Stratecast Perspectives and Insight for Executives

SPIE 2010 #45 December 10, 2010

4G and Much More Moving Forward and Creating Options

Introduction 1
With the close of 2010 looming on the horizon, the phenomenal demand and growth in mobile
markets has not slowed. Mobile operators and their vendors continue to expand network coverage
and capacity, bringing new technologies to market with the underlying goal of providing new
services and devices.
This year can be called the year that 4G came to market en mass, with many major network
strategies, deployments, and plans announced by North American mobile operators. Specifically,
Sprints recent Network Vision announcement; Verizon Wireless 4G network deployment
announcements; Clearwires recent 4G LTE trials and funding announcements; and, first out of the
blocks, Metro PCS which announced availability of its 4G services in September. AT&T has not had
a recent 4G announcement but has endorsed 4G LTE, with plans to roll out 4G LTE in 2011.
Although there is still discussion about what is and what is not considered 4G, each operators latest
actions center around moving to next-generation technologies and augmenting, converging and
providing higher bandwidth services and new devices to consumers and the business community.
In this broad sense, all operators are moving towards 4G, but from a technology purist standpoint, it
can be argued that all will not attain the label of 4G as defined by standards bodies. For example,
some industry pundits argue that Clearwires 4G WiMAX and current deployments of 4G LTE are
not 4G at all. Moreover, 3GPPs (3rd Generation Partnership Project) initial 4G standard does not
meet ITUs (International Telecommunications Union) 4G criteria, which is the ability to provide
optimal download speeds at 100 Mbps for mobile devices such as mobile phones, and 1 Gbps for
other mobile devices, such as wireless modems. Nevertheless, Stratecast considers the recent
announcements made by the North American operators to be 4G announcements.
That being said, each operators 4G announcement incorporates different technology strategies and
reliance on multiple vendor partners for products, hardware, software and, very importantly, services.
The services range from planning, integration, project management, training and deployment of
solutions. In this weeks edition of SPIE we discuss the most recent 4G announcements in light of
mobile market trends, communications infrastructure, and 3G/4G technologies.

Please note that the insights and opinions expressed in this assessment are those of Stratecast and have been developed
through the Stratecast research and analysis process. These expressed insights and opinions do not necessarily reflect the
views of the company executives interviewed.
1

