Umtsf Report 42

LTE Mobile Broadband Ecosystem: the Global Opportunity
UMTS Forum Report 42
UMTS Forum V1
May 2009
Ovum 2009
Ovum 2009
LTE Mobile Broadband Ecosystem: the Global Opportunity UMTS FORUM REPORT 42
Table of contents
1 2 3 3.1 3.2 3.3 4 4.1 4.2 4.3 4.4 4.5 5 5.1 5.2 6 7 7.1 7.2 7.3 Executive summary ....................................................................1 Introduction ...............................................................................7 LTE enabled services ................................................................17 Mobile data applications will drive LTE............................................17 Consumer services ......................................................................17 Enterprise services vertical sectors .............................................24 Devices and infrastructure........................................................27 Overview ...................................................................................27 Chipset vendor LTE roadmap ........................................................27 Device vendor LTE roadmap .........................................................30 Infrastructure supplier LTE roadmap ..............................................37 Test component ..........................................................................40 Drivers and barriers of the LTE ecosystem................................41 Reasons and drivers for the deployment of LTE ...............................41 Barriers to the adoption of LTE......................................................46 End user survey results ............................................................50 Conclusions and recommendations...........................................63 Drivers and risk factors for LTE deployment and adoption .................63 End user expectations and needs ..................................................67 Recommendations.......................................................................67
Annex A: LTE global ecosystem development...........................................70 A.1 Global LTE ecosystem roadmap .............................................................70 A.2 Regional ecosystem variations ..............................................................74
A.3 Impact of LTE standardisation ...............................................................82 A.4 Industry view on future LTE development scenarios..................................83 A.5 Trials and industry activities..................................................................84 Annex B: Supporting initiatives ................................................................87
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Table of figures
Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 3.1 Figure 3.2 Figure 3.3 Figure 4.1 Figure 4.2 Figure 4.3 Figure 4.4 Figure 5.1 Figure 6.1 Figure 6.2 Figure 6.3 Figure 6.4 Figure 6.5 Figure 6.6 Figure 6.7 Figure 6.8 Figure 6.9 Illustration of LTE ecosystem ................................................................ 9 What does the ecosystem foundation group comprise?........................ 10 Each generation ecosystem increases in size ....................................... 12 Key components for service access...................................................... 14 Different services share common components ..................................... 15 Overview of LTE ecosystem roadmap................................................... 16 Consumer services enabled and enhanced by LTE................................ 17 Content / devices preferences ............................................................ 22 Business services enabled and enhanced by LTE.................................. 24 Overview of chipset vendor roadmap................................................... 28 Overview of device vendor roadmap.................................................... 30 Overview of infrastructure supplier roadmap....................................... 38 Public LTE and SAE vendor announcements ......................................... 39 LTE ecosystem interactions ................................................................. 41 Current/future preferred mobile broadband services by country ......... 51 Current/future preferred mobile broadband services by age ............... 51 Mobile broadband services growth ...................................................... 52 Service/application priority list ........................................................... 53 New services and applications by country ........................................... 54 New services and applications by age.................................................. 55 Device preferences for embedded mobile broadband ........................... 56 Preference for embedded mobile gaming............................................. 57 Preference for separate mobile phone and video/music device............ 58
Figure 6.10 Feature preferences for mobile device ................................................ 59 Figure 6.11 Preference for mobile netbook device ................................................. 59 Figure 6.12 Preference for mobile TV capability .................................................... 60 Figure 6.13 Price to pay comparing with current fixed broadband offer ................. 61 Figure 6.14 Price to pay comparing with current mobile broadband offer .............. 61 Figure 6.15 Adoption of higher performance mobile broadband............................. 62 Figure 7.1 Drivers and risks in LTE ecosystem..................................................... 63
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Figure A.1 Figure A.2 Figure A.3 Figure A.4 Figure A.5 Figure A.6 Figure A.7 Figure B.1 Figure B.2 Figure B.3
Overview of LTE ecosystem roadmap .................................................. 70 LTE roadmap in US .............................................................................. 75 LTE roadmap in Western Europe.......................................................... 77 LTE roadmap in China.......................................................................... 79 LTE roadmap in Japan ......................................................................... 81 LTE roadmap in South Korea ............................................................... 82 LSTI Proof of Concept - Predicted end user data rates ......................... 85 Examples of NGMN requirements ........................................................ 88 LSTI activity timing ............................................................................. 89 Industry LTE demonstrations .............................................................. 90
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Foreword
Mobile broadband is changing the way the world communicates. The UMTS Forum helps all players in this dynamic new value chain understand and profit from the opportunities of 3G/UMTS networks and their Long Term Evolution (LTE). The UMTS Forum participates actively in the work of the ITU, ETSI, 3GPP, EC and CEPT as well as other technical and commercial organisations globally. It also contributes to the timely licensing and deployment of mobile broadband globally through regular dialogue with regulators and responses to public consultations. A strong promotional voice is maintained via a high-profile presence at conferences, seminars and workshops as well as regular briefings to the media, analysts and other stakeholders. Membership of the UMTS Forum draws together everyone with an interest in mobile broadband, including network operators, regulators and the manufacturers of network infrastructure and terminal equipment. Since its launch in 1996 The UMTS Forum has been supporting the interests of its membership with a range of studies, reports and other outputs. Principal focus areas include markets trends, mobile broadband services and applications, key growth markets, spectrum & regulation, technology & implementation. While centered around the promotion of 3GPP technologies and their long term roadmap, the studies of the Forum nevertheless embrace a range of complementary mobile and wireless access technologies that can deliver broadband multimedia and the personal Internet. This UMTS Forum report n 42, LTE Mobile Broadband Ecosystem: the Global Opportunity, is a first step in understanding the critical enablers for LTE. Offering significant benefits in speed, capacity and support for new services, LTE will dominate the global market for mobile broadband as operators start to deploy networks over the next few years. LTE will be characterised by a complex ecosystem that includes not only operators, infrastructure providers, terminal vendors, standard bodies and regulators, but also chipset manufacturers and consumer electronics vendors, to name a few. Supported by a healthy ecosystem, LTE will also see the emergence of dynamic new business models not hitherto experienced in the mobile space. This report explores a number of key parameters and success factors, the level of readiness of the industry, and gives a series of recommendations for successful LTE deployments. It is also intended to serve as the foundation for further studies by the UMTS Forum that will examine specific elements of this new value chain in greater depth. I would like to thank the Ovum team for their extensive research work and in particular Stewart Anderton, Yim Ling and Lei Xue. I would also like to thank the UMTS Forum Steering Group and the following UMTS Forum colleagues for their dedication in the preparation and direction of this report: Eduardo Snchez Fernndez, Paul Le Rossignol, Bosco Fernandes, Jean-Paul Rissen, Jean-Paul Pallois and Colin Chandler.
May 2009
Jean-Pierre Bienaim Chairman, UMTS Forum
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1 Executive summary
The UMTS Forum commissioned this report from Ovum Consulting to provide a global analysis and insight into key issues surrounding the LTE/SAE1,2 ecosystem. The report considers the relationship between LTE and other mobile broadband technologies; the new services, devices and applications which will drive the success of LTE; and the drivers and risk factors in the LTE ecosystem. The report is based on over 30 interviews with operators, vendors, regulators and standards bodies, and end user research with 550 respondents in the US, Korea, Japan, Germany, France, Italy, the UK and Spain. The report is supported by Ovums insights derived from continuous analysis of the industry.
LTE has industry commitment

The report findings are very positive and show that there is considerable commitment and co-ordination across the industry, with most leading mobile network operators planning to deploy LTE. NTT DoCoMo in Japan is a very active supporter of LTE, driven by the demand for high speed data services in the country and the companys commitment to deploying new, marketleading technologies rapidly. In the US, Verizon is a leading supporter of LTE, with plans to introduce the first commercial services in the second half of 2010. China Mobile is actively involved in LTE trials with vendors, and the company has announced plans to build a TDD (Time Division Duplex)-LTE pre-commercial network in China from the middle of 2010, followed by commercial trials in late 2010. It is Ovums assessment that commercial TD-LTE services will be launched in China in the first half of 2011. LTE is also active in Europe, where TeliaSonera has started network roll-out, with a commercial launch planned in 2010. NTT DoCoMo, Telia Sonera, KDDI and Verizon Wireless have all announced their LTE and SAE Evolved Packet Core suppliers. Many major operators have already declared their intent to deploy LTE as the ultimate stage of 3G Evolution. This will allow them to take advantage of performance improvements in the radio access network and the service and operational benefits of an all-IP core network. Nevertheless, global European operators such as Orange and Vodafone will rather deploy LTE in 2011-2012, optimizing their legacy investments and network costs. In the longer term, LTE, together with major business transformation by the operators, will provide the business environment which will allow capital and operational cost reductions in an increasingly competitive market. All major systems vendors have LTE product roadmaps and these companies are engaged in joint programmes of technology trials in line with their market and company strategies. Major alliances span the ecosystem which will enable end-to-end solutions, with devices and applications to be offered in the early markets before the broader
Long Term Evolution / System Architecture Evolution (LTE/SAE) is an evolution of the current 3GPP 3G
wireless network standards. LTE relates to the radio access network and SAE to the core network.
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References to LTE in this report relate to both the LTE radio access network and the SAE core network,
unless it is only the SAE core network which is being referenced.
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ecosystem emerges. The LTE standards are being implemented by chipset vendors and early pre-standard chipsets and devices are being used in interoperability and performance trials. These trial and testing initiatives receive cross industry support through the Next Generation Mobile Networks (NGMN) Alliance3 and the LTE-SAE Trial Initiative4 (LSTI), the latter being instrumental in the breadth of test and proving activities.
Ecosystem drivers support LTE

The introduction of icon-based mobile devices such as the iPhone has stimulated mobile broadband, which is increasingly being used as a fixed broadband substitute. The availability of higher quality content, including audio and video, will cause a significant increase in data traffic. A projected six-fold increase in global IP traffic between 2007 and 20125 (driven mainly by video) will impact mobile as well as fixed networks, with mobile data projected to double every year from 2008 to 20136. This growth projection will be supported by LTE operators' initial focus on data services. Network operators carrying this traffic will benefit from the increased radio network efficiency of LTE; indeed, a recent report published by the UMTS Forum7 indicates that the cost per megabyte for LTE services will be 83% lower than Wideband Code Division Multiple Access (W-CDMA) and 66% lower than High-Speed Downlink Packet Access (HSDPA). End users are enthusiastic for mobile broadband in laptops and netbooks and also in mobile phones and personal media players. An improved user experience is critical and devices must provide intuitive access interfaces to content and applications. The lower latency and higher capacity access inherent in LTE will reduce functional delays and render a wide range of applications and services more accessible. Survey results from regular users of 3G data services indicate that LTE will stimulate the greatest growth in demand in video and media services (35%40%), but it is access to email, web browsing/search, online shopping and social networking that will be the most used consumer services with usage growth of 15%25%. Location-based (GPS-linked) and in-car services are seen as major application areas that end users will find attractive. Broadband users are demanding increasingly higher bandwidths to enable them to access media-rich content. The primary demand for bandwidth is not just from music and video downloads: newspapers, blogs, social web sites, commercial and topic web sites are increasingly media-rich and benefit from being accessed through higher speed and lower latency connections. Whilst these and many other services will develop rapidly in an LTE
The Next Generation Mobile Networks (NGMN) Alliance: http://www.ngmn.org/ (see Annex B) The LTE-SAE Trial Initiative (LSTI) is a global industry group which aims to drive industrialisation of
3GPP LTE and SAE technology and demonstrate its capabilities against 3GPP and NGMN requirements. These activities stimulate development of the LTE ecosystem. http://lstiforum.org/
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http://newsroom.cisco.com/dlls/2008/ekits/Cisco_Visual_Networking_Index_061608.pdf http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-
520862.pdf
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Global Mobile Broadband: Market potential for 3G LTE.
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environment, no one application (existing or new) will dominate the consumer or enterprise markets. This breadth of demand will significantly reduce the risk to the industry of LTE being dependent on only a small number of drivers. To support these service demands, end users will expect improved performance from their network, which LTE will provide. On 20 MHz bandwidth, it can offer a peak download rate of over 150 Mbit/s, a peak upload rate of 50 Mbit/s and up to 200 users per cell. This contrasts with HSPA+ over 5 MHz bandwidth which is typically limited to 28 Mbit/s per cell. In practical situations, modelling of typical user environments shows that typical LTE user data rates of 2-4 Mbit/s will be achievable, with capability to burst to far higher rates. It will be essential for LTE devices to be multi-standard capablee.g. LTE/HSPA(+), CDMA/LTE, GSM/UMTS/LTE, UMTS/LTEand also to be multi-band capable, depending on the target market for the device and the frequency bands used in that market. For example, devices for a North American market will require 700 MHz for the home market, and, if intended for roaming in Asia and Europe, at least the 2.6 GHz and 2.1 GHz bands also. The underlying capabilities are being developed by vendors and decisions on the mix of capabilities will be determined. Devices will become more complex, some with application-specific form factors which vendors will have to understand and develop. New devices will need improved characteristics: greater processing capability to deal with video processing and applications; larger screens to provide a clean, usable, multi-touch interface; multi-standard and multifrequency band capable of operating in other networks for roaming and to increase coverage area; multiple antennas; improved battery life and higher processing capabilities. The industry will require focus to meet these challenges: fortunately, however, not all of them have to be concurrently met in every device. It is expected that high end smart phone devices will be a priority, although power management strategies will be needed to handle higher processing and video demands. There is a range of machine-to-machine applications currently supported by mobile networks. The higher capacity of LTE will enable new areas, e.g. remote healthcare file access and news reporting, but these will not be a major driver of LTE uptake. The all-IP architecture of LTE, with a core network architecture which is able to interwork with a wide range of radio access network technologies, will provide inherent operational advantages and long term reductions in operating expenses. With broad industry cooperation, the roadmaps of different sectors of the ecosystem are well aligned creating momentum for LTE, which will help the mobile industry develop the expected new business models to serve new vertical markets. A key factor for LTE deployment is spectrum availability. Alignment within and between regions is required to support roaming and create market scale for devices. The 2.6 GHz band has been reserved as a 3G extension band and is suitable for LTE, WCDMA/HSPA/HSPA+ and WiMAX. The interest for additional spectrum in the 2.6 GHz band lies in the availability of large channel bandwidth (up to 20 MHz bandwidth) which will enable LTE to fulfill its potential. In Europe, Norway and Sweden awarded 2.6 GHz spectrum to operators in 2007 and 2008, respectively, and other countries will follow suit from early
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2009. The key band in the US is 700 MHz, while the 2.1 GHz band will be most prevalent in China and Japan. During the 25 year growth of the mobile industry, many valuable lessons have been learned in terms of standards development, concept testing and ecosystem development. These have led to an essential, more structured approach being taken to develop the new ecosystem. The LTE ecosystem will incorporate a breadth of devices and components, software, applications and services, new business models and players in the value chain. These changes will build on Web 2.0 and its enhancements, which fundamentally change the way in which information and services are shared across the internet. All of these devices, applications and services will be part of an ecosystem which will be broader and deeper that that for any previous communications technology. The broadening of the ecosystem is itself a disruptive influence and one of which the industry needs to be continually aware. It will be a challenge to adapt to these and any new disruptions, but they must be responded to at all levels, not only to generate acceptable return on investment but to allow operators to survive.
Risks for LTE

The development of the LTE ecosystem is not without challenges and risks, which are discussed in more detail in Section 7 of the report. With the economic climate creating uncertainty in all markets, its impact on the LTE ecosystem specifically is difficult to judge and further assessment in this area is recommended. As well as influencing the attitude of end users to adopt new services, the economy may also impact the speed with which the majority of operators deploy LTE beyond the initial commercial installations. The scale of these deployments is crucial to device vendors, which need market scale and certainty to bring volume production economies. Operators and service providers have to decide how they can achieve the greatest return from their network and services. Expected revenue streams are threatened in two main areas. The first concerns the battle for the customer and how the services delivered to devices are controlled and managed. If the network operator controls its own application store, it will be able to retain a greater share of end-user revenue than if the applications are provided from an externally controlled managed device platform (e.g. Apple or Nokia application store). However, whilst the device vendors currently have the upper hand, network operators can make good returns on broadband access revenues and avoid all the store development costs. The second concerns lucrative voice services. If devices are allowed to support VoIP clients, then internet-based voice service providers will be able to channel revenues away from the operator. Operators will need to sustain their existing networks as LTE is rolled out. Some operators will continue to deploy their HSPA/HSPA+ and Evolution-Data Optimized (EV-DO) networks as they introduce LTE. If too many operators delay their LTE deployments due to competition for capex and focus primarily on HSPA/HSPA+, then the demand for applications and devices will impact the development of the LTE ecosystem. However, the applications developed for HSPA/HSPA+ networks will all contribute to and complement the eventual LTE ecosystem.
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Having said this, consumers will expect a consistent end user experience, in terms of look and feel, as they operate across different networks. Relatively straightforward devices such as USB dongles and PC cards will come to market early. The full benefits of LTE will require handheld devices, which are expected to become available in 201112. The risk is that without an adequate supply of devices the ecosystem could replicate the slow introduction of 3G in the early part of this decade. We recommend that all players in the value chain assess and strengthen their partnerships, which are so important in this area. The cost of intellectual property rights (IPR) licensing has been an issue within the industry for many years. LTE devices will need to support pre-LTE standards (to allow non-LTE voice services and roaming to non-LTE regions), and may also need to include other licensed technologies such as video codecs and mobile graphic functions. These incremental IPR licensing costs will increase the costs of devices, which will be an inhibiting factor as the industry tries to get new devices and services accepted in the market. In summary, although the industry is well co-ordinated, wide-scale LTE deployment will take some years to achieve, during which time some of the advantages to operators (e.g. long term cost reduction) will only partially be achieved. To help manage the risks and enable LTE to be brought into wide-scale service, we recommend that the industry should consider further opportunities to strengthen and extend partnership arrangements at all levels.
End user expectations and needs

