality of service

capabilities (in combination with other latest generation technology developments).

LTE1800 also delivers a much better indoor experience compared with HSPA2100 and LTE2600. Data

from operator trials has shown that in dense urban areas indoor reception for LTE1800 can deliver

on average more than 17Mbps more throughput than LTE2600. Whats more, given the possible

deployment of LTE1800 on a grid optimised for WCDMA at 2.1GHz, uplink power requirements will

be much lower with LTE1800 than they are for LTE2600 this will make a big difference to battery

life with high-end devices.

Meanwhile LTEs use of OFDM techniques makes it more robust in urban areas than WCDMA as the

transmission is more immune to noise. OFDM also offers a spectral efficiency gain of 2530% and

LTE1800 additionally offers better indoor coverage than WCDMA2100 (about 25% better). This

results in a better user experience on the LTE1800 network compared to the WCDMA2100 network.

Reductions in latency will also mean a significant improvement in customer experience. When

customers are downloading small amounts of data (for instance web pages), and when the

download time is relatively short, latency can have as much of an impact on customer experience as

peak download speed. Latency can also have a significant impact on perception of service quality for

latency-sensitive applications such as VoIP, videocalling, videoconferencing and online gaming.


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Latency depends upon a variety of factors (including the route and distance application data must

travel), but on-net latency for mobile technologies varies considerably.

Typical latency benchmarks for different mobile technology generations

Mobile generation LatencyHSDPA (R99) 60-130msHSDPA (R6) 40-50msHSPA+ 20-30msLTE 10-20ms

Source: Nokia Siemens Networks5, operator statements

Developing a reputation for better customer experience especially if delivered earlier than rivals

through refarming has the potential to be a lever for driving market share over the long term.

There is also a marketing benefit to be gained from being able to offer your best customers LTE

services before anyone else.

5Nokia Siemens Networks: Latency The Impact of Latency on Application Performance

http://www.nokiasiemensnetworks.com/system/files/document/LatencyWhitepaper.pdf


22/32

Theoretical operator case study the financial benefits of launching early

in LTE1800

To illustrate the dynamics of the various investment options, this paper presents a hypothetical

business case for a mid-sized mobile operator. The business case looks at the cost for that operator

of deploying a national network based on various combinations of mobile broadband technology. Inall cases the operator has already deployed HSPA Release 5 on a near-national basis (90%

geographic coverage). The operator then adds additional capacity via one of four methods:

Building out an LTE1800 network starting in hotspot areas, to reach near-national capacityby end of year five

Building out an LTE2600 network starting in hotspot areas, to reach near-national capacityby end of year five

Upgrading the HSPA+ network to Release 7 (64 QAM) starting in hotspot areas, and doingthis on a near-nationwide basis by the end of year five.

Upgrading the HSPA+ network to Release 8 (DC-HSPA and 64 QAM) starting in hotspotareas, and doing this on a near-nationwide basis by the end of year five.

The operator has the following characteristics:

Network characteristic Details

All subscribers 10 millionGeographic area to be covered 350,000 km2Urban / suburban / rural areas 1% / 6% / 93%Population distribution in urban / suburban / rural

areas

55% / 37% / 8%

Frequency available 20MHz for each of LTE1800, LTE2600and WCDMA/HSPA+*

*To make the deployment costs comparable, we assume that LTE1800, LTE2600 and HSPA+ upgrades cover the

same geographic areas, and that each technology has the same frequency available. Note this is not realistic

for real-world deployment scenarios, but has been chosen to enable like-for-like comparison.