Verizon Wireless
On Wednesday, December 1, 2010, Verizon Wireless (VZW) announced it would be opening its
initial 4G markets four days later, on December 5th. The initial rollout covers 38 markets with plans
to cover its North American customer footprint by the end of 2013. Devices used to access 4G
mobile broadband services are currently limited to USB modems with 3G/4G dual-mode support,
and are manufactured by LG and Pantech. The company plans to introduce 4G mobile phones in
2011. VZWs 4G/LTE is provided in the 700 MHz spectrum with advertised speeds of 5 - 12 Mbps
down and 2-5 Mbps up.
VZWs infrastructure partners include Alcatel-Lucent (ALU) and Ericsson for mobile infrastructure;
and Cisco, Nokia Siemens Networks (NSN), and Tekelec for IP Multimedia Subsystem (IMS)
architecture. Typical of Verizon, not many details were given on each vendors contribution, but it
was emphasized that each vendor partner was integral to its success in bringing 4G to market, and
that the professional services each vendor provided were crucial to VZWs successful and on-time
4G rollout.
VZW originally announced its LTE vendor ecosystem in 2009. At that time, VZW stated that it
would use Alcatel-Lucent and Ericsson for radio access network infrastructure; Starent (acquired by
Cisco) for portions of the mobile core; and Alcatel-Lucent and Nokia Siemens network for IMS for
converged (fixed and mobile broadband) applications enablement. It also stated that it would rollout
its 4G network in 2010, a promise that has been delivered on.
Alcatel-Lucent, in a subsequent announcement on March 24, 2010, stated that Verizon Wireless
selected Alcatel-Lucent to provide its mobile backhaul solution for VZWs 3G and in preparation
for its 4G network.
Tekelec, an equipment vendor providing signaling solutions, call session control and mobile traffic
management solutions for both LTE and WiMAX for global mobile operators, and who recently
acquired Camiant, is also a key vendor in VZWs 4G infrastructure. VZW chose Camiant in March
2010 to provide policy and charging functionality in its 4G network, utilizing Camiants Multimedia
Policy Engine (MPE) as the Policy and Charging Rules Function. Camiants MPE will perform
policy control for Internet data, and IMS and non-IMS-based services.
VZWs initial 4G service offerings, although limited today, are just the beginning of a wealth of
services that can be brought to market as the network is leveraged to its fullest capabilities. More
robust convergent offerings utilizing its 3G/4G wireless infrastructure, coupled with its wireline
IP/MPLS infrastructure, can be enabled to bring innovative services to market for the consumer,
enterprise, and large industry. Machine-to-machine, employee productivity applications, field
services and device management are enhanced by LTE as 4G LTE offers more security, capacity,
and, with the underlying IP-based infrastructure, more flexibility to bring mobile services to market.
Another benefit of VZWs 700 spectrum 4G service is the ability to improve in-building coverage.
Stratecast believes that, although this is not a primary focus of the recent announcements, it is a
crucial feature. In-building coverage (or lack thereof) is a major blind spot for many mobile
operators who, in some cases, appear to be trying to render wireline phone service obsolete but are
unable to do so when reliable wireless service ends at the corporate front door.
From a device perspective, VZW is completely aware that devices drive usage, and plans to bring
out multiple devices in 2011, including mobile phones. However, VZW and other mobile operators
are reliant on their device vendors.
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Roaming and hand-off between 3G and 4G mobile technologies is critical for a high-quality user
experience. VZW explained in its 4G announcement that hand-offs are very efficient and should be
transparent to users. Calls that start on 3G and roam into 4G territory will stay on 3G, and calls that
originate in 4G areas that roam into areas where 4G is not available will be seamlessly transferred to
3G infrastructure.

Sprint Network Vision

Another significant announcement was made by Sprint on Tuesday, December 6, 2010. Sprint
announced its Network Vision strategy. Sprints Network Vision is a new program that collapses
Sprints mobile network by combining spectrums on a single base station that provides for multimode transmission. Sprint signed a multi-year agreement with infrastructure partners, Alcatel-Lucent,
Ericsson, and Samsung. The Network Vision and support of multiple technologies not only enables
a more efficient and collapsed network but provides Sprint with a strategy to hedge its bet on
technologies (LTE and WiMAX), gain significant cost reductions, and provide its iDEN users with a
more robust service offering. In the initial deployment Sprint will re-purpose its 800 MHz spectrum
from the retiring iDEN network, strengthen its in-building penetration and utilize 1900 MHz
spectrum to improve coverage and capacity, and eventually bring out mobile new devices.
The new, multi-mode base stations can support 800, 1900 and 2.5 MHz spectrum on the same
platform which will allow Sprint to enable services in the 800 and 1900 MHz spectrum, support
Clearwires 2.5 WiMAX spectrum as well as the other spectrums in the future. As 4G spectrum
becomes available, the multi-mode base stations can be upgraded via software and adding hardware
(cards) to support LTE technologies. Sprint is working with chipset vendors today to enable devices
and future requirements for 3G/4G hand-offs.
A recap of the Sprint announcement is:
Financial Impact

The total estimated incremental cost of the Network Vision program over the deployment
period is between $4 billion and $5 billion.

Sprint estimates the total net financial benefit will be between $10 billion and $11 billion
(realized over a 7-year period).

Cost savings are expected to come from capital efficiencies, reducing energy costs, lowering
backhaul costs, and an overall reduction of the cost per bit. The cost per bit reductions will
be realized in 3G voice and data services, and further reductions will be realized from future
4G infrastructure as well as the eventual reduction in the total number of cell sites.