Services continue to move from fixed to mobile networks in all markets, and wireless is the access technology of choice for services in developing countries. We expect to see the trend of fixed to mobile voice migration replicated with broadband access bringing considerable national economic benefits. There is, however, no killer application for LTE. The capabilities of mobile broadband will serve a wide constituency of needs; in fact the access technology will become increasingly less important to the end user as applications and services become more uniform across different platforms. The breadth of services which might develop is no easier to foresee than it was for the internet at its inception, from which a wide range of applications and services have emerged. The main conclusions drawn from our end user survey are thus: users in all regions expressed a clear interest in having their main fixed network internet services (email, browsing and information search) available on a mobile broadband device. Accessibility is the key. access to music and video media rates highly. Mobile TV, video calling and video downloading show the strongest growth prospects. users are receptive to new ideas and new technologies. However, the opportunities for enhancements to consumer devices are not yet understood or appreciated by consumers and it will therefore take time to fully develop this aspect of the market.
By 2020, LTE is expected to be the dominant mobile technology and LTE-enabled device volumes will be higher than those for any other network technology. LTE users will be able to
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access services over existing networks (e.g. HSPA/ HSPA+, EV-DO) which will be supported within their deviceseven in the early daysenabling national and international roaming. In summary, the report findings indicate that rapid and effective progress is being made across the industry to bring the whole LTE ecosystem to market, with the necessary commitment from all parties to bring a major evolution of technology, devices and applications to market.
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2 Introduction
The Third Generation Partnership Project (3GPP) is defining the Long Term Evolution (LTE) standards for a new high-speed radio access method for mobile communications systems. These standards incorporate the System Architecture Evolution (SAE) which provides a much simplified all IP core network architecture and which is able to support multiple types of radio access network. The successful introduction of LTE to the market is dependent on a healthy and strong ecosystem, which will encourage competition and technology innovations. The UMTS Forum objective in commissioning this report was to help the industry understand the way in which the LTE ecosystem was developing: the products and services which will be enabled; the dependencies within the ecosystem; the relationships between LTE and other technologies; and the opportunities and risks facing the development of a buoyant ecosystem.
What is LTE?
Long Term Evolution/System Architecture Evolution (LTE), also called 3GPP E-UTRAN (Long Term Evolution of UMTS Terrestrial Radio Access Network), is an evolution of the current 3GPP 3G/UMTS wireless network standards, the technical aspects of which are well defined and there are many papers which describe the technical and systems characteristics. A main objective of the Evolved Packet System (EPS), consisting of LTE and SAE, is to support IP multimedia services, including VoIP and high speed data applications, with an always-on end-user experience comparable to that of fixed internet access, and at a lower cost per bit. This is achieved by a flatter network architecture, improved spectral efficiency, providing a more flexible spectrum deployment, lower opex costs and better integration with other open standards such as WLAN and WiMAX. A major benefit of LTE is that it has a flexible channel bandwidth requirement and can operate in channels of between 1.4 MHz and 20 MHz. The channel bandwidth is key for the delivery of higher access speeds. With a 20 MHz bandwidth, it can offer a peak download rate of over 150 Mbit/s, a peak upload rate of 50 Mbit/s and up to 200 users per cell. This contrasts to HSPA+ over 5 MHz bandwidth, which is typically limited to 28 Mbit/s per cell. In practical situations, modelling shows that typical LTE user data rates of 24 Mbit/s will be achievable, but with capability to burst to far higher rates. Thus the 3GPP LTE radio technology is optimized to enhance existing 3GPP networks by enabling significant new high capacity mobile broadband applications/services and providing cost-efficient ubiquitous mobile coverage. Operators are motivated to move to LTE as: it supports a flatter network architecture which reduces the radio network controller (RNC) layer, leading to a more cost effective network, with reduced capex and opex there is wide industry support to develop and build the essential ecosystem
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it enables higher performance, lower latency services to be offered to corporate and consumer customers it provides a natural evolution path from UMTS (WCDMA and HSPA/ HSPA+).
The initial standardisation of LTE was completed in 2Q 2009. The two UMTS Forum White Papers - Towards Global Mobile Broadband: Standardising the future of mobile communications with LTE (Long Term Evolution)8and Mobile Broadband Evolution: the Roadmap from HSPA to LTE - describe the technical aspects of LTE and its evolution in more detail.
The LTE ecosystem overview

The ecosystem interest groups The LTE ecosystem will be larger than that for any communications technology to date. It is not only the operators, service providers, device and component vendors, application and platform developers, content and services providers which will enable end users to enjoy the performance benefits and wide-scale availability of LTE technology. The ecosystem will include the regulatory and standards bodies, the consumer and business markets served, and the business models of the participants. This latter point is one which will need to be grasped by the mobile network operators (MNOs). Just as device platforms have opened to allow thousands of applications and services to be developed and bought by consumers, the network itself will provide service development platforms which will allow third party developers to provide network-based capabilities. These points are discussed later in this section of the report. The collaborative initiatives being undertaken in the industry are co-ordinating these players to allow the full benefits of LTE to be brought to the worlds market efficiently and in-step. Figure 2.1 illustrates the major interest groups in the ecosystem and their relationships.
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Figure 2.1
Illustration of LTE ecosystem
Source: Ovum
The foundation group in Figure 2.1 will have the greatest number of contributors and will grow most strongly as LTE networks are deployed. The performance characteristics of LTE broadband will expand the number of applications developed and draw new vertical markets into the ecosystem, with sector-specific devices, interfaces and applications. As Figure 2.1 illustrates, there are interactions between many of the industry players. Information, interdependencies and collaboration flow in all directions. An example of the collaboration needed in the ecosystem, and of an application outside the traditional mobile phone domain, is the inGeo service development from Qualcomm - an application for use in existing cellular networks and LTE environments. The solution, with applications in non-cell phone personal location devices and related services, is based around cellular technology and assisted-GPS chipsets which will be incorporated into applicationspecific devices. Service control and application servers will provide the capabilities to deliver a complete solution. The service development and deployment requires cooperation across the ecosystem, between the chip vendor, mobile carrier, application service provider, device manufacturer and distributor to bring a complete end-user solution. The inGeo reference system will expand the ecosystem further. It will allow third party devices such as motion sensors or other systems to be incorporated into the end solution, which might be used for package tracking or perhaps location-based telemetry systems. In the US, Verizon is developing its LTE Innovation Center in collaboration with two of its primary vendors for initial LTE network deployments, Ericsson and Alcatel-Lucent. The centre will allow device and application developers to test their products during the development stage and leverage the centres expertise in deploying mobile broadband solutions, service integration and network hand-off issues. The centre will focus on three major product areas: consumer electronics and appliances; machine-to-machine products that wirelessly deliver information between devices specifically designed for fields such as healthcare, security and utility monitoring; and telematics applications, such as GPS solutions for vehicle fleet tracking.
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The components of the broadening ecosystem are considered in Figure 2.2. Figure 2.2 What does the ecosystem foundation group comprise?
Ecosystem components SAE/EPC, LTE radio access, antennas, power units, amplifiers, servers, enclosures. New niche vendors entering market with protocol stacks, specialist chipsets Personal devices: Handsets, personal media players, laptops and netbooks, games consoles, GPS/navigation, OEM devices and branded end user devices Consumer electronics: cameras, media centres, in-car entertainment, vehicle diagnostics, TV Industry-specific devices: telemetry, remote monitoring, security and surveillance/security, financial transaction/POS terminals; health monitoring/ display, control systems Services: voice, text/media messaging, broadband, video/TV, location-based services Content: Music, video, games, special interest groups Applications: Software services, managed services, productivity services Integration with Web 2.0 content; portals; personalised delivery Managed device platforms For lab and field test of systems, devices, RF performance, software and hardware test, integration, environmental, development, conformance, interoperability and acceptance testing. Baseband modems, baseband and power management, RF transceivers, application processors, protocol stacks, embedded software, browsers, voice recognition, audio and video codes, keypads, batteries. Platforms and operating systems: Java, Linux, Palm OS, Symbian, Windows CE Windows Mobile, Android. Middleware and embedded software: browsers, native applications/games. Development tools and software development kits Applications: Tens of thousands and growingsocial networking, video/photo sharing, music sites, blogs, news, games, travel, community and special interest groups
Foundation Group Infrastructure suppliers End user device vendors
Service/ content providers
Test equipment manufacturers Chipset and device components manufacturers Software developers
Source: Ovum
Non-voice mobile services will be increasingly important components within the mobile ecosystem, while voice and basic data (SMS) will become relatively less important and the widening ecosystem will become more complex. It will go beyond the traditional mobile network ecosystem to incorporate a broad range of internet applications, new services, devices and content delivery mechanisms. This complexity brings with it a challenge for LTE. In a larger ecosystem, there are a greater number of relationships and dependencies which have to work effectively for the full opportunities for LTE to be realised. For the purpose of our analysis the ecosystem is divided into three component groups, shown in Figure 2.1: the foundation group; the enabler group and the momentum group. In reality, however, the boundaries between groups are not so strictly defined. the foundation group is formed by the entire vendor community, including chipset component vendors, device vendors, infrastructure suppliers, test equipment manufacturers, software developers and service/application providers. Members of this
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group work together to provide three LTE-related product groups: LTE infrastructure equipment; user devices, encompassing handsets, laptops, application specific devices, gaming consoles and consumer electronics, all of which provide access and interfaces to the third group; content, services and applications the enabler group is formed by standardisation bodies, the regulators and industry bodies. Through their work, the group develops and provides the technology standards, provides the enabling regulatory framework and policy, and ensures industry alignment for LTE development the momentum group is formed by operators worldwide. Their global support has built a strong momentum for LTE development, which has encouraged vendors to deliver the first commercial products to meet the operators deployment roadmaps in 2010. Once LTE is introduced, the healthy growth of the ecosystem is dependent on operators commitment to deploy their networks. This will create the momentum for all members of the ecosystem to invest in further development.
The momentum and foundation groups are highly active in the ecosystem. They provide essential inputs to the enabler group for standardisation, regulatory decision making and the industrys inter-operability test programmes. The progress made by the enabler group and the decisions that it makes will influence operators LTE deployment strategy. All groups are closely linked in the ecosystem and are working to achieve the first LTE commercial deployments. Previous generations of mobile network systems and infrastructure have been developed around vertically integrated technologies, services and applications i.e. based on specific devices/handsets, radio access network technologies and core network systems with associated support services. These have underpinned network operators' and service providers' core business. The ecosystem for these networks and services was bound by voice and basic data (SMS, MMS) services with low speed networking access. The availability of Universal Mobile Telecommunications System (UMTS) serviceswith their associated devices, applications and attractive service bundleshas caused the UMTS ecosystem to start to grow to support WCDMA and HSPA services.
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Figure 2.3
Each generation ecosystem increases in size
Source: Ovum
As Figure 2.3 shows, the supporting ecosystem layers of the foundation group are expanding. To quantify one area of this growth, a recent audit of applications9 for Nokia phones counted over 60,000 total applications, broken down into the following types: 9,000 Nokia S60 platform applications (only 1,000 are available on Nokias on-device download store) 45,000 Java applications between 5,000 and 7,000 widgets (build for Web Runtime) between 5,000 and 7,000 Adobe Flash applications.
The number of S60 (i.e. native) applications available on Nokias download store can be compared directly to Apples App Store. Estimates as of January 2009 suggest that there are over 15,000 applications available for the iPhone and iPod Touch. The Nokia S60 platform, meanwhile, is used in a wide range of Nokia and other vendors devices. This provides access to an addressable market for developers of over 180 million devices shipped. It is this scale which attracts so many developers to the market. With these numbers of developers involved, co-ordination is essential. Alcatel-Lucent has launched the 'ng Connect Program', to help create the ecosystem rapidly. It will provide an environment in which infrastructure, device, application and content companies can rapidly develop and deliver next generation services and applications to service providers, enterprises and consumers. New sources of revenue are needed There is inexorable downward pressure on voice revenues and mobile network service providers have to find alternate streams of income and/or reduce costs. In the fourth quarter of 2008, Ovums quarterly interconnect benchmark 2008 shows an average mobile
Source: Forum Nokia
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termination rate in the EU2710 countries of 8.1 euro cents per minute. In May 2009 the European Commission issued guidance on mobile termination rates indicating that rates should be reduced to be in line with fixed call termination and (with a few exceptions) that the guidance should be implemented by 2012. This would represent a reduction in the order of 40% from current levels. Not all of the thousands of applications will be revenue generating, but many are. Operators may create their own application platforms for device service delivery or partner with application platform operators/ owners. The latter option has the benefit for network operators that by working with an established platform owner they have access to stable service management, without reduced levels of capital and operational investment for the operator. Device platforms are considered further in Section 4.3 of the report. Within the core network, migration to LTE will need to be approached by MNOs in the same way that fixed network operators have viewed next-generation network (NGN) deployments - long term and holistically. It will be part of a process for transforming their business to adapt to an IP-centric world. To benefit from the efficiencies that LTE holds, mobile operators must undertake a major overhaul of their businesses, migrating from their legacy networks, systems, business processes and working practices. New operational systems and processes will be required to effectively manage the new architecture. Operators will need to shift their focus from being technology, product and network based, and move towards becoming software-led, service-driven and customer-centric businesses. The use of agile business processes and third parties (such as systems integrators and application developers) for outsourced, hosted or managed services will be needed to reduce costs and improve time to market. This transformation will enable operators to introduce service delivery platforms which will enable the core network to be opened up to third party developers to develop services accessible from a range of different end user devices - mobiles, televisions, laptops and other devices - spanning consumer and enterprise applications. The convergence of customer data storage will allow end users to flexibly access and control their network-delivered services across fixed and mobile networks, leading to new service opportunities and helping to reduce churn, as the customer experience becomes more integrated with the network. Common components in the ecosystem The performance characteristics of LTE will lead to many different types of end user device and consumer electronics systems in the ecosystem. Within these, there will be three major service components to provide access to most services: the local client or device, web-based or remote service resources, and a means of connectivity between them, as shown in Figure 2.4.
10
EU27 refers to Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland,
France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.
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The form of the local client/device will be determined by its function. As the power of devices increases, applications become more complex and users expectations increase, so LTE will become the mobile access technology of choice. LTE has the advanced capacity and low latency to satisfy emerging market needs.
Figure 2.4
Key components for service access
Chipsets Screen Local content and services ADSL Fibre 3G Shared content, data and media
Source: Ovum
Power User interface OS / applications Memory
Local client / device
LTE WiMAX WiFi Cloud applications and services:
Connectivity
Web or remote service resources
The common factor which underpins the development of the consumer sector in the communications industry, and which is increasingly providing opportunities in the overall consumer electronics sector, is the need to be able to access the breadth and depth of applications, service and content available on the web. Moreover, we see consumers requiring increased access bandwidths with reliable performance. The trend in this direction is exemplified by the way in which users perceive and use new products. Many users initially considered the iPhone as an evolution of the iPod, to be used to listen to music (as previously), but with the additional capability to watch stored videos. However, the connectivity which allows access to web content, applications and services has transformed the way in which users view and use the device, which can access a much broader range of content and be used in ways that they had not anticipated. The PC/laptop category in Figure 2.5 is distinct in that nearly all of its capabilities are added after the purchase of the basic product. Application software (which may be bundled) is added as needed, and open platform initiatives are geared to fully open platforms. Netbooks are in a similar situation, but with the absence of a CD drive. The use of the web connectivity is increasingly apparent in phones/devices and games consoles, which, despite having most of their functions embedded, still allow applications and services to be downloaded. By contrast, the other devices shown in Figure 2.5 are only starting to evolve and incorporate networking connectivity.
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Figure 2.5
Different services share common components

TV/ media player/ STB
Different categories of devices with unique functions and user interfaces
Common functions: Web access (applications, services PC / and content) Surveillance laptop + An increasingly high speed LTE can serve each of the connection common functions and can E-book Games serve each of the device reader console categories Still and video camera
Phone/ voice device
Netbook
Common applications, services and content useable from the Internet
Source: Ovum
LTE will also be integrated with consumer devices, particularly those with inherent mobility. Just as mobile phones have incorporated cameras, so high performance cameras can integrate wireless for download of results to storage or direct to social web sites. Vehicles shall see online diagnostics, location-based information provision and in-car entertainment services, all of which require full mobility and national real-time capability. With regards to laptops, LTE can enable computer application and OS upgrades using software as a service platform. Smaller, lower cost consumer devices will be developed as component prices fall. The components of the ecosystem are discussed in more detail in Section 4 of the report. All areas of the ecosystem are under development and proof of concept testing is underway to assess the performance and interworking within the RAN and core network. Applications and services are being developed for current networks (e.g. HSPA/HSPA+), and these will develop further as LTE rolls out. Application-specific services and network-specific devices will become available in volume to meet forecast demand from network operators. LSTI and its testing work provides an efficient way to share experiences between the LTE players, and thus widens the LTE Ecosystem.
Global LTE ecosystem roadmap

The LTE global ecosystem roadmap from 2008 to 2013 is shown in Figure 2.6. This and regional variations are discussed further in Annex A.
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Figure 2.6
Overview of LTE ecosystem roadmap
Source: Ovum
To explore the LTE ecosystem, we conducted interviews with major players from each group in which we discussed the following areas: LTE development / deployment roadmap views, plans and expectations for the LTE ecosystem views on the future requirements for high speed mobile broadband expectations for LTE device evolution expectations for services and applications that will benefit from LTE.
In this report we will discuss the roadmaps of each group in the ecosystem in the following sections: Section 3: LTE enabled services Section 4: Devices and infrastructure Section 5: Drivers and barriers of the LTE ecosystem Section 6: End user survey results Section 7: Conclusions and recommendations.
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3 LTE enabled services

3.1 Mobile data applications will drive LTE
LTE networks, with their high capacity, high data rate capability and low latency, will provide a better platform for many varied services and applications. Our industry survey indicates general agreement that LTE networks will provide the best opportunity to date for existing and new services and applications to benefit from mobile broadband networks. This is reinforced by the growing support for LTE within the operator community. One major European operator is reported to be planning to move from HSPA to LTE, without incurring the costs of HSPA+ upgrades. The industry was also in common agreement that increased data usage on mobile broadband networks will drive the deployment and take-up of LTE services. In this section of the report we discuss a number of services and applications that received the most interest in our survey, namely general data services, voice services, video services, interactive services, location-based services and machine to machine services.
3.2 Consumer services

The industry would like certainty about where its user demand will come from. However, as with successful internet services, the certainty is not possible to predict. Figure 3.1 identifies some important LTE characteristics and potential consumer services. Whilst it is possible to support many of these on pre-LTE networks, it is the wide-scale availability, the capacity, the performance characteristics of the access and core networks, and the considerably broader ecosystem that will differentiate LTE from its predecessors. The results from the consumer survey are provided in Section 6. Figure 3.1
Sector
Consumer services enabled and enhanced by LTE