The service parameters assumed are as follows:

Year 1 Year 2 Year 3 Year 4 Year 5

Mobile broadband

adoption

2,400,000 2,800,000 3,200,000 3,600,000 4,000,000

- Of which LTE /HSPA+

48,000 252,000 512,000 828,000 1,200,000

Average WCDMA /

HSDPA / HSUPA

broadband monthly

ARPU ($)

14.3 13.5 12.9 12.2 11.6

LTE / HSPA+ broadband

monthly ARPU ($)

16.4 15.6 14.8 14.1 13.3

Average monthly usage

(GB)

1.5 2.3 3.4 5.1 7.6


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The mobile operator enjoys growth of its enhanced mobile broadband customer base (those

customers using LTE / HSPA+ Release 7 or 8) over five years, rising to 30% of the operators overall

mobile broadband customer base. Average ARPU from mobile broadband declines over the period,

although LTE / HSPA+ services are assumed to command a 15% premium over WCDMA and lower-

speed HSDPA / HSUPA services.

Average monthly usage across all mobile broadband customers is assumed to be 1GB per month in

year zero (which is generous) with average consumption growing by 50% per year. (This may be

conservative in comparison with growth rates witnessed recently.)

The operator is assumed to have slightly more than 10,000 GSM 1800 / WCDMA base stations in its

network, distributed as follows:

Urban: 54% Suburban: 13% Rural: 43%

It is assumed that each cell has a maximum of three sectors.

The rollout programme for the upgrades is the same for each upgrade strategy, as follows:

Cell coverage area for a deployment in the LTE2600 band is assumed to be approximately half that in

the LTE1800 band. The operator therefore puts in many more LTE2600 base stations but gets much

more network capacity. It is assumed that 100% of existing sites can be re-used in the LTE1800

deployment scenario, but that some reconfiguration to deploy in LTE2600 means only 95% of

existing sites are re-used.


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Cost and capacity analysis

The figures below show the cumulative capex of the various mobile broadband upgrade strategies,

as well as the cumulative capacity that each network delivers.

It is immediately apparent that the capex of the LTE deployment strategies are much higher than for

the HSPA upgrade strategy; and the LTE2600 is much more expensive than LTE1800. However, theLTE2600 network has substantially higher capacity than the others. These figures exclude the cost of

any new frequency that must be acquired by the operator. In the case of refarming there is no such

cost. In the case of LTE2600, refarming is typically not possible, so these costs must be borne in

addition. In Italys recent auction the price paid for spectrum in the 2600MHz band reached $0.16

per MHz pair per head of population. A similar cost in this scenario would equate to additional fees

of $16 million (based on 100% penetration with 10 million customers).

The figure below shows the cumulative network capacity delivered by these three approaches

(bearing in mind that the baseline capacity provided by the non-upgraded sections of the networks

is also available). It also shows the capacity available if LTE Release 8 is pushed to its limit with SU-MIMO 4x4 (high-case scenarios), as opposed to simply upgrading to LTE Release 8 with 2x2 SU-

MIMO technology. It is quite evident that although the LTE2600 strategy costs much more, it

delivers much more network capacity.

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800


$millions

Cumulative capex of the technology upgrade paths

LTE 1800 LTE 2600 HSPA+ Upgrade to R7 HSPA+ Upgrade to R8

Source: Innovation Observatory


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Given the customer growth profiles and usage assumptions we have defined, the HSPA+ upgrade

strategy comes close to exhausting total network capacity during peak periods later in the scenario,

as the figure below shows. The non-upgraded HSPA network runs out of capacity in urban areas

around year 4.

0

500

1000

1500

2000

2500


Cumulative network capacity - Gbps

LTE 1800 (rel. 8, 2x2 SU MIMO)

LTE 2600 (rel. 8, 2x2 SU MIMO)

HSPA base line (rel. 5)

HSPA+ 21 Mbps (rel. 7)


LTE 1800 (rel. 8, 4x4 MIMO)

LTE 2600 (rel. 8, 4x4 MIMO)

Source:

InnovationObservatory

(200)

-

200

400

600

800

1,000

1,200

1,400


Spare network capacity Gbps - urban area

HSPA base line (rel. 5) HSPA+ 21 Mbps (rel. 7)

HSPA+ 42 Mbps (rel. 8) LTE 1800 (rel. 8, 2x2 SU MIMO)

LTE 1800 (rel. 8, 4x4 MIMO) LTE 2600 (rel. 8, 2x2 SU MIMO)