Infrastructure Partners

Alcatel-Lucent is scheduled to provide radio access network (RAN), IP/MPLS and packet
microwave backhaul and network monitoring hardware and software. Alcatel-Lucent is
providing base stations that support 3G multiple technologies and spectrums; 9500
Microwave Packet Radios (MPR); 7705 Service Aggregation Routers (SAR) and 7750 Service
Routers (SR); 9900 Wireless Network Guardian (WNG); 5620 Service Aware Manager
(SAM), and ancillary cables and antennas.

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Samsung will provide its multi-mode base stations, backhaul and core network elements, and
services as part of Sprints Network Vision. The multi-mode base stations enable multiple
spectrums on the same platform.

Ericsson is to provide multi-band, multi-standard Radio Access Network based on its

RBS6000 (Radio Base Station) and core network for voice and data, and IP/Microwave
backhaul solution (MINI-LINK and SmartEdge).

Services

Sprints Network Vision leverages its existing Network Advantage contract with Ericsson,
signed in 2009, providing network services for Sprints wireless, wireline and iDEN
networks. The new arrangement leverages this existing agreement. For Network Vision,
Ericsson will be the lead integrator and provide network design, deployment and integration,
as well as training and support.

Alcatel-Lucent will provide network integration services, including installation,

commissioning and deployment of multiple infrastructure elements, as well as training and
project management.

Samsung will provide network services such as network design, deployment, optimization
and support. Samsung is an original partner in the build out of Clearwires 4G mobile
network and was an original Sprint partner in its 4G (Xohm) infrastructure prior to merging
WiMAX assets with Clearwire.

Clearwire 4G WiMAX and LTE

Clearwire continues to increase its market coverage, steadfastly rolling out its WiMAX mobile
broadband network to many markets. As of the end of September 2010, Clearwire markets cover
70.5 million people; and, since September, the company has continued to open additional markets in
California, in areas of Los Angeles and the San Francisco Bay, as well as Cincinnati and Cleveland,
Ohio. Clearwire reported in its third quarter 2010 financials that it serves 1 million retail and 1.8
million wholesale subscribers, with approximately 45% the wholesale customers using multimode
3G/4G devices. These wholesale customers reside outside of Clearwire markets and, subsequently,
most of the usage is not realized by Clearwire (Sprint and others).
With LTE selected over WiMAX by the majority of North American mobile operators, Clearwires
WiMAX strategy is being put to the test. However, Clearwire is also pursuing LTE tests and has
planned trials to test ubiquitous coverage, technology hand-offs, and spectrum efficiencies.
In August 2010, the company announced that it planned to test 4G LTE alongside WiMAX in its
Phoenix, Arizona market. This announcement foreshadowed the current Sprint Network Vision
announcement and shows the level of planning that is taking place between Clearwire and its
majority owner and investor, Sprint. Samsung, with its multi-mode base station, is also one of the
key partners in Sprints Network Vision.
Clearwires recent funding announcements, debt funding and other funding strategies bring home
the point that building greenfield networks is always more expensive than planned. Although
requiring additional funding for network builds is not solely restricted to greenfield networks, it
usually is more predominant because base revenues are non-existent. Other factors that typically
contribute to additional funding requirements are founded in the premise that it takes time to build
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networks and modifications that occur during the build process. Changes that can occur include,
market conditions, technologies, decisions made along the way to change and expand markets,
incremental revenue fluctuations from original projections, investor changes and new requirements,
and other miscellaneous factors, all of which contribute to the need for more capital funding.
In December 2010, Clearwire Communications LLC completed a private debt offering raising
approximately $1.2 billion in additional funds. Funds will be used to continue to build its network
and for working capital and for general corporate purposes, including capital expenditures.
On December 7, 2010 Erik Prusch, Clearwire CFO, announced at an industry event that Clearwire is
pursuing a multi-faceted fund raising strategy that may include selling off spectrum assets estimated
to bring in an additional $2 billion and/or pursuing equity financing. Mr. Prusch made it clear that
no final decisions have been made.