LTE Ecosystem Components/characteristics at service, application, device level Innovation in all components: OS, protocol stacks, processors, antennas, batteries, displays, large and multi-touch screens. Intuitive interface; accessible services Open or managed device platforms enable new applications, services, content, portal access Partnering key to success Devices for broad and narrow markets All that Web 2.0 comprises: communication, interoperability, sharing, collaboration Wide base of data for consumer added value, marketing Consumer services (Note: * indicates machine to machine service) Compelling content delivered to 1000s of market segments.
Devices and user interface Application/ service specific
Internet
Social networking, video/photo sharing, music sites, blogs, news, chat, games, travel information, community and interest groups Internet TV, media streaming and download Personalised and discovery services
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Navigation, location
GPS and cell location data GIS services Mapping data Service directories Vehicle manufacturers Government agencies In-car entertainment systems Bespoke chipsets and devices Vehicle service centres Content providers Radio /TV services adapted for in-car use Wide base of data for consumer added value, marketing Banks, credit card and financial sector companies Vending machines Point of sale terminals Scanning and entry systems Associated manufacturing and applications Health and dental practices, hospital services Insurance company records Monitoring devices Scanners and display systems Advice and diagnosis web sites Newspapers, journals, radio and TV stations, blogs Still and video cameras Home and server-based storage systems Cameras still and video Device and web storage applications, social networking Building or car alarm monitoring/reporting/security systems Scanning and entry systems Camera interfaces Heating and air conditioning control Security applications built into many services LTE and user interfaces Applications: Home gateway integration: printers, media servers, TV, gaming consoles Multi-room; user-segmented Home nodes/femtocells Cloud-based software/software as a service E-book reader
Location-based content Presence/location information Location-based push-marketing In-transit travel updates to itinerary Car performance, efficiency and service monitoring* Automatic updates to in-car applications / data bases Location-based real-time info. for navigation and traffic updates* Road tolling (maybe variable)* In-car networking for entertainment games and media* Online mobile banking and e-commerce* Integrated near-field communications* Mobile wallet for payments, entry, vending machines, public transport* Personalised payments based on circumstances* Mobile access to health advice sites Personal data access*: clinical records, scans, x-rays Remote diagnostics with video support* National and international coverage* Personal news reporting First to market blogs and news Personal directory services Remote user auto backup for laptop, camera, audio* Auto archiving* In-building alarm monitoring / reporting Cameras store and forward, or online Heating and air conditioning control Integration with control centre Switches and cameras integrated* HD surveillance/security* Long term, high capacity storage* Remote access to home network: printing, media centre, home gateway, security Broadband TV connection Managed services for consumer electronics Camera backup: still and video Online gaming Cloud/web hosted applications Content rich E-book applications See items marked with * above
Transport
Financial
Health
Journalism
Storage
Security and control
Consumer electronics applications
Machine to machine
Source: Ovum
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General data services and applications

General data services include online browsing, email, information searching, blogging, social networking, etc. which are already supported by existing mobile data networks such as HSPA and EV-DO. Although these services do not require the high network speed and low latency connections that real-time video and gaming services might require, the user experience is always improved when a true broadband service with higher capacity and lower delay is used. The respondents to our industry survey expect LTE to complement existing network services, and expect that the improved quality of service will be particularly attractive to premium corporate customers and high-end consumers. Although faster access to web content is more of a convenience rather than a necessity, the faster browsing speeds offered by HSPA+ and LTE networks will encourage users to view more content and feed the desire for higher performance services (e.g. media rich services). Users will not only increase their mobile network usage by volume, they will also change their behaviours and come to increasingly rely on mobile data services as they have accessibility on the move. They will require information searches, news access and communications to replicate their use of fixed network broadband. Users, especially those keen on social networking, will also want to retain online connections to their personal networks. Applications such as RSS feeds and instant messaging will keep mobile users updated all the time, and, with the growing use of video in news feeds and messaging, will generate increased capacity demands on the network. All of these services will be enhanced by improved user interfaces. The advent of higher performing mobile broadband will lead to converged applications and mediaa trend which has already startedand will encourage fixed and mobile network convergence.
Voice services
Although voice over IP (VoIP) capability is expected to become available on the LTE devices, the options on how VoIP calls will be handled, including handover, require review and agreement. There is wide-scale agreement in the industry that legacy 2G and 3G networks will continue for many years and interworking with these networks will be sustained, which sets the question of voice continuity across different access types. Voice services may be handled in several ways: multi-mode devices can be configured with GSM and UMTS capability, enabling voice traffic to be carried over an existing GSM or UMTS radio access network. This will enable LTE devices to roam nationally and internationally beyond LTE coverage area. LTE network operators who run their own GSM or UMTS networks may choose to go down the route of voice over LTE via generic access (VoLGA). The recently formed VoLGA Forum aims to define a set of specifications for enabling delivery of voice services over LTE access networks based on the current 3GPP Generic Access Network (GAN) standard, which will enable mobile operators to deliver mobile voice and messaging services over LTE access networks based on upon this. By means of an access controller in the LTE evolved packet core, VoIP voice calls and SMS data originated over the LTE radio interface can be routed and handled by associated GSM or UMTS core networks. This
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approach means that the GSM network (and, in time, the UMTS network) can be gradually run down as users migrate to LTE networks, enabling operators to benefit from earlier opex cost savings.
Other technical solutions can be foreseen, such as Circuit Switched (CS) Fallback (when a voice call which is being established is handed over from the LTE network to the 2G or 3G network) or Voice over IMS, however, the recommendations for these have not been yet finalised within the 3GPP arena. The main issue to be solved is to find a good solution which minimises the interruption gap in the call which is caused by the swap between circuit and packet modes. Thus, it is highly recommended by the UMTS Forum that 3GPP Release 9 be not frozen before a proposal for a good solution to integrate voice in LTE is included.
VoIP over broadband, support for which is included in the LTE standards. Since LTE will be an overlay network on top of the established 2G and 3G networks, it will be the operators decision whether or not to implement or allow VoIP on its LTE network. With voice still remaining the major revenue generator for operators and service providers, the main push for internet-based VoIP will come from those LTE operators which do not have complementary 2G or 3G networks and from third party VoIP services, such as Skype.
Mobile network operators and service providers will wish to retain and protect voice revenues, but will be under regulatory pressure to match mobile termination rates against actual attributable network costs. The uptake of VoIP will mainly depend on an operators strategy, and of the implementation of IP Multimedia Subsystem (IMS) if a fully featured service set is required. Multi-mode handheld devices (which support LTE for data and UMTS for voice) are expected to be the main end user product, as operators generally consider that LTE will be used primarily for data-only services for several years after introduction.
Video related services and applications

Our industry survey indicates that video services, especially high quality video, will be one of the services to enjoy greatest benefits from LTE, as they demand high capacity, high speed and low latency network support. Pre-HSPA mobile networks struggle in every one of these aspects to deliver a satisfactory video service to end users. HSPA is already embedded in personal media players and video handset devices, developing the market in which LTE will provide an ideal network to support further take up of mobile video services. There are two primary types of video service, namely streaming video and live video. Streaming video services normally use a cache and play method to minimise the impact of a poor network connection, as users can accept some delay at the beginning of the service. Some video on demand services (i.e. IPTV) allow users to download the full video content to their local drive and play it as and where they wish. Streaming video services are becoming increasingly popular for mobile broadband users. Live video service, on the other hand, requires high network speed and low latency, and because of the bandwidth required, operators normally prefer to introduce live video as a
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broadcast service. Users who are willing to pay for live video services are not tolerant to interruptions, and they expect high quality, live video service on demand. Mobile-TV services will include both streaming and live video services, which our end user survey indicates will be among the most popular LTE-enabled services. In due course these will drive network use but operators currently do not feel that there is demand for such services. The success of mobile-TV will depend on the operators evolving business model and relationship with content providers. The business model will, however, be subject to the current trends in the traditional broadcast markets, in which subscription and advertising based channels are under pressure from multi-channel broadcasting and internet-based content (catch-up TV, social networking, user-generated content, blogs, news sites). Operator respondents recognise that there will be a market for high-quality mobile broadcasting to meet user expectations. The technology of choice (e.g. MediaFlo, DVB-H, DVB-SH, MBMS, IMB [Integrated Mobile Broadcast], etc.) will depend on region, and has still to find real traction. Those requiring a dedicated overlay network may find the business case to be more challenging. Unicast and internet-based TV and media will become extremely popular over HSPA, HSPA+ and LTE. Users will have raised expectations of internet-based TV services (broadcast programmes and catch-up TV) because of their experience of the services available on their fixed network broadband internet access. The current availability of mobile devices with Wi-Fi capability provides an alternate means of accessing internet-based video content. In a recent global survey, Ovum found that 89% of users who use their mobile phone to access online video did so using their mobile network, and 20% accessed the service via a Wi-Fi connection (a small proportion of respondents use both access methods.) Given that Wi-Fi access has only been widely available on phones since 2007and even then, mainly on phones with an open OS platform such as Microsoft or SymbianWi-Fi is being adopted fairly rapidly in some markets. As mobile operators have been slow to roll out flat-rate data packages on their high-speed networks, Wi-Fi has provided a cheap alternative means of accessing multimedia content on the phone. With vendors such as Nokia pushing Wi-Fi access on Ovi, Wi-Fi based services may become more of a threat to the operator channel in future. However, the advent of faster-speed networks coupled with flat-rate affordable data packages should alleviate this threat to some extent, providing operators get to market quickly. As the LTE market develops, operators will have to assess the market take-up of Wi-Fi network devices, which may influence strategy for in-building and hot-spot femtocell deployment, and decisions regarding incorporation of Wi-Fi capability within the femtocell.
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Figure 3.2
Content / devices preferences
80% 60% 40% 20% 0% Hollywood TV Sport film programme

63% 47% 17% 9% 58% 43% 16% 13% 33% 27% 11% 11%
Home movie
32% 28% 10% 7%
Music video
27% 32% 20% 15%
Adult
17% 19% 6% 5%
Short clips
10% 18% 9% 9%
TV device PC PMP Mobile phone
Source: Ovum - Video trends: the mobile story. March 2009
Figure 3.2 illustrates the findings of recent Ovum research, which indicated the device preference for viewing different types of video content. With three of the device categories PC/laptops, personal media players and mobile phonesall having inherent mobility, the results demonstrate latent potential for mobile TV and video content. As LTE service plans mature over the next few years, further market research can identify content requirements and regional differences at a more granular level. A recent report from Cisco11 projects that mobile data traffic will double every year from 2008 to 2013, and that almost 64% of this traffic will be due to mobile video at the end of the period. Furthermore, the report indicates that by 2013, 80% of traffic will come from mobile devices and handsets which are connected at access speeds greater than those offered by 3G mobile. The Asia Pacific region is projected to account for one third of mobile data traffic by 2013, while Western Europe exhibits the highest level of mobile video traffic, with a projection that 73% of mobile data traffic will be due to video services. The take up of mobile TV services, whether broadcast or streamed internet-based content, should be monitored over the next two years. Mobile service providers will need to segment their offerings and encourage access to free sites to generate mobile broadband traffic, offering some advertising-supported content and providing premium content packages where possible. The former will target the mass market, while the latter will appeal to a smaller segment of users. Service offerings will also need to be packaged for mobile phone users and those using personal media players, as viewing expectations will be different. The availability of subscription packages which do not impose monthly download limits will be essential. If
11
http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-
520862.pdf
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these services become popular, then the high traffic demand generated by such services will be a major driver for increased LTE rollout to increase national coverage and to drive greater cell density.
Real time and interactive services

Our end user survey identifies interactive services as another type of service that will place demands on LTE service providers. Voice services and video telephony/video conferencing are prime interactive real-time services. Mobile gaming is a typical interactive service which requires a low latency network and high capacity data storage, and backup will require network capacity. Mobile gaming has not been successful on the current generation of 2G and 3G mobile networks. The majority of handheld mobile gaming consoles choose Wi-Fi to support network group gaming, and our survey indicates that operators recognise that the market demand for mobile gaming is low. Operators are concerned that there are factors beyond the network which will influence the gaming community. The network operator will provide the gaming market with network performance and will help create device availability (probably gamesspecific) to support the end user demand. However, the end user requirement for low endto-end latency will also require the gaming server and the gaming device to have performance to meet the end users expectations. Although gaming server performance is improving as the popularity of network supported gaming consoles increases, mobile gaming device manufacturers are expected to focus on improving their device performance, especially in the areas of graphics design and game design. It is clear that the gaming industry is currently less focused on mobile gaming, but it has made rapid developments to improve the performance of standalone, fixed internet and Wi-Fi consoles which have already become features for standard gaming consoles. Given their powerful performance, it is questionable how much value mobile broadband will bring to these devices. It should be noted that mobile gaming does not necessarily mean that all games will require powerful handheld terminals. Internet gamingalong with many other internet applications will move to the mobile internet domain. Games such as World of Warcraft, Second Life (a virtual social world) and WAR (Warhammer Online: Age of Reckoning) attract tens of millions of users worldwide. With mobile broadband support, users will increasingly be able to play games away from their fixed network access. All they will need is a laptop/PC with mobile broadband (via a USB dongle/data card or embedded chipset). High capacity data storage and back up capabilities are already being built into digital cameras and video cameras with the introduction of HSPA into the devices. Other applications in real-time monitoring and surveying services will also benefit from immediate download of data to server and are being considered by the vendors and service providers.
Location based services

A major difference between mobile broadband networks and fixed networks is that the former can be subject to location changes. This provides a huge opportunity for location based services (LBS) which have very broad potential to integrate with high performance
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mobile services. General LBS include the updating of maps, provision of information on the location of shops, service points, etc., depending on the location of the user. As LBS become more intuitive to use, require regular updates when on the move and have access to the sophistication of applications like Google Maps and Google Earth, they are expected to drive network traffic to considerable volumes. Operators are strongly interested in LBS as a route to providing true personalised services, and, with true broadband connectivity, they will be able to take advantage of devices with embedded GPS to offer their own and third party services, e.g. using Google Maps or similar. Services such as these raise the possibility of new business models to be developed for charging users or specialist service providers for use of network capacity.
3.3 Enterprise services vertical sectors

Whilst the business sector will use many of the consumer services, the flexibility to offer new services to vertical markets (as shown in Figure 3.3) will require service providers to reassess their approach to marketing, which includes many non-traditional markets and service delivery.
Figure 3.3
Sector
Business services enabled and enhanced by LTE

LTE Ecosystem Components/characteristics at service, application, device level Business services Note: * indicates machine to machine service
Refer also to Figure 3.1 (consumer services). Many components, applications and services identified in the previous consumer service review also apply to the enterprise sector. Devices and user interface Internet Applications, services and content, portals and devices developed for specific vertical market sectors. All that Web 2.0 comprises: communication, interoperability, sharing, collaboration Wide base of data for consumer added value, marketing Industry-specific applications (based on standard architectures): health, logistics, emergency services, retail, finance, etc. Corporate VPN access Service delivery on the web - content formatted for mobile broadband delivery Transaction services with customers and industry partners Personalised content for customers Targeted marketing Location-based content Presence/location information* Location-based push-marketing In-transit travel updates to itinerary Fleet monitoring speed, location* Logistics control* Health and safety (driving time)* Public transport in fleet services* Road tolling* Emergency service command and control Live relay of incident* Telemetry*
Navigation, location, transport
GPS and cell location data GIS services Mapping data Service directories Dispersed enterprise resources
National utilities and services
Emergency services; utilities
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Financial
Banks, credit card and financial sector companies Vending machines Point of sale terminals Associated manufacturing and applications Mobile access to health advice sites Medical devices and records Health and dental practices, hospital services Insurance company records Monitoring devices Scanners and display systems Advice and diagnosis web sites Video and audio reporting tools adapted for mobile delivery High definition capabilities
Online mobile banking and e-commerce Integrated near-field communications Transaction service
Health
Full-scale clinical records scans, x-rays, personal data access* Remote diagnostics with video support* National and international coverage*
Journalism
High speed/low latency news gathering (without news gathering satellite services)
Storage , security and control
Corporate storage networks In-building alarm monitoring/reporting Scanning and entry systems Cameras store + forward, or online Heating and AC control Interfaces for telemetry devices Remote polling systems
Back-up storage for field workforce* Corporate security/CCTV archive* Integrated with control centre Switches and cameras integrated* HD surveillance/security* Long term, high capacity storage* Remote office working Push-to-talk/video Emergency services support See items marked with * above
Industry applications Machine to machine
Source: Ovum Note: * Indicates machine to machine service
Machine to machine services

Machine to machine communications services are currently used in public safety, finance, healthcare, utilities, etc. They require only low speed, low capacity network support, for which GPRS/EDGE and 3G networks are well suited. Our industry and end user survey indicates that machine to machine services will not be a major driver of LTE uptake. There is general agreement that low capacity requirement applications will stay with GPRS/EDGE and 3G networks for many years. Any machine to machine applications which require a high capacity LTE network are expected to develop over time, but specific examples are not identified, and current HSPA networks should be able to provide a good data service for emerging machine to machine services. Ultimately, service costs and total cost of ownership will influence the demand for and take up of LTE machine to machine services.
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It should be noted that machine to machine users are not the usual business or consumer groups. Their network requirements are often constant and, if the capacity demand is high, this would lead to high charges on a standard tariff. However, if operators have predictable demand, they may be flexible and offer service to these users at a lower price, which could encourage machine to machine services. An example of public safety service can be considered with regards to the control and data from thousands of CCTV cameras being gathered. Each camera may demand a constant 1-2 Mbit/s support which, as a proportion of a cells uplink capacity, equates to about one fiftieth for an LTE cell, one tenth for an HSPA Evolution and one fifth for an HSPA cell, this improvement being one of the advantages of the lower interference inherent in OFDM technology used in LTE, compared to W-CDMA. The mobile operator community perceives machine to machine as a long term strategic market opportunity for LTE and, although not one that will initially drive high volumes of product, one which provides an opportunity for mobile network operators to expand their market. The vision for machine to machine is that LTEs higher capacity combined with a large penetration of LTE modules in various device form factors in the consumer market and in several vertical markets will generate a huge market opportunity for machine to machine connectivity services. This vision may only fully materialize in 10 years from now, but is a perspective that is certainly in operators minds.
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4 Devices and infrastructure

4.1 Overview
The vendor community provides the foundation of the LTE ecosystem. Vendors work very interactively in partnerships and alliances to help build their own success and that of the industry. During the early stages of standards development, architecture design and systems development, the vendors are the main drivers in the ecosystem. In this section of the report we will discuss the chipset, user device, infrastructure suppliers and test system vendors. The timing of demand, the variety of services, applications and content, and the volumes of LTE related chipsets will have a direct impact on the range and sophistication of LTE enabled devices. However, this aspect of the industry is very intertwined and successfully so, as it allows new innovative companies to bring new ideas to market. Device vendors and software developers interact to define and develop mobile operating systems and applications. With the introduction of mobile data services, service and content providers have increased in importance as they cooperate with device vendors, software developers and operators to bring more services/applications to the mobile user market. Test capability is hugely important to enable clean, functional products to be brought to market and equipment manufacturers provide product testing support to user device vendors and infrastructure suppliers. The test community plays an especially important role in the early stages of new technology introduction as it provides verification and functionality tests. Any new devices and handsets developed for the LTE market will have to be compatible with the existing network technologies deployed by the LTE network operator (which will most likely be W-CDMA, HSPA+, EV-DO, or TD-SCDMA in China). However, the availability of devices with a compelling overall user experience (size, screen, usability, features, etc.) will generate the most market interest. A wide range of devices is anticipated: data-only dongles and cards; LTE embedded in laptop; voice handsets; gaming consoles; internet-connected media players; mobile internet devices and consumer goods; cameras, security and surveillance devices. All of these devices are already being brought to market with HSPA capability: a move which will help the ecosystem of applications, devices and services develop prior to the commercial launch of LTE services.
4.2 Chipset vendor LTE roadmap