LTE 2600 (rel. 8, 4x4 MIMO) Source: Innovation Observatory


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Of course, looking at total network capacity is too simplistic. Traffic does not average smoothly

across cell sites. Some cell sites account for a much higher volume of data than other sites. If we

assume that 5% of cell sites generate 20% of all traffic, that the next 20% of cell sites account for

35% of traffic, and the remaining 75% of sites generate 45% of traffic (a profile which is not

inconsistent with the traffic distribution experienced in live networks) then it becomes apparent that

using HSPA alone is not a viable strategy, as the figure below shows:

Even LTE is insufficient given a 20MHz band of spectrum unless it is upgraded to MIMO 4x4 (the

high-case scenario).

If an operator only initially has access to 10MHz of spectrum for LTE, the amount of capacity in the

network is insufficient even if LTE is upgraded with MIMO 4x4, as the figure below demonstrates:

-150

-100

-500

50

100

150

200


Unusedcapac

itypercell(Mbps)

Spare capacity in busiest 5% of cells under various technology

scenarios, with 20MHz of spectrum for LTE




LTE rel. 8, 2x2 SU MIMO (20 MHz WCDMA + 20MHz LTE)

LTE rel. 8, 4x4 MIMO (20 MHz WCDMA + 20 MHz LTE)

Source:

Innovation

Observatory


27/32

Radio technologies are becoming available that can support two LTE bands using the same radio

units and antennas. This opens up the possibility of deploying LTE in both the 1800MHz band and

the 2600MHz band (with minimum incremental cost in comparison with deploying in a single band

only). The figure below shows that by deploying LTE in two bands from a single base station in order

to take advantage of more frequency availability (in this case the 1800MHz and 2600MHz bands)

then operators can ensure sufficient capacity even in the highest loaded cells throughout the

forecast period.

-120

-100

-80

-60

-40

-20

0

20

4060

80

100


Unusedcapacitypercell(Mbps)


scenarios, with 10MHz of LTE spectrum




LTE rel. 8, 2x2 SU MIMO (20 MHz WCDMA + 10MHz LTE)

LTE rel. 8, 4x4 MIMO (20 MHz WCDMA + 10 MHz LTE)

Source:

Innovation

Observatory

-150

-100

-50

0

50

100

150

200

250


Unusedcapacitypercell(Mbps)


scenarios, with 30MHz of LTE spectrum




LTE rel. 8, 2x2 SU MIMO (20MHz WCDMA + 10MHz LTE1800 + 10MHz LTE2600)

LTE rel. 8, 4x4 MIMO (20MHz WCDMA + 10MHz LTE1800 + 20MHz LTE2600)

Source: Innovation Observatory


28/32

It is clear that even in this scenario further capacity is likely to be needed in the future, and

operators are unlikely to have access to sufficiently large blocks of frequency in the 1800MHz band

alone to be able to meet their capacity requirements. They will need to use frequency in the

1800MHz band to ensure coverage, and frequency in a complementary band in many markets in

the 2600MHz band to provide the necessary capacity in high-demand locations. They can deploy

LTE in the 2600MHz band either at existing sites only (so it provides highly localised capacity), or

additional sites can be deployed.

What this cost and capacity data illustrates is the following:

The ideal combination in many countries as the figure below suggests will be the combination of

LTE at 1800MHz with one or more complementary bands and technologies.

Many operators are likely to push their HSPA investments if not to the limit, then certainly to

42Mbps peak speeds. Operators cannot ignore LTE investments completely however, as the long-

term scalability of their networks depends upon deploying LTE, and migration to LTE offersadditional potential benefits such as the long-term integration of voice and data on IP.

Where it is available digital dividend spectrum in the 700MHz and 800MHz bands will also be used.

LTE in these spectrum bands can deliver national coverage cheaper than LTE in the 1800MHz band

(because cell size is much larger, and because the in-building coverage is much better in urban areas

although system capacity is much lower). So where operators have access to spectrum in the

700MHz and 800MHz bands for LTE they will use it as an enabler to deliver coverage.