MetroPCS
MetroPCS, a regional mobile operator that offers predominantly consumer services, announced its
initial 4G deployment in September 2010. Staying true to its business strategy, the initial service
offering includes unlimited usage and no annual contracts. A MetroPCS spokesperson indicated the
company will offer smartphones but not USB modems in its initial deployments. Coincident with
this network announcement came the availability of Samsungs 4G mobile phone (Samsung Craft).
The initial market coverage was in Las Vegas, Nevada. MetroPCS 4G coverage now includes Dallas,
Texas; San Francisco, parts of Los Angeles and Bakersfield, California; Detroit, Michigan and parts
of Philadelphia, Pennsylvania.
MetroPCS vendors include Ericsson, Huawei, ALU, NSN and Samsung. In a conversation with
MetroPCS, it stated that vendor selection was based on specific criteria including:
1. The vendors technology roadmap and the cohesiveness with MetroPCS vision,
2. MetroPCS belief that each vendor would be a committed partner,
3. The vendors technology roadmap timing and its ability to meet MetroPCS timelines, and
4. Costs and economics.
By not being as rich in spectrum assets as some of the other mobile operators, MetroPCS strategy is
to optimize its spectral assets in order to gain optimal spectral efficiencies.
MetroPCS chose not to go to 3G but instead move directly to 4G due to limited spectrum and the
cost involved. MetroPCS will be re-framing its spectrum assets and moving to VoIP to reduce
network costs.

It Always Comes Down to the Device

As Stratecast has witnessed these announcements and network builds, our conclusion is that the
capabilities of the network are extremely important but the device continues to be the key
component to bringing and keeping users on 3G and new 4G networks. AT&Ts and other global
mobile operators success with the iPhone is a clear example of the importance of the device.
Notable is a lack of 4G pronouncements by AT&T, possibly because its plans have been built on
deploying HSPA+ (High Speed Packet Access) and the iPhone, currently two market leading
platforms.
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Current 4G device offerings are very limited, with each operator having one or two devices and, for
the most part, limited to a few USB modems and even fewer mobile phones.
Stratecast believes that 4G coverage has the capability to bring innovative services to new and
existing geographic areasbut the device will be one item that slows progress if not carefully
managed. Sprint, VZW, Clearwire and, to some extent, MetroPCS face many challenges in ensuring
that devices are available in multiple form factors including mobile phones and smart phones, tablets,
notebooks, netbooks, and innovative in-home connection devices that can be networked easily by
the user.

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Stratecast
The Last Word
The abundance of 2010 4G announcements, deployments and strategies shows the strong commitment
that each operator and their vendors have to 4G technologies. Although all of these announcements
and network deployments are significant, a key foundation of all the announcements is the
importance of vendors, including device manufacturers, partnering with their CSP customers,
and the extensive services that need to be brought to the engagement to make it successful.
Each vendor partner is required to bring services to market, and whether the services are provided with
internal or external resources (partnering with outside services organizations) to the organization,
expert and multi-faceted professional services must be part of a successful engagement.
With 4G technology, LTE or WiMAX, Stratecast believes these will continue to co-exist for a
considerable time to come, as well as co-existing with 3G. However, LTE is emerging as the
predominant North American mobile infrastructure technology.
Finally, although each operator must make the best network decision based on assets, infrastructure,
markets and customers served, each operator has kept its network options open by engaging with
multiple vendor partners and utilizing its vendors services expertise, and supporting multiple
technologies.

Becky Watson
Program Manager, Communications Infrastructure and Convergence
Stratecast (a Division of Frost & Sullivan)
bwatson@stratecast.com

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About Stratecast
Stratecast assists clients in achieving their strategic and growth objectives by providing critical, objective
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SPIE #45, December 2010

CONTACT
Stratecast
(a Division of US
Frost & Sullivan), 2010

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