Roadmap overview
Chipset vendors are fundamentally important in any mobile industry technology development, especially those for end user devices. Figure 4.1 shows the roadmap for chipset vendors associated to the device support.
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Figure 4.1
Overview of chipset vendor roadmap
Current activities Expected activities
First commercial ready Data only device support
Embedded devices support
Small handheld device support
Test & trial Development
Test & trial
Test & trial
2008
2009
2010
2011
2012
2013
Source: Ovum
200809: in-house development before being commercially ready Chipset vendors are in general agreement that they will initially introduce LTE/HSPA+ and LTE/EV-DO dual-mode chipsets to satisfy the needs of the initial multi-mode devices. Multimode chipsets for the Chinese market will need to include TD-SCDMA. In the future it is expected that LTE will be embedded with EDGE, UMTS and CDMA, but the vendors would not be drawn on specific timescales as, after the current initial development phase, their developments for further multi-mode chipsets will depend on device vendors requests, which are in turn driven by the demands of network operators. The testing of LTE chipsets will continue through 2009 as new variants are released. During 2008, vendors were focused on frequency division duplex (FDD) mode and they expect to have hardware support for both FDD and time division duplex (TDD) modes in 2009. Chipsets are baseband products, so current tests are conducted independently from frequency bands and the majority of vendors use the 2.6 GHz band and a 20 MHz channel for test purposes. Tests for other bands and channel bandwidth will be conducted with device vendors in 2009. In terms of MIMO support, it is commonly agreed that 2X2 MIMO for the downlink will be a popular choice for initial LTE deployment and hence the initial focus for chipsets. It is expected that general user device will have up to 4X2 MIMO support, allowing improved diversity performance, with an associated 2x data rate increase, whilst 4X4 MIMO can be introduced for femtocell devices. Engineering chipset samples are expected to be available in mid-2009. The first fully standards compliant, multi-mode commercial chipset products will become available as early as the second half of 2009, or early 2010 at the latest. Pre-standard chipsets could be made available 23 months earlier if device vendors indicate an intention to bring early, pre-
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standards devices to the market first. Chipsets for LTE femtocells will become available in the second half of 2009. The many options for multi-band support and MIMO configurations will be reviewed during these early days, as chipset and device vendors seek to achieve the right balance between performance, size, power consumption, product volumes and costs. It is clear that different devices will be needed for different markets. 2010: standard-compliant chipset ready It will take the vendors very little time to finalise their chipsets once the standards are ratified. Initially, multi-mode chipsets will be used on data-only devices, such as USB dongles and PC data cards. Once the initial releases are available, the time to implement new standards-compliant data-only devices will be reduced and new versions should become available within three to six months of the initial chipsets. Chipset vendors work very closely with device vendors to increase the level of integration for embedded devices and small handheld devices. The timing of these chipsets will depend on the device vendors roadmaps. LTE femtocells will appear in the second half of 2010, with deployment determined by the operators' strategies and the popularity of LTE devices. Some operators will choose femtocells to compensate for the lack of network coverage, but for this to be a successful strategy will require LTE devices to be adopted to create demand for femtocells. Dual/triplemode femtocell chipsets (incorporating LTE, Wi-Fi and other cellular standards such as EVDO or HSPA+) are expected by the end of 2010 or early 2011, with commercial availability in mid-2011. Size and cost of these devices will be critical, as they will have to meet consumer expectations for form factor and price.
Impact on the ecosystem

Chipsets are a very important part of the ecosystem. According to the chipset industry, standard-compliant product will be ready as early as the second half of 2009 or the first quarter of 2010 the latest. This timeline will be a problem for user device vendors who wish to have standards-compliant devices ready for early LTE deployment. They can however use pre-standard chipsets for initial LTE devices, such as USB dongles and PC cards. There should be a low impact on the main commercial deployments since these devices are used only to support data services, and given that such devices have a simple form factor, vendors can quickly ramp up production to introduce standard-compliant devices. It is expected that a standard-compliant LTE device will initially become available with the smallest form factor i.e. a USB dongle, but it will take another six to nine months for vendors to test and integrate an LTE chipset into embedded devices. For small handheld devices, the test and integration period will be at least 1218 months. Issues such as size and power consumption must be solved before small handheld devices can be sold to the general consumer.
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4.3 Device vendor LTE roadmap

Roadmap overview
The vendors of end user devices are actively involved in the trials programmes with the LSTI and separately with individual operators. This is encouraging, as when 3G was introduced the lack of suitable devices was the biggest challenge which slowed user adoption and market uptake. To avoid the same problem with LTE, device vendors have an active programme to introduce devices in time for early LTE deployment (albeit for data-only services in the first instance). There are device and chipset vendors in all major markets and with vigorous competition in a large and dynamic market, all major mobile device chipset vendors are expected to take a position. Ultimately, the growing momentum of LTE will generate a healthy competitive device and chipset market. Device vendors state their position clearly: most have undertaken the basic developments to support LTE and they continue to develop partnerships. They will respond to concrete statements of intent and contract negotiations with network operators. In terms of development plans, device vendors are divided into two groups: those without in-house chipset capability, which depend on the external supply of chipsets and which work closely with the chipset vendors on joint programmes, and those vendors with in-house chipset capability, which are able to consider more flexible product development plans. Overall, the device vendors roadmap is comprised of three stages, which are shown in Figure 4.2 in relation to the expected three major device types.
Figure 4.2
Overview of device vendor roadmap

Small handheld device Embedded device Data only device
Test & trial
Test & trial
2008
2009
2010
2011
2012
2013
Source: Ovum
After the initial period of commercial network deployment, there is an expectation in the industry that LTE capabilities will become embedded in many different classes of device. Gaming consoles, connected audio and video media players, mobile internet devices,
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cameras and high-end smart phones are all seen as candidates. Many of these types of devices are already being shipped with Wi-Fi capability to allow networking in the home. If this can be extended to the wider area through the LTE network, then consumers will have access to download and upload their own content to and from their own servers or to network servers. However, the risk of a false launch in a nascent market will deter the device vendors from introducing these devices early. Multi-mode capability in devices will be nearly always essential. Devices aimed at the mobility market will need to operate when roaming outside LTE network coverage areas. More static devices, such as gaming consoles, will need to incorporate Wi-Fi and possibly other domestic networking capabilities. Apart from meeting market needs, multi-mode capability will increase the volumes of chipsets and devices, leading to economies of scale. As devices become more complex, with greater processing capability, larger screens and a wider range of frequency bands to incorporate, LTE devices will have to: be multi-standard capable (CDMA/LTE, GSM/UMTS/LTE, UMTS/LTE, ...) combining TDMA, CDMA and OFDMA radio access techniques be multi-band capable (700 MHz, 900 MHz, 1.5 GHz, 1.7 GHz, 2.1 GHz, 2.6 GHz, etc...) support both TDD and FDD integrate multiple antenna (2x2 MIMO is a pre-requisite and it can go up to 4x4 MIMO for very high performance devices) improve battery life embed higher processing capabilities.
Not all of these challenges have to be concurrently met in every device, but the need to meet some of these challenges in every device will require clear objectives and focus. These can be achieved through strong relationships with major vendors and operators. 200910, data-only device ready Vendors have demonstrated prototype devices during 2008 and device vendors will be testing and developing LTE products further during 2009. The industry expects the first commercial devices to become available in late 2009 and early 2010, which will be multimode, data-only devices, such as USB dongles and PC cards. These devices have a small form factor and relatively low complexity, which makes them more easily implemented. Devices will be available in a wide range of frequency bands, including 700 MHz, 2.1 GHz, 2.3 GHz and 2.6 GHz. Other spectrum bands will be supported, but vendors are keen to see spectrum alignment to create market scale in order to enable production efficiencies. FDD devices will dominate the market as TDD services (and the associated market-specific aspects of the ecosystem) are expected to develop first in Asian markets and at a later date in Europe. Those vendors with in-house chipset capability will have an advantage during this early period as they are able to introduce pre-standard devices and have greater control over the component set. Those vendors who require large volume chipset production will be disadvantaged, unless their chipset manufacturer suppliers decide to increase their output of pre-standard components.
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2010-11, standard-compliant device, embedded device ready By 2010, after the introduction and availability of standard-compliant chipsets, vendors will address required enhancements to the first generation data-only devices, enhancing device performance and improving power consumption. This latter point will be a key issue to enable LTE capability to be included in a wider range of devices, not least because high processing power is required to deliver LTEs increased data rate. The industry expects that LTE-embedded devices, e.g. laptops, notebooks and PDAs, will become available in late 2010 or early 2011, at least six to nine months after the introduction of data-only devices. Of course, chipset availability is the key to the introduction of LTE-embedded devices and chipset vendors work closely with laptop manufacturers on joint implementation programmes. During 2010, multi-mode network devices will be developed to embed LTE and mass production of such devices is expected to start in 2011. The industry is expected to make effective progress to implement LTE capability, as was the case during 2007 and 2008 when many laptop vendors delivered products with embedded HSPA capability. 201112, small handheld devices become available As LTE networks become more widely established, there will be increased market demand for additional device capability. However, this is expected to evolve quite slowly, with small multi-mode handheld devices expected to be introduced in 2011 at the earliest. As devices mature during 2012, they will go through an iterative development cycle to improve issues such as power consumption, size, etc. There is a common expectation and agreement in the industry that LTE will be embedded in high-end smartphone devices only. This implies that LTE will still be a data-centric technology even after two to three years of products and sales. As the ecosystem develops, multi-mode and multi-band devices will become available. This will present a challenge to the chipset and device vendors. It will not be practical, due to costs and chipset real estate, to support an increasing number of modes and frequency bands in the same device. Mobile network operators will need to assess their national, international and roaming strategies, the impact on their device portfolio and they should provide clear requirements on the required modes (e.g. LTE, W-CDMA, EV-DO, HSPA, HSPA+, GSM, TDD/FDD support) and frequency bands (e.g. 700 MHz, digital dividend [790 862 MHz], 900 MHz, AWS [1710-1755 MHz and 2110-2155 MHz], 2.1 GHz, 2.6 GHz) to the device and chipset partners in the ecosystem. The decisions will be complex, as even though it is expected that devices will be developed to meet the needs of particular markets/regions, the need to support international roaming will still need to be addressed. Although VoIP capability is expected to become available on these devices, the options pertaining to how the handover of VoIP calls will be handled require review and agreement. There is widespread agreement in the industry that legacy 2G and 3G networks will continue for many years. Since LTE will be an overlay network on top of the established 2G and 3G networks, it will be the operators decision whether or not to implement VoIP on its LTE network. As voice remains the major revenue generator for operators and service providers, the main push for internet-based VoIP will come from those LTE operators which do not have complementary 2G or 3G networks.
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When voice does migrate to an all-IP network, significant regulatory issues will have to be addressed regarding IP interconnect and voice termination rates. As voice traffic is becoming a small component of overall traffic carried on the network, the costs attributed to voice will relatively decrease, which will in turn impact voice termination rates and the revenues earned by operators.
The impact on consumer devices

The consumer world innovates more rapidly than ever. Wireless networking technology is steadily being incorporated into consumer devices. Cameras, gaming consoles and media centres are taking advantage of low cost Wi-Fi chipsets and some vendors have incorporated HSPA into these devices. TVs, meanwhile, are increasingly including Ethernet ports. The current trend towards plasma and LCD screens removes the convenient storage space for a host of recorders, media players and consoles. A wireless solution which overcomes the aesthetic problem of cabling and the doors could initiate a revolution in home wireless connectivity, in which high bandwidths and inherent wireless connectivity are the norm. Whilst Wi-Fi has provided a solution for many applications in closed environments, it would never be able to provide the user with a connection at a wide area range of locations. With the advent of LTE as a wide area mobile broadband solution, the applications which are limited to home/office bases by Wi-Fi should be able to take advantage of higher performance connections, available both inside and outside the home. One might consider the evolution from 56 kbit/s dial up modems to broadband at 12 Mbit/s, which is then overtaken by 20 Mbit/s broadband as the norm. It is video media applications which have most benefited from these fixed broadband speed increases. As such, we might expect the attractiveness of user-generated content (e.g. YouTube), media content (online broadcasting/catch-up) and studio quality video services to be major drivers of mobile broadband. These services seek to increase their quality, providing higher definition, thus requiring increased bandwidth. The home node, based on femtocell technology, could prove to be a major market opportunity for LTE and is being considered by early adopters of the technology. Nevertheless another solution of fixed-mobile convergence (FMC) via UMA (Unlicensed Mobile Access) with a Livebox as the home node and a single mobile terminal offering the connectivity at home and on the move outside the home with WiFi and 3G modes, could be enhanced by LTE access. It is the case of the Orange Digital Home with Unik FMC handset. As well as being a major driver of LTE, video/media services are also a challenge for operators. The LTE market could evolve in a similar manner to fixed networks, where a network operator provides a high performance network, but finds that internet-based players provide over-the-top content, thus channelling value away from the operator. This challenge may lead to tiered pricing plans for access products segmented by bandwidth/performance, with audio, video and TV content included in the package. The commercial arrangements between a service provider and the network operator would then be reflected in the users subscription plan.
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Devices drive data traffic The introduction of screen-based devices such as the iPhone, which make services and content more easily accessible, has driven increased data usage on 3G networks. These devices, which are designed to incorporate the latest mobile technologies, allow services to be accessed through embedded applications, generating revenue for application developers, content providers and device vendors. Each device vendor has strong propositions in particular areas: for example, Nokia has navigation capability and music, while Google's G1 phone has a wide range of embedded services and the Apple iPhone offers music and an increasing range of applications. The user experience is an important factor and those vendors with existing embedded capabilities or the ability to develop them will have a distinct advantage in this respect. We expect that user download clients will be developed for specific content (e.g. social networking and chat sites, blogs, navigation) to ensure that the delivery of many types of internet content are optimised for access on small and portable devices. The implications of these changes to service and value delivery mean that operators will need to continue to evolve their business models. As noted earlier, the long term migration of voice from the TDM network to VoIP on the LTE network will impact interconnect, termination and regulated call charges. To avoid revenue attrition, operators will need to cope with the explosion in new devices, many of which may be transient, and in doing so rethink their business models to allow them to retain end user revenue. They will need to balance the provision of controlled service interfaces in their devices which allow them to share revenue with application and service providers, requiring new commercial arrangements across the supply chain with the provision of fully open interfaces, which will encourage wide-scale service development. Open or managed platforms for LTE-enabled devices? The move to LTE will have a significant impact on devices and their architecture. There is currently a trend towards more PC-like architectures for devices, with the increasing use of open platforms (e.g. Symbian OS, Windows Mobile, Android). Ovum estimates the shipment of devices with open platforms to reach 570 million by 2012. Device vendors supporting LTE will also need to provide mobile operators and third parties with the ability to launch applications and services. An open platform will provide this capability and allow others to provide innovation which will drive adoption of LTE devices. As we have seen with third party applications using Apples App Store, innovative third party content has driven consumer demand for Apples iPhone and Apple devices continue to be a desirable addition to an operators portfolio, thus enabling the company to retain a strong position in the industry. With a number of competing open platforms, application vendors will need to develop application variants leading to higher costs across the value chain. These higher costs may be offset for the operator by an opportunity to retain a higher proportion of the application/service value in an open environment. Many handset manufacturers and network operators are developing their own applications stores and developer networks (e.g. Vodafone betavine, O2 Litmus, Nokia Ovi) which will help foster innovation. These stores will need to provide more than games and ringtones that have been the mainstay of some to date.
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The challenge for operators is less about which operating system to focus on, but more about creating a valuable proposition which will encourage customers to visit their portals. It is technically possible to host apps for a number of different operating systems, but this has yet to be mastered to enable the applications to be marketed in a compelling fashion. Whilst open access platforms with PC-like architectures are developing rapidly, we are also seeing that managed device platforms (MDPs) are becoming more prevalent. MDPs represent a midpoint between the open platform approach pioneered by the PC and the closed platform approach still typical of most consumer electronics. Third-party access to the devicewhether developer, content provider or end useris possible, but is fully managed by the MDP vendor. The user experience is effectively owned by the companies which control access by third parties to the device. A fully-realised MDP will offer all the elements involved in the creation, discovery, acquisition, delivery and consumption of digital content and applications, as well as the means to update applications and device software. (No platform fully meets these requirements today.) To fulfil their ambitions to develop and create the best user experience, the aspiring MDP owners (e.g. Apple, Microsoft, Google, Nokia and Sony, but also smaller vendors such as Yahoo! and RIM) will require increased bandwidth and the best possible quality of service possible: factors made available by LTE. The MDP approach allows third party applications to develop bespoke and mass market solutions using licensed software development kits, but possibly with restrictive terms and conditions. This development of the device platform is critical to the industry as it has implications for customer ownership and revenue distribution along the value chain. The most obvious beneficiary of the MDP approach is the end user, who gains a highly optimised, easily customisable and frequently updated user experience. However, device OEMs, operators and content providers can all benefit from the stability created by MDPs and the lower capital investment necessary to support them. The control of a fully realised MDP, combined with a high level of consumer stickiness fostered by ownership of popular online applications and services, will become defining characteristics of an emerging category of top vendors. These will help bring stability to the currently highly fragmented digital content ecosystem, helping vendors to attract a full range of content and application developer partners. The rise of MDPs will create a distinct split between devices that are managed by vendors and come bundled with multiple content and applications sources, and those that do not. Simple distinctions based on the openness or otherwise of the device platform (as distinct from the services supplied) will be rendered largely irrelevant. The MDP approach is currently appropriate mainly for mid- to high-end propositions for developed markets. However, many of the principles of MDPsespecially the integration of delivery elements by a single vendorwill trickle down to other markets and segments, with local brands and less complete platforms more able to compete. The power gap will become a significant issue for LTE-enabled devices The power gap describes the increasing difference between power supply and power demand. Device capabilities will increase significantly, if not exponentially, over the next five years; this includes processor performance, storage and network bandwidth as well as increasingly complex software. These increasing capabilities coupled with the increasing
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number of applications and services offered by devices (e.g. media player, camera, sat-nav) and the growth of mobile video services (often of long duration if used for mobile TV, catchup TV and films), means that devices are used more consistently throughout the day, thus placing increasing demand on the battery and the consequent consumer quality of experience. Given there is no single hardware innovation which will provide a step change in battery performance in the next five years, device vendors will need to focus on power management strategies and technologies. Device vendors will need to look at all areas of the device for optimisation opportunities, including the processor, operating system and display technologies, to help minimise power consumption. Device vendors will need to explore non-traditional mobile phone form factors Device vendors building LTE-enabled devices will need to look beyond traditional phone form factors. Initially this will be driven as device vendors miniaturise and scale down LTE technology to smaller and lighter dimensions. Conversely, vendors may choose to overcome battery constraints by offering larger devices. Aside from these physical issues, the current trend for mobile internet devices and netbooks can be addressed by devices designed to support LTE. As the MNOs change their business models to develop revenue streams, they will address non-traditional markets and opportunities. Some new service opportunities are discussed in Section 3 of this report. Devices to support these services may include embedded devices in cars to provide performance and service monitoring; medical devices allowing large size images to be downloaded to field medical staff; premises video monitoring; and security applications. Attractive, usable devices will drive considerable data volumes, but the traffic volumes cannot be estimated as the service and tariff model will have a major influence on volumes.
Femtocells
Femtocell capabilities are included in 3GPP Release 8 and early LTE femtocells chipsets are being developed. It is expected that home nodes and femtocells will play a role in early LTE networks, with commercial trials in 2010 and market launch in 2011. Any LTE femtocells will have to support other national/regional access technologies to help create the demand for the cells during the early years of LTE rollout. Operators are showing interest in the US, Europe and Asia. These nodes, which are being targeted by smaller, specialist vendors, will enable a network operator to provide wide area coverage, without the costs and timescales of full scale base station coverage in a region. The small cell will connect over a broadband fixed access interface (xDSL, fibre or cable) and provide local users with complete LTE-based services. Deployment will be limited through 2010 with dual-mode (LTE and HSPA+) femtocells being developed, leading to volume production expected from mid-2011 or later.
There is room in the market for addtional solutions to address the in-home market, which is not yet fully developed, although WiFi/UMA solutions are deployed in several networks (e.g. Orange Unik).
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Special purpose devices

The market for special purpose devices, such as handheld gaming consoles, multimedia players and vertical-specific markets with embedded LTE will evolve separately from other mobile devices and be highly market specific, but based on common platforms and chipsets. Gaming devices are aimed at a specific market, different from standard mobile data-only devices in that they require performance-specific functionalities. This contrasts with data and voice/data mobile devices in which features and user experience predominate the requirements. Gaming device vendors will not sacrifice performance to integrate mobile phone capabilities. This is reinforced by our end user analysis, which indicates that gamers using LTE broadband would prefer a dedicated gaming console. It is expected that gaming devices with mobile broadband support will eventually appear in response to specific perceived market demand, but their emergence will be much slower. It is difficult to predict the development/timing of LTE gaming devices but they will be specialist devices, which may come to specific markets within one or two years of full commercial launch. This is the same timeframe as small handheld devices, which are expected to be multimedia mobile phones with large screens and screen-based user interfaces similar to those which entered the 3G market in 200708.