Where they are able, operators will use LTE2600 (or LTE in other high frequencies), because this

strategy delivers much higher capacity for any given coverage area than deploying LTE in 1800MHz

or in digital dividend spectrum. This approach will be common in peak traffic areas.

However, they will also want to use LTE1800 where they can because it offers an improvement onHSPA+ performance (even upgraded to Release 8), because LTE in digital dividend spectrum cannot


29/32

deliver sufficient capacity, and because launch of LTE in 1800MHz enables coverage to be achieved

at a lower cost than launch of LTE only in higher frequencies.

Revenue analysis

If an operator refarms frequency in order to deploy LTE as soon as possible, it will accelerate some of

that cost, but revenue is brought forward too. The figure below shows the cumulative totalbroadband revenue derived from the provision of broadband services in this scenario, based on

launching services at the start of year 1 (assuming launch now on LTE1800), and based on delaying

for two years (assuming launch later on LTE2600).

Under these scenarios, the operator launching earlier on LTE1800 has taken over a billion dollars

more (50% extra) in revenues by the end of year five. Of course there are many other potential

factors to consider, such as the potential market share to be gained by exploiting first-mover

advantage, or the ability to realize that advantage if the device availability is limited. But in simple

terms if operators see a potential return on investment from deploying LTE it makes sense to do it

sooner rather than later as there is a cost to delaying. In simple terms, operators will never catch up

on revenue lost by delaying rollout if they have the possibility to launch LTE in the 1800MHz band

now.


30/32

Conclusions

Accelerating the launch of LTE through refarming of spectrum in the 1800MHz band can deliver a

number of opportunities to mobile operators.

First, they have the opportunity to reduce the cost of their LTE deployments in comparisonwith launching in the LTE 2600MHz band alone. Analysis suggests that savings of the order of

3040% on capex are achievable by using a mix of frequencies. (Note that operators will

need to deploy LTE in other bands including the digital dividend and 2600MHz bands too, in

order to gain sufficient capacity in hotspot areas, and to improve in-building and rural

coverage. Deployment in the 1800MHz band alone will not deliver sufficient long-term

capacity.)

Operators can use LTE in the 1800MHz band to improve coverage where they have alreadydeployed LTE in the 2600MHz (or other complementary) band in urban areas.

They can also use it to speed time to market by refarming spectrum they already hold sothey dont have to wait for spectrum auctions, and because it takes less time to deploy anetwork needing fewer sites than it does to deploy a network at a higher frequency needing

more sites.

Operators also have the potential to bring in additional revenues from the early launch ofLTE.

Finally, and just as importantly, by deploying LTE earlier mobile operators can significantlyimprove the experience of their customers, helping to lower churn, and improving the

opportunity to develop new revenues streams on top of the mobile broadband network.

In order to realise the benefits of LTE 1800MHz, regulators need to accelerate efforts to enable

refarming of spectrum in the 1800MHz band. This is underway, but regulators should redouble their

efforts to remove barriers as swiftly as possible.

Operators should note that device availability is improving rapidly. This should not be seen as a

deterrent to deployment in the LTE 1800MHz band where this is practical. Notwithstanding this,

vendors must improve rapidly the range of devices available for LTE and must ensure that there is a

wide variety of attractive and competitive handsets capable of supporting LTE in the 1800MHz

frequency band to help operators drive the market. There is clear and significant commitment from

operators to deploy in this band so handset vendors must help assist them by responding rapidly.

Vendors need to develop multi-mode, multi-band handsets, with capability to operate in variety ofLTE frequencies including digital dividend spectrum, 1800MHz and 2600MHz, and the capability to

fall back to WCDMA-HSPA, CDMA EV-DO networks and GSM/ EDGE networks. Typical requirements

are likely to vary by region, but 1800MHz has emerged as one of the prime LTE bands. Even in

regions where use of LTE in the 1800MHz band is not as common (for instance in North America

currently), inclusion of 1800MHz capabilities will be essential to ensure roaming elsewhere.


31/32

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Documents

GSA Report Embracing the 1800MHz Opportunity