As demonstrated in the communications industry when 3G services were introduced, the availability of customer-attractive user devices is one of the key factors for a successful launch and growth of a new mobile platform. This will also be the case for successful LTE deployment. Device vendors will introduce data-only devices for the initial LTE deployments, with small handheld devices becoming available during 201112. This means that for LTE network operators will provide data services only during the initial two to three years of service. Although it is not a major problem, it does pose a challenge to any operators who may wish to target specific user groups, such as young people who prefer to have a 'cool' handset rather than a USB dongle. Our research indicates that operators will largely fall into two groups. There will be those who are happy to launch their LTE services with data connectivity onlyi.e. meeting the market need for mobile broadband with data cards and similar allowing these operators to get to market earlier. The other group is concerned that the lack of a wider range of end user devices will impact the take up of network services and will wait for a greater selection of devices prior to their network deployments.
4.4 Infrastructure supplier LTE roadmap

Major vendor proposition overview
Understandably, the infrastructure suppliers are the most active group in the ecosystem. They contribute to the standards bodies, are engaged in trials with operators and device vendors, lobby regulators and demonstrate and promote LTE technology worldwide. All major wireless infrastructure vendors have announced LTE product roadmaps but their positions vary slightly depending on their current markets.
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Figure 4.3 gives an overview of infrastructure suppliers LTE development roadmaps. Figure 4.3 Overview of infrastructure supplier roadmap
More bands support First commercial product
Test & trial
Test & trial
2008
2009
2010
2011
2012
2013
Source: Ovum
200810: getting ready for LTE commercial deployment To date, all of the major vendors involved in the development of LTE platforms have demonstrated their LTE product capabilities. Some vendors are already shipping prestandards base station systems that will be upgraded to full LTE compliance through software upgrades. Vendors will continue trials with operators and with the LTE Trial Initiative (LSTI) programme through 2009, leading to the expected first commercial product deployments in the second half of 2009 to early 2010. These initial products will support both FDD and TDD, although the timing of releases to support different frequency bands will vary, depending on operator and national requirements. The initial focus for FDD bands will be on the 700 MHz, 2.1 GHz and 2.6 GHz bands, while the initial TDD focus will be on the 2.3 GHz band. Whilst there is a need for vendors to support different frequency bands, this will only affect the radio access side of the network, and economies of scale will still be achievable. The process of live trials with individual operators will help the products mature and will help the vendors meet operator-specific requirements, such as handover and VoIP support. The early network operators have announced their major vendors. Figure 4.4 shows publicly announced information as of Feb 24, 2009.
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Figure 4.4
Country Japan
Public LTE and SAE vendor announcements

Operator NTT DoCoMo LTE suppliers NEC Fujitsu Panasonic/NSN Ericsson SAE suppliers NEC Fujitsu/NSN
Japan Norway
KDDI TeliaSonera Telenor Huawei Huawei Ericsson Alcatel-Lucent Ericsson
Hitachi/Nortel Huawei Huawei Ericsson Alcatel-Lucent Ericsson Starent
Sweden US
TeliaSonera Verizon Wireless
Based on data available as of May 2009
Source: Ovum
201012: additional frequency bands support and end-to-end solution Developments during 201012 will depend on operators' requirements, but the vendors expect to see demands to support additional spectrum bands, e.g. FDD at 800 MHz, the digital dividend bands (698-806 MHz and 790862 MHz), 900 MHz and 1800 MHz. Dependent on Europes spectrum allocation policy, more TDD bands will also be supported by the vendors. The major infrastructure suppliers are preparing to support additional frequency bands and will be well positioned to respond when they see there is a market demand from the operators. All the major vendors aim to provide an end-to-end solution developed using their own inhouse capability or through partnerships which will sustain after the first commercial LTE networks are introduced.

The infrastructure suppliers are all actively involved in industry trials and ongoing standardisation activities and their product timelines are very aggressive to meet the early adopters requirements. Whilst there is a potential vulnerability of inter-working problems, the current trials are key to help prevent inter-operability issues between different vendors. All vendors stress the importance of bringing standard-compliant systems to market, to minimise the risk of interworking problems.
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One factor which prevented UMTS TDD from taking off was the lack of a UMTS TDD ecosystem. The industries support for LTE TDD will be important in certain markets such as China and Western Europe and for the subsequent development of a full ecosystem. There is a desire across the industry to use LTE TDD, which has received very positive support. The availability of LTE TDD spectrum will encourage LTE deployment; its higher efficiency will become increasingly important as spectrum resources are limited and expensive.
4.5 Test component

There are several areas in which test is an important facet for the introduction of a new technology. Each contribution to the ecosystem needs to be tested in its own right which is undertake by the development team, against standards and design specifications. More importantly is the availability of test systems and co-operation between industry players to develop and implement comprehensive performance and interoperability test programmes. The test equipment vendors have test systems ready for the deployment of LTE and they bring valuable experience from the testing of HSPA/EV-DO data network operations and services which is quite relevant to LTE testing. They are actively involved in tests and trials with operators, infrastructure suppliers and device vendors. A great deal of this work is being coordinated by the LTE-SAE Trial Initiative (LSTI), whose activities are discussed in Annex B. These initiatives and cross-industry activities are important as they help the industry confirm both proof of concept and interoperability testing.
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5 Drivers and barriers of the LTE ecosystem

5.1 Reasons and drivers for the deployment of LTE
The network operators sit at the centre of the LTE long term ecosystem (Figure 5.1), and they create worldwide LTE momentum, interacting with all other parties and industry bodies to enable LTE deployment. They raise their requirements to the vendor community for products that suit their specific markets, provide R&D support to the standardisation bodies, and influence the regulators to provide the regulatory frameworks which are beneficial for LTE.
Figure 5.1
LTE ecosystem interactions

Standards andIndustrial Standards an Industrial an Industrial Bodies Bodies
International and International and Regional Regional Regulators Regulators
Infrastructure Infrastructure Providers Providers
Test Equipment Test Equipment Providers Providers
Spectrum Availability Data Capacity Requirement Network Operators Network Operators Incumbents/New Entrants Incumbents/New Entrants
Chipset Chipset Manufactures Manufactures Device Device Vendors Vendors
Software Software Developers Developers Service/Content Service/Content Providers Providers
End Users End Users
Source: Ovum
The main drivers for the deployment of LTE are discussed below.
Technology driver
There are a number of reasons for operators to choose LTE as an evolution to the current WCDMA/HSPA network, including: high peak data rate low latency flexible bandwidth configuration higher spectrum efficiency with reduced cost per megabyte.
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These advantages will help service providers to offer services with prices and features which help meet the needs of different user-groups for bandwidth and service performance, which will contribute to a long term strategy to encourage fixed-mobile substitution. These all help deliver lower overall costs for operators when compared with previous generations of technology. For WCDMA operators, LTE is the natural upgrade route. For CDMA operators, since Qualcomm no longer supports UMB, LTE is an ideal upgrade candidate. The CDMA Development Group (CDG) became a Market Representation Partner (MRP) of the 3GPP on 28 April 2009 - as have been the UMTS Forum and the GSMA for a long time - with the goal of promoting CDMA2000 and EV-DO migration to LTE. Operators such as NTT DoCoMo have always been at the forefront of mobile technology evolution. Indeed, NTT DoCoMos mission statement says We will continue to drive innovation so that we can earn the respect and admiration of people worldwide. The firm has also established a clear roadmap to deploy their LTE network from 2010. For such operators, LTE deployment will demonstrate their strength and vision in technology innovation. As LTE networks are established, then the self-organising network (SON) capability, which supports the automatic configuration and optimisation of new cells, will also help operators reduce their operating costs, most notably where there are large numbers of small cells e.g. femtocells. More standardisation work is needed in this area however, as only a low number of SON features are supported in 3GPP Release 8, although there are many proprietary implementations of these features in vendors products. The UMTS Forum therefore recommends that Release 9 should include additional SON features.
Competitor driver
Operators decisions to upgrade their network will also be driven by their competitors' decisions. Once one operator has started LTE network deployment, other operators will follow, driven by competition and the need to remain strategically positioned in the market. Competition from other technologies, such as WiMAX, cable and fixed network operations will also influence an operators decision on whether to deploy LTE early or later. These decisions, which will vary by region, are discussed in Annex A.
Demand driver
The demand driver manifests itself in two ways: At the user level: the expectation is for higher performance services, stimulated by the increased availability and speed of fixed network broadband services and coupled with the increased usability brought about by new generation devices (e.g. iPhones). At the network level: both cells and core network need to respond to potentially very large steps in data traffic demand. This will be intensified as mobile broadband takes an increasing share of the total broadband market and takes some market share from fixed network service providers.
This growth in demand has been seen during 2007 and 2008, and it is expected to grow more as HSPA/EV-DO networks are deployed further. Our industry survey indicates that
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most operators expect their network capacity to reach its limit during 200910. Whilst some networks do have capacity for growth, the growth drivers will increase demand rapidly. By 2010 many operators will urgently need a solution to provide more capacity both in the RAN and in the core network, more so than the incremental increases to which they have become accustomed. LTE technology helps in both the access network and the core. MIMO technology can help LTE achieve two to three times spectral efficiency over HSDPA (Release 6), and the Evolved Packet Core of the SAE architecture is designed to handle IP-only traffic (voice and data), which, by preventing the duplication of network elements, provides a simpler solution than established 3G networks, with lower opex. The result of these efficiencies can mean that the cost per megabyte for LTE services is 83% lower than WCDMA and 66% lower than HSDPA12. Users continue to expect improvements in the user experience on mobile broadband networks, which means a need for higher quality of service. This demand, which may exceed RAN and core network capacity, is one of the biggest drivers for operators to deploy LTE networks.
LTE and HSPA/HSPA+ will be complementary

The applications and services developed for LTE will build on the strong base which has been established for HSPA/HSPA+ services. This, together with the expected ability of multimode LTE devices to connect through HSPA and 3G radio access networks when users are outside LTE coverage areas, will make LTE highly complementary to existing network deployments. It will allow operators to develop their LTE access networks in high demand areas such as city centres initially, without limiting the access and roaming opportunities for LTE users. This immediate coverage will be a major advantage for operators launching their LTE networks. The inherent ability of the SAE core network to work with established non-LTE radio access networks eases the task of network evolution and transformation.
Device subsidy
Subsidy may be a driver or a barrier, depending on how it is handled. Service providers, and users, have become used to having device subsidies, which are effectively paid for over the life of the contract. We therefore consider subsidies to be a driver in the LTE ecosystem, as they can be used to stimulate demand and will help direct users buying intentions. The decision to subsidise and the level of subsidy will depend on volumes, demand, market segmentation, operator strategy and competitor positioning. Providing subsidies are not disallowed by the regulator and the market has a reasonable level of post pay users, then historical precedents indicate that subsidies will be provided on LTE devices. Operators will have invested in spectrum and network, and will wish to encourage service take-up and migration to their LTE network in order to maximise the return on investment. The migration period, however, will be lengthy.
12
Derived from UMTS Forum Report: Global Mobile Broadband: Market potential for 3G LTE.
http://www.umts-forum.org/component/option,com_docman/task,doc_download/gid,1902/Itemid,12/
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We expect that subsidies will be lower on data-only devices as there is a more compelling driver for higher performance, low latency networking which may justify the lower cost of these devices. In all cases, the subsidy will be effectively repaid over the life of the device, typically taken as 18 months.
Business model evolution

The mobile industry has seen a steady evolution of its product and service portfolio. The proportion of revenue generated from data services (SMS, MMS, content, internet access and associated services) has grown to 18% of total revenues in 2008 and is forecast to grow to 27% of total revenues in 201313. At the same time, steadily decreasing average revenues per user forecasts will be offset by increases in the total number of connections, leading to an overall increase in global revenues. With this continuing trend towards data usage, it is to be expected that higher capacity mobile broadband will stimulate new business models for content delivery and a broad range of services, as has been seen with fixed network broadband services. These models, enabled by the capacity and performance of LTE, will need to diverge from the standard average revenues per user model to develop new vertical markets, applications and services within the ecosystem. This will be supported by device vendors which are able to introduce new, market-specific products rapidly, with lead times of 1218 months or less if the device modifications are modest. Such changes are already happening, and we see convergence occurring: devices like the Blackberry Storm, Apple iPhone and Google G1 are bringing phones closer to being computing devices, and netbooks are evolving in the other direction thus helping laptops to become mobile internet devices.
The ecosystem
The LTE ecosystem itself is a driver which will support the deployment of LTE. This is best considered in tabular form through comparison with other network technologies, as shown in the table below. The major aspects of the ecosystem are all favourable to LTE deployment.
13
Ovum forecasts
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W-CDMA Services
Was W-CDMA a real mobile BB technology? Initial W-CDMA service offerings (e.g. video) met low user demand, and were not helped by unattractive tariff structures, low demand remained until devices improved; widescale roaming enhanced by multi-mode devices
HSPA/HSPA+
HSPA brought real 3G mobile broadband performance Penetration of fixed broadband triggers demand for mobility; services made useable by improved interface; internet access is key; attractive service propositions, but with limited bandwidth often achieved
CDMA/EV-DO
High levels of service innovation in Korea and Japan, pulled through by high local demand, leading to a fast evolving ecosystem which developed market-specific applications. Strong vendor support for application platforms also helped services get established.
LTE
Roaming inherent in concept and key differentiator to mobile WiMAX User interest in internet and media services; the market needs simple service/tariff structures; users will use existing UMTS/GSM voice services; LTE mobile VoIP expected later from most providers
Devices
Slow to market, initially with poor design and poor performance; high initial costs reduced and market triggered when all major vendors entered market; significant improvement with time; approx 1700 devices available (Jan 2009) Huge licence costs impacted service delivery; inherently poor broadband performance; lower band deployments (700 MHz, 850 MHz, 900 MHz) increase attractiveness for reach and in-building coverage.
Simple to use dongles and cards with embedded software stimulate market; around 1,100 HSDPA devices in the market (Jan 2009) Device power saving improvements have been defined in the standard For HSDPA, a modest upgrade to W-CDMA provides significant performance lift (to 1-2 Mbit/s); scale realistically achievable; lower band deployments (700 MHz, 850 MHz, 900 MHz) increase attractiveness for reach and in-building coverage.
Korea and Japan saw innovative, datacentric devices, with larger screens, pulled by end-user service demand and enthusiastic local device vendors. This created knock-on effect in US, which benefited from the devices adapted for the market. Demand for data cards in NA reflected enterprise needs, rather than consumer. The vendor industry emphasised softwareonly upgrade in the RAN, which helped ease the evolution challenge for operators. UMB has now been withdrawn as a CDMA migration path, which, together with uncertainty about operator commitment to EV-DO RevB, provides a leap-frog opportunity for CDMA operators to adopt LTE. There is a migration trend from CDMA to 3GPP (e.g. Australia, Canada, Brazil, South Korea)
Initial devices USB and dongles; handsets and embedded devices later Network deployment will stimulate device market; economies of scale in simple devices quickly achievable; diverse range of devices expected.
Network
LTE developments expected faster than predicted 1-2 years ago as uncertainties rolled back; 3G sites can be reused; LTE is mobile NGN, building on 3GPP ecosystem as evolution from HSPA; full LTE transformation needed to reap full service and operational benefits; broad industry support/commitment from major vendors and MNOs; lower band deployments (700 MHz, 850 MHz, 900 MHz) increase attractiveness for reach and in-building coverage. As an IMT-2000 technology, can be deployed in 900 MHz, 2.1 GHz spectrum in longer term; 2.6 GHz main band expected in Europe and Asia Majority of MNOs (CDMA & WCDMA)
Spectrum
Allocated in all major countries (except India)
As W-CDMA
Mainly in the 450 MHz, 800 MHz, 850 MHz & 1900 MHz bands.
Operators
MNOs
All W-CDMA MNOs
Mainly Korea, US, Japan, with strong presence in India and China
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5.2 Barriers to the adoption of LTE

The success of a new technology is not only dependent on the drivers in different parts of the ecosystem being aligned but also on there being sufficient demand to create compelling business cases for the development of a full ecosystem. The barriers which might prevent success also have to be understood and overcome. Our industry survey indicates that there are three main barriers to the adoption of LTE: cost of investment, users' expectation and adoption of services, and a desire to sustain existing technologies. There are also other factors which need to be assessed: for example, the future of LTE will be further affected by the economic downturn which is increasingly affecting the economics of all industries.
Cost of investment
LTE has been developed as a new radio and core network platform to provide the benefits of better spectrum efficiency and lower deployment costs when compared with previous generations of mobile network technology. To achieve these benefits requires operators to upgrade their existing network, including both radio access network and core network (although a complete change of the radio access network is not always required). It is possible that some aspects of existing HSPA base stations can be shared, such as base station sites, cabinets and RF modules/antennas (if LTE falls within the working frequency range of the antenna). New modules are needed, however, if LTE runs in new frequencies. Network rollout costs are determined by the scale of the new network, with the cost of additional radio access network and core network upgrades being incurred prior to revenue generation. Subsequent capital costs will be incurred through coverage upgrades and the uptake/traffic demands on the network. Our research finds common agreement that a limited scale deployment of LTE in city centres will be insufficient to demonstrate and realise the full benefits which might be achieved with LTE. If we look at the roll out of previous network upgrades e.g. 2G to 3G or 3G to HSPA, we see that the new network is normally deployed as an overlay network on top of the existing network and the coverage of the new network will not exceed that of the existing network. Our survey respondents expect that the deployment of LTE will follow a similar trend. Most operators who plan to deploy LTE already have a large data network supported by HSPA/EVDO and they are planning to build LTE as an overlay network in regions where data demand is high. The increase in data use stimulated by LTE will require additional investment in the backhaul network to ensure that quality of service and performance are maintained at acceptable levels. One major LTE infrastructure vendor expects that a minimum of 300 Mbit/s backhaul capacity will be needed for LTE network sites, and many respondents to our industry survey think that LTE will require high capacity backhaul support (as will HSPA/HSPA+), such as fibre backhaul to base stations. These increasing demands demonstrate a clear need for a step-change in spectrum and network technology. Such increased backhaul capacity requirements are part of an ongoing backhaul evolution. When backhaul technologies are upgraded, the operator can take advantage of all-IP networking and migrate from TDM-based circuits to the more cost efficient Ethernet backhaul. Spectrum is another cost factor to be considered. In the current climate, shareholders will punish
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operators felt to be squandering cash unnecessarily. Therefore, operators will require a solid business case to bid for additional spectrum, which should see prices remain at more sensible levels compared to 3G. According to our industry survey, operators do not think the economic climate has impacted their LTE strategy.
User adoption of LTE services

Users are stimulated to buy new and improved services; they do not, as a rule, buy new technology per se. The services and user experience offered by LTE mobile broadband will have to meet the expectation that an LTE network will offer faster service speeds and an expanded range of devices and services to its users. Our end user survey14 shows that users are already familiar with mobile data services and flat-rate tariffs. The survey indicates that for the average user, data usage will increase but that we should not expect similar levels of data traffic increase which were seen when HSPA was introduced, which was up to 500% per annum over a two year period. There will need to be compelling reasons for users to adopt LTE, which may include: the availability of a range of devices; the products, applications and services offered on the LTE network (if they are suitably packaged and priced); the service performance and service availability. The user experience needs to meet expectations and be consistent, both within an LTE network and when roaming between an LTE cell and another (e.g. HSPA or EV-DO). This raises issues which may stand in the way of smooth acceptance and growth of LTE networks and services. Although a typical LTE cell may be able to provide more than 100 Mbit/s of instant capacity, the general expectation in the industry is that 24 Mbit/s will be the typical user average. Users must be attracted to take up new service contracts and buy new devices on the basis of realistic service expectations, but which may have significant variations in instantaneous performance, influenced by the number of users in a cell and the users location within a cell. Additionally, when users roam, they may move from an LTE cell to an HSPA or GPRS network. As the user is unlikely to be aware of the cause of the degradation in service level, they will only see this as a generic problem with their service. It can be difficult for service providers to overcome initial preconceptions, which may be formed before network rollout and performance tuning are complete. LTE testing and trials are continuing within the industry and will allow real performance expectations to be assessed by operators prior to full service launch.
Sustaining existing technologies

There will be many scenarios by which operators upgrade their networks and deploy LTE and each competitive situation will be different. Some operators are deploying HSPA and their short term strategy may be to upgrade to HSPA+ rather than LTE as they will want to see a suitable return on their 3G/HSPA investment (3G licenses + network roll-out and upgrade). Although this may be achievable through a software-only upgrade and provide an acceptable level of performance enhancement, it will ultimately lead to a delay in LTE investment. Others may bypass HSPA+ and move directly to LTE. Furthermore, there are vendor options
14
Undertaken with consumers who are already familiar with the services offered by 3G and GPRS/EDGE
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which will allow the radio access network to be upgraded with multi-standard capabilities, supporting both LTE and other technologies. Alternatively, LTE may be introduced as an overlay network. These decisions will depend on an operator's existing infrastructure and strategy. Whichever route is taken, each is intended to provide service continuity and a smooth evolution to very high mobile broadband which is right for the particular operator. Whilst the expectations of the leading operators interviewed are currently to meet their LTE rollout plans, they all accept that future plans for full deployment may need to be revised in light of the emerging financial slowdown. The view expressed by the NGMN Alliance at the Mobile World Congress 2009 in Barcelona, was that operators will require: multi-vendor capabilities be included in LTE, with the aim of reducing the overall cost per bit carried that infrastructure manufacturers shall provide operators with easy means to migrate their 3G radio networks towards LTE.
The question arises, then, as to why a migration to LTE should be a compelling proposition for a mobile network operator. The answer lies in the drivers discussed earlier, but particularly it will be the long term costs of running a network which is becoming increasingly data-centric. Although voice services remain the primary revenue driver, the increasing levels of data will provide the same driver that is seen in next generation networking and business transformation in fixed networks. Network and business transformation, in which the network becomes an enabling platform for a much broader range of services, applications and value chains, is fundamental to reducing long term operating costs of the business and deriving the long term benefits of LTE. The transition to LTE will not be quick, but the network changes will deliver long term, essential operational cost savings.
Intellectual property rights

Intellectual property rights (IPR) charges are a major cost for mobile devices, particularly impacting the cost of high volume devices. Whilst the costs of LTE IPR are expected to be lower than those for 3G, and some of the major systems vendors have formed an LTE IPR licensing framework to help establish predictable and more transparent maximum aggregate costs for licensing IPR that relate to LTE, there are not yet any conclusions from this initiative and the absolute cost impact on LTE devices is not yet determined. However, operators are pushing for the acceptance by the industry of a pre-agreed cumulative cap of 35% for all LTE equipment. They also wish to see the adoption of an ex-ante approach to declaring relevant patents designed to eliminate the possibility of any new royalty claims pertaining to LTE equipment being lodged in the future. If these targets are achieved, then the lower IPR costs for LTE should create a positive differentiation from prior technologies. However, there is a risk that the new LTE IPR charges will not be the only IPR cost, as many multi-mode devices will still need to support pre-LTE standards to allow roaming onto 2G and 3G networks, as well as other capabilities such as video encoding and mobile graphics, increasing the costs of these devices.
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Implications of operator decisions on ecosystem development

An operators commitment to LTE, determined by the drivers and barriers noted previously, will be the main driver for LTE deployment, and their decisions will impact the ecosystem development in a number of ways. Firstly, their deployment scale will have a huge impact on the user device vendors and infrastructure suppliers, which require network scale to generate cost reductions and justify the development of applications and new device variants. If the operators limit their commercial networks to city centre areas or specific regions, this will limit the demand for end user devices and vendors will not rise to address limited business opportunities. Device vendors need scale to justify new developments and hence volume production. A volume of 100,000 devices/platforms are needed to justify modest reengineering/design projects, while one million is needed to support a major platform design initiative. The experience gained from field use feeds the vendors learning curve and volume demand helps vendors to be innovative and competitive on pricing. If operators do not have confidence to push innovative services, then the range of devices may be limited, possibly being restricted to data only devices in the short to medium term. Secondly, the operators requirements are also important. If operators all have special requirements on network and user device vendors (i.e. handover support to existing networks), it will be difficult for vendors to create business market scale as well.
Spectrum resources
As discussed previously in this report, there is a need for a wide channel bandwidth (10 to 20 MHz) in order to maximise LTE performance. This will require new spectrum resources to be made available to operators, and options for refarming of existing resources also need to be considered. It is important therefore that there is harmonisation of channel arrangements in Europe and elsewhere (e.g. digital dividend bands), refarming of the GSM 900 spectrum and the allocation of additional spectrum in higher bands (e.g. C-band), which will be a key long-term requirement.
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6 End user survey results

An end user survey was conducted in the US, Western Europe (France, Germany, Spain, the UK), Japan and South Korea. We asked about users attitudes towards mobile broadband, focusing on their preferences for mobile broadband services/applications and their willingness to pay for faster, higher quality of service mobile broadband services. The survey targeted business and consumer users that were technology literate: they were users of mobile broadband on 3G phones, laptops, Blackberries and other mobile broadband devices, familiar with mobile broadband services and applications. The survey provides a snapshot of these countries and was not conducted to gather data with statistical significance. In this section, we highlight the main results from our survey.
Services and applicationsoverall classification trends

To understand users current mobile broadband service and application usage, we asked them to rate their level of use, currently and after the introduction of high capacity (24 Mbit/s), low latency mobile broadband (LTE), for three groups of services and applications: general internet services: these include general online browsing, information searching, email, mobile blogging and social networking (e.g. file, photo, music, video sharing) media services: these services are media focused, include music streaming (e.g. online music), video streaming (e.g. online video), music downloading, video downloading (e.g. TV program, movies), mobile TV and video calls new/other services: these are services and applications which may currently be accessed through fixed broadband services, including online shopping, online gaming, online betting/gambling and business use (e.g. VPN).
We also asked for respondents to rate their future usage of current and new services and applications after the introduction of LTE. From this we have prioritised services and applications according to user preference and identified the services with the highest level of expected growth. Figure 6.1 and Figure 6.2 show the global survey results for each country and each user age group. Global services and application growth trend General internet services are currently the most used mobile broadband services, with media services in a close second place. This is found in all the survey countries except Korea, where media services have notably higher usage levels than in other countries. When high speed mobile broadband is introduced, service usage levels are expected to increase in all countries. General internet services will continue to be the most preferred services on mobile broadband with a significant lead. In the majority of countries, media will retain the second place. Growth in all three service groups is strongest in all the European countries, reflecting a generally lower current level of usage than Korea, Japan and the US.
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Figure 6.1
Current/future preferred mobile broadband services by country
Relative preference level

8
2 France
Germany
Italy
Spain
UK
Japan
South Korea
US
General Internet services
Media services
New / Other services
Future increase
Source: Ovum
Figure 6.2
Current/future preferred mobile broadband services by age
Relative preference level 8

7 6 5
4 3 2 1 18~24 25~34 36~45 46~55 56~older
Media services
Future increase
Source: Ovum
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Service preferences by age group For the three major service categories, Figure 6.2 shows a consistent picture, that current use and expected future use of mobile broadband services declines with age, with the service demands of the 1824 age group being very similar to those of the 2534 year old group.
Figure 6.3
Mobile broadband services growth
Expected growth
100%
80%
60%
40%
20%
0% 18~24 25~34 36~45 46~55 56~older Average
Media services
Source: Ovum
Figure 6.3 shows the expected growth in use of mobile services by age of consumer, with the greatest growth being in the 56 and older group, a reflection that this group has the lowest current usage. Media services have the highest expected growth among all groups except the 56 and older group, which expects to increase use of new/other services more. The growth results, averaged across all age groups, of 43% increase for both media services and new/other services, demonstrate that users require the high quality of performance offered by LTE, that they are keen to use new services on their mobile broadband connection, and that they still expect to increase their use of more traditional internet services, such as online shopping. The higher growth in media services also reflects the industrys expectation that these will benefit from high speed mobile broadband, and that traditional internet services will migrate to mobile broadband.
Services and applications priority list

Figure 6.4 shows the expected priority list of services and applications before and after the introduction of LTE. Currently, general internet services such as email, information searching and general online browsing are at the top of users' preferences, surpassing all other
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services by a significant amount. The preference and usage of other services is not so obvious, regardless of if they are media related services or traditional internet services.
Figure 6.4
Service/application priority list

Email
Information searching General online browsing Social networking Online shopping Music streaming Music downloading Video streaming Business use (e.g. VPN) Video downloading Online gaming Mobile TV Video call Mobile blogging Online betting / gambling
8
Relative preference l
Current preferred level
Expected future increase
Source: Ovum
When mobile broadband is introduced, email, information searching and general online browsing are expected to stay at the top of the list. The major changes occur in the media group and users expect to make greater use of all media related services with mobile TV having the biggest incremental move. Online gaming, mobile blogging, and online betting/gambling generate little interest.
Services and applications growth list

Figure 6.4 also shows the expected growth of the major services. Mobile TV (which will primarily be internet delivered over-the-top streaming services, rather than broadcast TV), video call and video downloading have the highest growth rates. As noted earlier the type of video media accessed has implications for the broadcast industry, as internet-based TV and user generated content has the ability to reduce advertising incomes. Online shopping and mobile blogging are among the highest growers. The trend again indicates that users are expecting more media related services on high speed mobile broadband and considering mobile broadband services as part of their everyday life and extension of their current fixed internet.
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Operators will have to develop charging structures which balance user expectations and the demand for such services against the implications of high volume demand on quality of service and network capacity at both the core and access levels. Flat rates rather than capacity-limited rates will be needed. Future services and applications When using mobile broadband, users' behaviours are expected to change as their location changes. We identified three types of services that will benefit users on the move: real-time data backup: for example upload photos/videos to network from digital cameras, upload blogs/notes, and general data backup real-time information update: for example receiving traffic update on GPS navigation devices, receiving location-based information (e.g. restaurant nearby) and receiving social networking updates mobile e-commerce: for example mobile cash point and mobile payments
Figure 6.5 shows the survey results in different countries. The most preferred services in all countries are real-time information update services, including LBS, map updates and social networking updates. Users in Germany, Spain, the UK and Japan are more in favour of mobile e-commerce than real-time data backup services, while users in France, Italy, South Korea and the US have preferred real-time data backup to mobile e-commerce services.
Figure 6.5
New services and applications by country
Relative preference level 8
4 France Germany Italy Spain UK Japan South US Korea Mobile e-commerce
Real-time data backup
Real-time information update
Source: Ovum
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Figure 6.6 shows the survey results in different age groups. Again, real-time information update services are the most preferred new services in all age groups. Expectations are high among all age groups. Users' preferences for real-time data backup and mobile e-commerce decrease as their age increase, but they generally prefer real-time data backup to mobile ecommerce services.
Figure 6.6
New services and applications by age
Relative preference level

8
4 18~24 Real-time data backup 25~34 36~45 46~55 56~older Real-time information update Mobile e-commerce
Source: Ovum
Devices
Preferred device to embed with mobile broadband As shown in Figure 6.7, when asked which device they expect to embed with mobile broadband, users select laptops (including netbooks) at the top of their lists. This is followed by GPS navigation devices, in-car systems (e.g. traffic update or information update), digital cameras and desktop PCs. For the general consumer, game devices, including both handheld consoles and home consoles embedded with mobile broadband, are the least expected. The question in the survey assumed that smartphone devices with voice and data connectivity would be available to consumers in an early release (the voice service not necessarily being provided by the LTE network).
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Figure 6.7
Device preferences for embedded mobile broadband

Laptop GPS navigation device Car Digital camera Desktop PC Digital billboard Cam recorder Mobile TV device
Home entertainment device Online connected photo frame Handheld gaming console Home gaming console
Source: Ovum
Attitude toward gaming devices with phone and mobile broadband capabilities We asked the game users in our survey about their views on having mobile broadband on gaming devices. Although mobile broadband in gaming devices scored low in Figure 6.7, as can be seen in Figure 6.8, 51% of respondents prefer a gaming device with only mobile broadband capability; 28% prefer a gaming device with phone and mobile broadband capabilities and 15% prefer a gaming device without phone or mobile broadband.
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Figure 6.8
Preference for embedded mobile gaming

5% 15%
Depends on other factors Game console without mobile broadband Game console with mobile broadband
51%
28%
Cellular phone
Total
*Other factors include game type and user location
Source: Ovum
Majority preference for a mobile broadband device with multimedia capability Over half (54%) of those surveyed expressed a preference for an all-in-one device which includes video and music multimedia capability. A quarter (25%) preferred a standalone multimedia device with mobile broadband. The strength of these two results, shown in Figure 6.9, indicates a market which will accommodate a diverse range of devices, tailored to meet the needs of individual user segments. Preferred features on mobile broadband device Figure 6.10 shows the features that end users expect to have on mobile handset devices, with free voice calls at the top of their lists. Whilst this may be seen as a challenge for mobile network operatorsafter all, their customers will generally say they want services delivered with lower pricesthe industry is well experienced at developing service bundles which are competitive. It will provide service providers with the opportunity to define and partition services according to their performance, with premium services, requiring high quality of service and guaranteed bandwidth to be offered at a premium price, whereas best efforts services will have non-guaranteed performance, and may be bundled into a basic service. Furthermore, it will allow service providers to package applications and content together to create cross-application benefits, e.g. with closed consumer and business user groups receiving one service level when using services within the group, which they would not otherwise enjoy. The rest of the results clearly indicate that for mobile handsets, non-broadband related features have a higher priority than broadband related features. For the general consumer, games capability is the feature least demanded on a mobile handset.
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New revenue streams are essential Figure 6.10 shows that customer always want more service for lower cost. Our survey results show that free VoIP calls are at the top of the end users list of preferences. There are various models by which VoIP can be provided: there is the approach of voice over LTE as discussed in Section 2 of the report; or it may be a device-based client to allow VoIP as an internet-based service, like Skype. Although the former allows the network operator to retain control of voice traffic and revenues, the end user expectations are clear. Operators will need to seek new revenues streams to compensate whether through on-deck applications or new service offerings.
Figure 6.9
Preference for separate mobile phone and video/music device
1% 7% 12% 25%
Choice depends on other factors Separate mobile phone and video/music device without mobile broadband support without mobile broadband support No need for a mobile video/music device Separate mobile phone and video/music device with mobile broadband support with mobile broadband support All-in-one device with embedded video/music
54%
Total *Other factors include user location

Source: Ovum
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Figure 6.10 Feature preferences for mobile device

Free voice calls (VoIP, e.g. Skype) High performance camera (>5M pixels) Additional memory Larger screen GPS Video camera MP3 Plug in adapter for laptop PDA Integrated online payments Broadcast TV Access to on-line storage Internet-based TV Support for business applications Direct connection to social sites TV Channel catch up services Video conferencing HDTV Games capabilities 5 6 7 Relative preference level
Source: Ovum
Figure 6.11 Preference for mobile netbook device
11% 35%
No need for a netbook device
Separate mobile phone/device and netbook device 54% All-in-one phone/device which may be used as a netbook
Total
Source: Ovum
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Attitude toward netbook device with phone capability We asked about users' views on netbook devices (small, portable laptops with wireless internet connectivity, designed for mobile internet access rather than powerful computing applications), which are shown in Figure 6.11. Over half (54%) of the end users surveyed expressed a preference for an all-in-one device that can be used as a netbook, 35% preferring a standalone netbook and 11% expressed no need for a netbook device. Attitude toward mobile TV device with phone and mobile broadband capabilities When asked about their views on mobile TV devices with phone and mobile broadband capabilities (Figure 6.12), 49% of users preferred to watch mobile TV on an all-in-one phone, while 30% preferred a standalone mobile TV device with mobile broadband support and 20% do not need a mobile TV device. Just 1% stated that their decision would depend on price, device size, screen size and their locations.
Figure 6.12 Preference for mobile TV capability

1% 20% 30% Choice depends on other factors No need for a mobile TV device Preference to have separate mobile phone and TV devices 49% Preference to watch mobile TV on all-in-one phone/device
Total
*Other factors include device size, large and clear screen and ser location u
Source: Ovum
Users' willingness to pay and use fixed network substitution

Price to pay for high speed mobile broadband Figure 6.13 and Figure 6.14 show users inclination to pay for a faster, higher quality mobile broadband network compared with current fixed broadband and mobile broadband offerings. The results vary from country to country, with US users most willing to pay more and Japan users most conservative. Generally speaking, users are willing to pay more for a better mobile broadband service when compared with current fixed mobile broadband, but less willing to pay more if compared with their current mobile broadband offers.
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Figure 6.13 Price to pay comparing with current fixed broadband offer
2% 10% 8% 8% 6% 8% 0% 10% 4% 10% 2% 5% 16% 18% 24% 31% 35% 32% 34% 42% 28% 37% 3% 10%
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
57%
49%
54%
56%
44%
77%
51%
29%
France Germany
Italy
Spain
UK
Japan
Cheaper or at same price 21-50% more
10-20% more
South Korea
USA
51-100% and more
Source: Ovum
Figure 6.14 Price to pay comparing with current mobile broadband offer
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% France Germany 21-50% more Italy Spain UK Japan Cheaper or at same price 10-20% more South Korea USA
2% 10% 31%
6% 8% 27%
4% 12% 26%
0% 6%
6%
2% 4%
2% 13%
9%
14% 30% 44% 22%
23% 40% 40%
57%
59%
58%
64%
36%
72%
45%
28%
51-100% and more
Source: Ovum
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Attitude toward using mobile broadband as fixed network substitute Figure 6.15 shows that of the current and active 3G users surveyed, 28% are currently using mobile broadband exclusively. This will rise to 43% within 1 year after LTE introduction and to 51% within 3 years after LTE introduction. 72% of those surveyed use fixed broadband or both fixed and mobile services. Of the latter group, 23% indicated that they would make a complete switch to high speed mobile broadband after its introduction, 42% will use both and 7% will not switch due to insufficient need. These results indicate a strong latent need for mobile broadband which will stimulate interest at all levels of the value chain to develop the ecosystem rapidly and which may encourage operators to develop in-building coverage, for instance with LTE femtocells or metro femtocells. Among users who will switch to mobile broadband completely, 16% will switch at the introduction of high speed mobile broadband; another 49% will switch within one year; another 33% will switch within three years; and all will switch within five years. For those already using mobile broadband, 81% say that they will upgrade to high speed mobile broadband when it is introduced while the remaining 19% will not. The main reasons for them not to upgrade are them being happy with the current service, constrained by current contract, additional costs and their employers decision.
Figure 6.15 Adoption of higher performance mobile broadband

Exclusive mobile broadband users Fixed and mobile broadband users Will use both fixed and mobile broadband No need for improved mobile broadband Will switch to mobile broadband only on introduction of LTE within one year ... within three years ... withing five years
28%
28%
28%
42% 72% 7% 23% Current After LTE introduction Timing
42% 7% 4% 11% 8%
Source: Ovum
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7 Conclusions and recommendations

7.1 Drivers and risk factors for LTE deployment and adoption
Figure 7.1 illustrates the drivers and risks in the LTE ecosystem with an increased market of end users being the ultimate focus. End user attitudes towards mobile broadband services supported by LTE are the determining driver for LTE adoption. Worldwide LTE deployment will support end users with network coverage, national and international roaming.
Figure 7.1
Drivers and risks in LTE ecosystem
Source: Ovum
The industry has learned many valuable lessons in terms of standards development, concept testing and ecosystem development, leading to an essential, more structured approach being taken to develop the new ecosystem. The LTE ecosystem will incorporate a breadth of devices and components, software, applications and services, new business models and players in the value chain. These changes will leverage Web 2.0 developments which are impacting the way in which information and services are shared across the internet. The broadening of the ecosystem is itself disruptive, but the industry needs to be continually aware of any new disruptions and respond at all levels, not only to generate acceptable return on investment, but to survive.
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Drivers
The major drivers in the LTE ecosystem are: Mobile data usage growth the demand for mobile data is a significant driver for operators to deploy new mobile technology and the industry is well aware of this trend. A projected six-fold increase in global IP traffic between 2007 and 201215 (driven mainly by video) will impact mobile as well as fixed networks, with mobile data projected to double every year from 2008 to 201316. Our survey indicates that operators and vendors have a strong focus to support data services and provide devices for the initial introduction of LTE. This support will further improve the mobile broadband environment which, in turn, will further encourage service consumption. The continued growth of mobile data usage will speed up the ecosystem development and innovations for new devices, services and applications. Network efficiency network operators carrying increased data traffic will benefit from the increased radio network efficiency of LTE; a recent report published by the UMTS Forum17 indicates that the cost per megabyte for LTE services will be 83% lower than WCDMA and 66% lower than HSDPA. Improved user experience mobile data volumes have grown significantly since the introduction of devices such as the iPhone, which provide increased screen size, embedded applications and application-specific screen functions. Coupled with lower latency and higher capacity access, this reduces functional delays and makes a wide range of applications more accessible Operator support 2008 and 2009 have seen many statements of commitment for LTE from major operators. This commitment, the development of the initial networks and operator support during the technology development stage will motivate all other parties in the ecosystem, including users. The wide-scale support and future LTE deployment plans stated by operators worldwide bodes well for LTE. The momentum will attract more vendors into the LTE ecosystem, which will provide additional technology innovation and healthy price competition. At the deployment stage, the operators rollout strategies will be the key drivers for user adoption and LTE uptake. Evolved Packet Core (EPC) the SAE EPC architecture is able to interwork with a wide range of radio access network technologies, allowing the core network transformation, with its inherent operational advantages, to proceed independently of the LTE radio access network. Vendor community support vendors are actively involved in technology development and product preparation for LTE commercial launch. Amongst the vendors, infrastructure suppliers are driving the industry trials forward with operators. User device
15
Cisco: http://newsroom.cisco.com/dlls/2008/ekits/Cisco_Visual_Networking_Index_061608.pdf http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-
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520862.pdf
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Global Mobile Broadband: Market potential for 3G LTE.
http://www.umts-
forum.org/component/option,com_docman/task,doc_download/gid,1902/Itemid,12/
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vendors and chipset vendors also have LTE roadmaps that are more or less in line with operators roadmaps. Operational cost an LTE network provides a simpler, all-IP network architecture, which not only reduces network operating expenses, but also enables mobile network operators to undertake business transformation to improve efficiencies across the business. Standards LTE standardisation is a major step in LTE technology development. The industry follows the standardisation process very closely. It is expected the work will be completed according to plan. The completion of standards will not only speed interoperability support process between vendors, but also attract more vendors to join the ecosystem. Regulation the availability of spectrum for LTE deployments is essential for operators to fully explore the benefits brought by LTE. The spectrum made available in the US has already become a focus for LTE deployment for both operators and vendors. Industry alignment industry sectors across the ecosystem are reasonably well aligned in terms of their LTE development roadmap, which creates a strong momentum behind LTE. Some early adopters will face problems for pre-standard equipment and device supports. Nevertheless, the whole industry is solving these problems rapidly. Business model evolution with a significant increase in mobile bandwidth and performance available to a mass market of business and consumer users, the mobile industry is expected to develop new business models to serve new vertical markets, in the same way as fixed broadband has allowed new markets and services to emerge supported by new, market specific devices. New services our industry survey indicates that video services, especially high quality video services, will be one aspect that will enjoy the most benefits from LTE. Generally speaking, video services demand high capacity, high speed and low latency network support. Pre-HSPA mobile networks struggle in every one of these aspects to deliver a satisfactory video service to end users. LTE will provide an ideal network for mobile video services to take up.
Risks
As illustrated in Figure 7.1, the current ecosystem is not without risks. In many cases, the risk factors are associated with the drivers: Economic downturn the economic climate is creating uncertainty in all markets. The impact of economic downturn on the LTE ecosystem is difficult to judge and we recommend further study in this area. Vendors are having to tighten their belts in all industries, which may impact the development ecosystem. Consumer spending patterns are also impacted, which may eventually affect operator strategy for LTE deployment. Operator commitment to LTE whilst operator commitment will be a major driver for LTE deployment, operators have different plans on the speed at which they will move to LTE and the scale of their network rollouts, which range from nationwide coverage to major city coverage only. The scale of these deployments is crucial to device vendors, who need market scale to bring volume production economies.
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End user device availability our survey indicates that the initial device focus will be to provide USB dongles and PC cards followed by embedded devices. Small handheld device will become available in 201112. It must be noted that standards-compliant chipsets will not be ready until the second half of 2010. These factors are risks for early LTE deployment, as without an adequate supply of devices the ecosystem could replicate the slow introduction of 3G in the early part of this decade. However, with the experience of 3G and the initial market being focused on data-only devices, the introduction of LTE is expected to be much smoother. We recommend that all players in the value chain assess and strengthen their partnerships, which are especially important in this area. Evolution of the chipset industry the chipset industry will continue to see specialist developer companies emerge and some consolidation, which helps provide both funding and economies of scale for development and supply chain partnerships. Providing the industry stays competitive, these changes are not expected to create any major risk to the LTE ecosystem. Technology sustainment operators will need to sustain existing network technologies as LTE is rolled out, and some operators will continue to deploy HSPA/EVDO as they introduce LTE. It is clear that HSPA+ is an option for operators and will be adopted by those whose short term strategy is to prefer software only upgrade from HSPA to HSPA+ rather than a complete upgrade to LTE. However, if too many operators delay their LTE deployments due to competition for capex and focus primarily on HSPA/HSPA+, the demand for applications and devices will impact the development of the LTE ecosystem. However, the applications developed for HSPA networks will all contribute to and complement the eventual LTE ecosystem. IPR whilst the industry initiatives to agree IPR licensing terms for LTE technology will, if successful, be beneficial, many devices will still need to support a number of pre-LTE standards and other capabilities (e.g. video codecs and mobile graphics), increasing the costs of these devices. Early chipset/device compatibilities given the aggressive deployment timeline envisaged by some early adopters, there are concerns that pre-standard equipment and devices may have to be used for the initial field introductions. This presents a potential risk to interoperability issues arising between products from different vendors. Regulation uncertainties spectrum availability is a determining factor for operators which require new spectrum for LTE deployment. Operators and vendors also require spectrum alignment to support roaming and create market scale for devices. There is a potential risk that the uncertainties will limit the scale or even delay LTE deployments in some regions. Security and privacy an all-IP architecture brings security challenges at the application and operating system levels. The increasing scale of any application attracts the malicious and criminal minded. Operating systems are never free from vulnerabilities and mobile financial applications and transactions will need to be secured against a range of scams and hacking. Online service updates will become as essential for mobile internet devices as they are for laptops and PCs.
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In summary, although the industry is well co-ordinated, wide-scale LTE deployment will take some years to achieve, during which time some of the advantages (e.g. long term cost reduction) will only be partially realised. To help manage the risks and enable LTE to be brought into wide-scale service, we recommend that the industry should consider further opportunities to strengthen and extend partnership arrangements at all levels.
7.2 End user expectations and needs

The 21st century has seen a steady shift of services and traffic from fixed to mobile networks. In developed countries, voice traffic is steadily migrating and fixed-mobile substitution is a threat to fixed network operators. In developing countries, with poor fixed network infrastructure, wireless is the technology of choice for services. These trends can now be replicated with broadband access and bring considerable national economic benefits. There is, however, no killer application. The capabilities of mobile broadband will serve a wide constituency of needs, the breadth of which is no easier to foresee than the internet at its inception, from which a wide range of applications and services have emerged. The main conclusions drawn from our end user survey are thus: Users in all regions expressed clear interest in having their main fixed network internet services (email, browsing and information search) available on a mobile broadband device. Accessibility is the key. Media access for music and video rates highly. Mobile TV, video calling and video downloading show the strongest growth prospects. In general, users are receptive to new ideas and new technologies. However, the opportunities for enhancements to consumer devices are not yet appreciated and it will therefore take time to develop this aspect of the market.
7.3 Recommendations
Based on our research for this report across the industry and with end users, we recommend the following to the industry sectors which are involved in the LTE ecosystem: The whole industry The industry should support initiatives to improve interoperability between pre-standard network equipments and user devices for early adopters. Given that the standardisation for LTE is not expected to be fully complete until the end of 2009 at the earliest (3GPP Release 9), this will minimise any risk to early adopters which intend to deploy LTE at the end of 2009 and in early 2010. The initiatives of the LTE-SAE Trial Initiative are important in this regard and a cross-industry programme should be developed to cover the period of product and application releases beyond 200910. Consider high profile targets for some early deployments. The 2012 Olympics in London for example could provide a superb opportunity to showcase LTE with exceptional media
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coverage. The hard target date will also provide a focus for cross-industry collaboration. LTE radio access technology has considerable advantages for high density network use, and demand at the venues, with the data-centric media industries and consumer segments, will suit LTEs capabilities. The industry initiatives to agree LTE IPR licensing terms are to be welcomed, as these should lead to lower costs and provide a competitive edge for LTE. However, the issue of IPR is much wider than just the LTE aspects, and the industry should assess the wider implications of IPR licensing and its impact on the LTE ecosystem, which will incorporate a wide range of application and IT technologies.
Operators Operators need to commit realistically to their LTE rollout strategies. A limited scale commercial deployment or trial network will not encourage user device vendors to start volume production nor devote effort to device innovation. Lack of user devices will damage the uptake of LTE. During the trials and initial systems rollout, there needs to be a balance of commitment on the supply and demand side of the ecosystem, which some vendors are supporting through strategic partnerships to help ensure outcomes. Identify the long term business case, which the lower operating costs of LTE and business transformation opportunities support. Consider the impact on competitive positioning against other mobile network operators and also the opportunities for fixed network broadband substitution. Operators need to focus on improving the user mobile broadband experience. There is wide agreement in the industry that there are no killer applications for LTE. A satisfactory user experience will encourage users to increase their mobile data usage, especially in applications which benefit from high bandwidth and low latency, such as video media and real-time services. An improved network quality of service and lower latency will also bring more traditional internet services/applications to mobile broadband. Both will drive the uptake of LTE.
Systems vendors Partnerships to develop system-level ecosystems are already a fact in the communications industry and the economic downturn is influencing vendors development plans. Early discussions about the possible impact of the economic climate and acknowledgement of each players technology and market strengths and weaknesses can lead to new opportunities for collaboration, such as joint developments and technology specialisations. There will be many business models for the deployment and rollout of LTE, which will vary depending on mobile network operators existing infrastructure and strategy. With a new LTE network architecture and alternate possible strategies for the co-existence of LTE with other network technologies, it will be important for vendors to work with operators to develop high level business cases for LTE. This will lead to customised scenarios, which may include the deployment of all phases of the 3GPP/UMTS family in a network and cost-optimisation strategies, as well as, on the contrary, leapfrogging technology e.g. moving straight to LTE without prior HSPA+.
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Device vendors Users clearly like to use touch screen, high functionality devices to access services. High speed mobile broadband will drive a wide range of new user applications and device vendors should ensure that their in-house capabilities or partnerships are established to deliver flexible new products to the market with short lead times.
Governments and regulators Regulators around the world need to co-ordinate their approach for the release of spectrum for LTE. LTE deployment requires at least a 10 MHz channel to achieve the high spectrum efficiency of which it is capable and support the high network capacity. These requirements cannot be met with operators' current licensed spectrum bands. Furthermore, spectrum alignment between countries is a fundamental factor necessary to support international roaming and create economies of scale. Governments and regulators should consider the national economic benefits which widescale LTE deployment can provide as an enabler of a wide range of mobile broadband applications, and as a method to provide broadband services beyond into areas poorly served by fixed networks. Having done so, these benefits should be realistically balanced against the fees expected from spectrum auction or allocation. Further study in this area is recommended.
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Annex A: LTE global ecosystem development

A.1 Global LTE ecosystem roadmap
Overview In this section, we highlight the expected LTE global ecosystem roadmap from 2008 to 2013, illustrated in Figure A.1, derived from our industry survey.
Figure A.1
Overview of LTE ecosystem roadmap
Source: Ovum
Trials and commercial launch Industry trials enable suppliers and operators to test and demonstrate systems in a closed environment. Commercial trials mean that the network has been deployed, with live users (who may be selected from a closed user group), with a limited range of devices/handsets and a limited range of services. The network systems may be subject to upgrade and fixes during the trial and not reflect the final iteration of any standards changes. These
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commercial trials help the operator refine its network configuration, product, services, pricing and support systems. Commercial launch means that the network has been updated with the latest hardware, software and fixes, that the services have been promoted through normal marketing and promotion means, that the product and service definitions have been developed, packaged and priced, and that the services are offered on normal commercial terms. The network may not be fully deployed as network growth may be staged over several years. Regional differences Regional differences in the ecosystem development are expected: Japan and Korea mobile service providers meet mobile broadband market demand for individual services, e.g. mobile payments, video services and gaming, rather than web content. Application developers and service providers will continue to respond to these types of demand. The successful experience of i-mode in Japan stimulated its own ecosystem including screen-based devices, mobile browsers, applications and services with tariff structures for data volumes and service usage. In Korea, the support for social networking sites has led to increased mobile network data usage. These experiences provide useful case studies which can help the development of the LTE services ecosystem. In Europe, the market for mobile broadband has developed with greater emphasis on mobile broadband access to the internet, through which users access content, social networking sites, news sites, media clips, etc. This reflects the way in which fixed network broadband is used. Although mobile broadband services in North America developed more slowly than in Europe, they are catching up quickly since the advent of the iPhone. Whilst the service providers would like to develop the more personal model (as seen in Korea and Japan), the European model, dominated by internet access, is expected to prevail.
The device markets are expected to continue to see device churn in a one to two year timeframe, with Japan/Korea leading Europe in device trends, which in turn leads North America. Device vendors market positions vary. For example, Panasonic and NEC in Japan, and LG and Samsung in Korea dominate their home markets; Motorola is strongest in North America, whereas Nokia has a relatively weak market share in this market. Relatively new entrants, such as Apple and Google, will make further inroads into the device market. We expect all vendors to respond to meet the form factor and functionality demands of their major markets. The user needs will impact the embedded functionality, e.g. direct links to specific sites and content (e.g. news, social networking) and market-specific user interfaces are expected. In time, the high bandwidth availability may lead to more services being provided over the network, leading to a much thinner client. Security software is a prime example: both corporate and consumer users will benefit from online security service updates. In the corporate sector, centralised network management will enable IT managers to manage upgrades and monitor performance to help . With mobile application software changing
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rapidly, the delivery of applications and operating systems upgrades will be provided by service providers as revenue generating services. 200810: LTE development at full speed The fundamental components of the LTE ecosystem have developed most strongly throughout 2008 and into 2009, driven mainly by the vendor community. Vendors are actively involved in trials with operators and in the LTE Trial Initiative. During 2008, infrastructure suppliers and device vendors conducted technology trials to make sure LTE technology will meet the specification requirements. Examples of LTE Trial Initiative trials include, in September 2008: Nortel, LG Electronics and T-Mobile demonstrating smooth, no interruption data transmission to and from a vehicle driving at 100km/h over a multi-cell end-to-end Nortel network; and NSN and Vodafone Germany conducting a joint LTE demonstration of services such as high-definition television streaming, remotely-controlled webcam and a multi-user multimedia communication consisting of VoIP and video. Such work will continue in 2009 with more focus on interoperability testing between vendors and commercial trials with operators. First generation LTE products, both infrastructure and user devices, will be ready for commercial launch at the beginning of 2010, but the number of deployments is expected to be limited with NTT DoCoMo, China Mobile and TeliaSonera planning deployments in 2010. Some major operators have declared that they will defer LTE deployment until 2011-12. Standardisation work is on track to publish 3GPP Release 8 in the early second quarter of 2009. Standardisation for Release 9 is expected to continue until the end of 2009/early 2010. In 2008, 700 MHz spectrum awards have occurred in the US and 2.6 GHz awards in some EU countries. Spectrum awards for additional new spectrum are expected to take place in most of the EU countries from 2009, although the process in certain countries will last longer than the others. Whilst LTE can operate in channels as small as 1.4 MHz, it requires at least a 10 MHz channel to achieve the high spectrum efficiency and high network capacity which are key advantages of LTE technology. It makes it difficult for operators which normally hold 1015 MHz 3G spectrum to efficiently plan their networks. Hence spectrum availability will be a key issue for operators when planning their LTE deployment strategy. By early 2009, the importance of developing a wide LTE ecosystem was well understood. Announcements at the World Mobile Congress '09 point to the opening up of the mobile ecosystem beyond the traditional 3G model, with new ecosystem components being developed: Wang Jiangzhou, chairman of China Mobile, announced that the firm is spearheading a mobile operating system called Open Mobile System that will be based on Android and will support TD-SCDMA. Dick Lynch, chief technical officer of Verizon, heralded its Open Development Initiative, opening up their network to all devices and application developers and working together on application programming interfaces. Ralph de la Vega of AT&T Mobility explained the companys proposed direction towards an increasingly open ecosystem with an emphasis on customer security protection and privacy, which will encourage work across devices and platforms.
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Olli-Pekka Kallasvuo, the chief executive officer of Nokia, announced a more open mobile ecosystem and a joint development for smartphones with Qualcomm. Alcatel-Lucent announced the launch of a multi-industry initiativethe ng Connect Programdedicated to establishing a rich and diverse ecosystem of infrastructure, devices, content and applications for both mobile and fixed broadband networks including 4G, LTE, GPON and other ultra high bandwidth technologies.
2010, the first LTE commercial deployment It is generally expected by the industry that 2010 will be the milestone year for LTE, as the first commercially influential deployments are expected. However, the scale of these deployments will mainly depend on an individual operators strategy. Since LTE introduces a new radio interface and flatter network architecture, it will take time for operators and the industry to develop the experience and confidence needed for full scale deployment, and it is therefore expected that the commercial LTE deployment will be limited in scale in 2010. It is expected that some operators will make LTE deployment announcements for strategic reasons, such as a need to respond to a competitors LTE deployment plan. Our research indicates that the initial end user devices will be data-only devices (e.g. USB dongles and data cards) in response to expected end user demand for higher bandwidth data services. As the field deployments of LTE increase, the device vendors will be stimulated to introduce an increasing range of devices, with potential for specialist variants. Spectrum awards in the 2.6 GHz band and in the digital dividend bands will continue to be held across Western European countries, and the 900 MHz band may become available for allocations to LTE, although, with technology neutrality expected in most markets, 3G/UMTS is also a candidate to use this spectrum. 201112: more operators committed to LTE deployment Throughout 2011 and 2012, more operators will begin to deploy LTE networks. They will become the main driver to encourage a wider ecosystem of applications and specialist devices. The industry expects multi-mode, multi-band devices to appear during this period, and LTE interfaces embedded into devices such as laptops and PDAs. First generation multimode, LTE-enabled small handheld devices are also anticipated. The early adopters will continue to increase their network coverage to cover all major cities or even provide nationwide coverage. The increase in deployments will lead to international roaming services, which might be expected to come under regulatory scrutiny. The commercial deployment and wider availability of LTE will lead to it becoming a more mature technology which will encourage more users to choose LTE-enabled devices and services, leading to greater use of data services. 2013 and later: the ground has been established; will the users come? The industry expects that by 2013, after three years of commercial LTE deployment, there will be wider LTE network coverage, a greater choice of end user devices and a wide choice of services and applications which make use of LTE enabled mobile broadband. With data applications expected to be the prime initial use for LTE, there will be significant data growth
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as operators commitment to data services and user demand for data service are the main drivers for LTE. Spectrum and spectrum regulation Spectrum is a valuable yet limited resource and is therefore managed and allocated by regulatory authorities. Although operators across the world hold spectrum to operate their 2G and 3G networks, our industry survey indicates that most operators will prefer to deploy their new LTE services using new spectrum bands. There is common agreement in the industry that LTE will have similar performance to HSPA when operated in only a 5 MHz bandwidth; operators therefore will prefer that the new spectrum will not only support the allocation of 10MHZ or 20 MHz channel bandwidth, but also allow them to run a separate overlay LTE network. In this section of the report, we will investigate spectrum availability in different regions and its impact on the LTE ecosystem.
A.2
Regional ecosystem variations
The development of the LTE ecosystem will depend on operators requirements and their commitment and actions to support and deploy LTE. Our industry survey shows that there are regional variations in the way in which operators will approach LTE.
The US: to be amongst the worlds first commercial LTE deployments

Figure A.2 illustrates the LTE development roadmap from 2008 to 2013 in the US, a market which has a number of advantages which encourage the first world-deployments of LTE. Two major operators, Verizon Wireless and AT&T, have declared their support of LTE. This support is significant because both operators hold 700 MHz spectrum from the FCCs 2008 auction. This nationwide spectrum not only allows them to deploy LTE at the time that best suits their strategy, but also places them in a good position to offer wider area coverage outside major cities into suburban and even to rural areas. Furthermore, operators with this spectrum can deploy LTE on their existing base station sites as an overlay mobile broadband network. Our industry survey indicates that LTE will roll out at a significant speed, to around 70%80% of operators existing sites within 23 years of commercial launch. It is expected that as Qualcomm has curtailed ultra mobile broadband (UMB) research, other CDMA operators in the US will follow the move of Verizon Wireless and AT&T to favour LTE. The competition from Mobile WiMAX, commercially launched by Clearwire, is also expected to drive LTE deployment in the country.
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Figure A.2
LTE roadmap in US
Source: Ovum
The first commercial LTE deployment in the US is now planned for the second half of 2010, and more operators are expected to follow in 201112. Notwithstanding LTE deployment plans, existing EV-DO and HSPA networks are expected to continue to grow, as they will provide coverage continuity for mobile data services in locations without LTE services. It is also worth noting that no US operators have the new 700 MHz spectrum with 20 MHz bandwidth. They will therefore need to use the same frequency in each cell sector for their LTE networks. This frequency reuse scheme allows better use of the spectrum, but also introduces higher amounts of interference, especially at the edge of the cell, and as a result the user experiences lower data rates. Given the situation with spectrum allocation in the US, operators will focus on LTE FDD. Both 700 MHz and Advanced Wireless Services (AWS)18 bands will be candidates for LTE. Spectrum in US There has historically been less harmonisation of spectrum usage in the US than in many other countries, and there has been a need for operators to negotiate with each other as they deploy their networks across the country. This situation has improved in recent years. The FCC held AWS band and 700 MHz band auctions in 2006 and 2008, through which AWS licence holder gained access to 2X10 MHz FDD spectrum nationwide and in key cities. The 700 MHz licence holders gained access to 2X6 MHz FDD spectrum nationwide. These new spectrum blocks are ideal for LTE nationwide mobile networks in the US, as they allow license holders to deploy such networks in lower frequency bands. However, the spectrum
18
The AWS bands currently available in the US are in the bands 1710MHz1755 MHz and 2110-2155MHz
and can be used by the licence holders for a range of advanced services.
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allocation of 2x6 MHz FDD blocks are not ideal for LTE as the limited bandwidth does not allow its full efficiencies to be attained. There is no clear picture of how any new spectrum bands will be allocated in the US. However, it is worth mentioning two bands in particular: the 2X11 MHz C block (2x6 MHz with 2x5 MHz extension) in the 700 MHz auction, which was not successful due to lack of interest, and for which the FCC currently has no declared plan; and the other band which is used by the 2G licensees that will expire in 2011. Our industry survey indicates that operators are not keen to use these bands for new networks, as they expect continued operational life from their legacy 2G networks.
Western Europe: spectrum uncertainty will impact on LTE deployment

Figure A.3 illustrates the LTE development roadmap from 2008 to 2013 in Western Europe, which is the largest GSM/UMTS market in the world. It is a natural upgrade for operators to move to LTE. However, EU operators do not have the same advantage of spectrum availability as do the US operators. Western Europe has the most complex spectrum situation in the world, and in most nations, there is insufficient clarity regarding new spectrum availability. The auctions for 2.6 GHz spectrum, the allocation of the digital dividend spectrum, and spectrum re-farming (e.g. plans for 900 MHz spectrum currently used for GSM may be used for UMTS or LTE with 5MHz channels) will have a big impact on LTE deployments and potentially on the way in which mobile services evolve in Europe. It is expected that new spectrum will be awarded in the 2.6 GHz band and the digital dividend spectrum allocation will start as early as 2009, with 900 MHz re-farming decisions coming later. The European Commission is proposing to amend the GSM Directive19 to allow the introduction of UMTS in the GSM bands, thus enabling the coexistence of new technologies with GSM in the 900 MHz band, starting with UMTS services. To that purpose, the UMTS Forum is quite active in supporting EC proposal towards the European Parliament and the Council. The situation, however, will vary from country to country, which could have significant impact on infrastructure decisions and device economies. The lower frequency digital dividend bands and the 900 MHz spectrum which could become available through re-farming are attractive to operators since they have significant advantages for RF propagation, leading to reduced numbers of base station sites (when compared to current GSM operating in the 1800 MHz and WCDMA operating in the 2100 MHz bands, and possibly in the 2.6 GHz band) for the same area of coverage. Sweden and Norway have already awarded 2.6 GHz spectrum, which may be used for LTE, whereas Finland was recently the first in Europe to award frequencies in the 1800 MHz for LTE networks. Other countries decisions on award timing and spectrum alignment plans will determine the roll out speed and scale of developing LTE networks. The plans of the major operators in Western Europe for LTE are already well developed. The first commercial LTE deployments in the region are expected in 2010: TeliaSonera has announced plans for LTE in Oslo and Stockholm with a commercial launch in 2010, while
19
http://ec.europa.eu/information_society/policy/radio_spectrum/ref_documents/index_en.htm#gsm
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Tele2 and Telenor plan to build a joint LTE network in Sweden, to be commercially launched in the end of 2010, or when compatible mobile devices come on the market. Operators in other countries have similar plans for limited scale operations in the same timeframe. Other operators will follow and LTE networks will spread across Western Europe during 201112. If the spectrum availability can be addressed, then the 2.6 GHz spectrum is expected to be the initial focus. The deployment of LTE in other bands will depend on the spectrum award progress.
Figure A.3
LTE roadmap in Western Europe
Source: Ovum
Western European operators are generally interested in LTE TDD and are keen to see the progress of LTE TDD developments. Most major operators own UMTS TDD bands, which are unused due to an unsuccessful UMTS TDD ecosystem. TDD spectrum at 2.6 GHz is expected to be cheaper than FDD, and given the current economic climate, the operators will consider the cheaper TDD bands if they encounter difficulties to raise capital. However, it is expected that major Western European operators will go for LTE FDD because of the availability of devices, but may also deploy LTE TDD in areas where they may not be able to afford the more expensive FDD spectrum. Spectrum in Western Europe Western Europe has the worlds most developed 3G networks. The operators have fully utilised their 3G FDD spectrum and some operators also deploy 3G services in TDD spectrum. Our industry survey indicates that operators will consider deploying LTE-TDD in the UMTS-TDD spectrum. Our industry survey also indicates that the greatest interest for additional spectrum lies in the 2.6 GHz band, which has been reserved as a 3G extension band and is now a suitable
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band for both LTE and WiMAX. Interest in this band comes from both operators and the vendor community. Norway and Sweden have awarded 2.6 GHz spectrum to operators in 2007 and 2008 respectively and other countries will follow suit in 2009. Harmonisation and pan-European spectrum alignment is the most important issue for the 2.6 GHz band. If individual countries cannot maintain alignment for the allocation of FDD and TDD spectrum within the band, then it will be difficult to create the same market scale across Europe as was achieved with 3G/UMTS. Our industry survey indicates that operators are interested in both LTE FDD and LTE TDD in the 2.6 GHz band, but with initial emphasis on FDD. The digital dividend spectrum (790862 MHz) at the top of the analogue band and re-farmed spectrum in the 900MHz band will provide new opportunities for LTE. The preparations for using the digital dividend spectrum are underway and some spectrum may become available as early as the second half of 2009. The lower frequency range of these bands is attractive to operators as they will provide wider area LTE coverage, prospectively allowing mobile broadband to be more cost effectively deployed into rural areas. Although the 900 MHz refarmed spectrum has potential for LTE services, there is an issue that existing license holders may be competitively disadvantaged if the spectrum is reallocated which makes for difficult regulatory decisions, especially if the 900M MHz band is allocated for UMTS 900, which will be a strong competitor for LTE. The spectrum uncertainty in Western Europe is seen by the industry as a risk factor for both operators and vendors. The timing for new spectrum awards and the spectrum alignment across individual countries will impact the speed and scale of LTE deployment.
China: government policy has big impact on operators strategy

Figure A.4 illustrates the LTE development roadmap from 2008 to 2013 in China. Although Chinas mobile market is developing at high speed, to date it has focused on deployments of GSM, PHS and CDMA. Deployments of 3G WCDMA started in China in 2008 and in January 2009 3G licenses were awarded to three operators China Mobile (to deploy TD-SCDMA, the Chinese 3G standard), China Telecom (CDMA2000) and China Unicom (WCDMA). Government policy has historically determined the technology used by the operators and is expected to do so in the future.
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Figure A.4
LTE roadmap in China
Current activities Expected activities 3G licence
TD-LTE precommercial network
First TD-LTE / LTE FDD commercial launch
Policy uncertainty Industrial and commercial trials Product development and trial for both FDD and TDD Product support for more bands More trials Products become standards compliant, mature and innovative
2008
2009
2010
2011
2012
2013
Source: Ovum
China Mobile started to build a TD-SCDMA trial network in 2006, which to date is available in eight cities and was demonstrated during the Beijing Olympics. China Mobile plans to roll out TD-SCDMA in another 28 cities. Although the company is a clear favourite to deploy LTETDD, it is difficult to predict when this will move to full commercial availability. Currently, China Mobile is actively involved in LTE trials with vendors and they have plans to build a TD-LTE pre-commercial network in China from the second quarter of 2010, followed by commercial trials in late 2010. The trial network could be as large as todays TD-SCDMA trial network, i.e. covering multiple major cities. Such significant network scale will certainly drive the development of TD-LTE ecosystem worldwide. It is expected that the existing TD-SCDMA ecosystem in China will continue to support China Mobile on TD-LTE. It is Ovums assessment that commercial TD-LTE network launch could occur in the first half of 2011. China Mobile is the best prepared operator in the world to deploy TD-LTE network and its rollout plan for TD-SCDMA has been carried out with later TD-LTE in mind. Base station and backhaul network components are deployed to be compatible/upgradable to TD-LTE. Importantly, China Mobile has 100 MHz TDD spectrum in the 2.3 GHz band and it is expected that around 4060 MHz of 2.3 GHz band will be allocated to TD-LTE. Both 20 MHz and 10 MHz channels are expected to be chosen for TD-LTE. There are operator demands for LTE FDD in the country, driven by China Unicom which has become the owner of a GSM network and received the governments WCDMA licence. China Telecom, which received a CDMA2000 licence, is also expected to choose LTE FDD as a future technology. Our research with Chinese operators and major Chinese equipment vendors indicates that the first commercial LTE deployment in China is expected to occur 23 years after the start of 3G (TD-SCDMA, WCDMA, CDMA2000) deployment, i.e. in the 201112 timeframe. Chinese operators will have a significant advantage in that they are able to plan their LTE
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network as they deploy their 3G networks, which could allow LTE in China to be rolled out very quickly, with the 2.3 GHz TDD band being the initial focus. The future in China is very dependent on governments decisions and spectrum allocation to LTE technology. In addition to the 2.3 GHz band, other bands such as 1800/1900 MHz and 800 MHz will be considered for LTE FDD. Spectrum in China The current Chinese operators received 3G licences in January 2009. China Unicom and China Telecom received 2X60 MHz FDD spectrum at 2.1 GHz band (18801920 MHz UL and 20102025 MHz DL) for WCDMA and CDMA2000 respectively. China Mobile received a total of 155 MHz TDD spectrum (18801920 MHz, 20102025 MHz, and 23002400 MHz) for TDSCDMA. Although these bands are ideal for LTE FDD and TDD, as discussed earlier, it will be government policy which will decide the use for the spectrum bands and technology choices. China currently allocates the 614798 MHz band primarily to broadcast service, while the 798806 MHz band is primarily used for fixed, broadcast and mobile services. The government also encourages broadcast companies to provide mobile-related services but not vice versa. It is therefore difficult for mobile operators to use these spectrum bands. Operators are operating GSM and CDMA networks in the 800 MHz, 900 MHz and 1800 MHz bands. It must be recognised that with the massive voice call market in China, the GSM and CDMA networks will continue to be operational for many years.
Japan: a key region for LTE development

Figure A.5 illustrates the LTE development roadmap from 2008 to 2013 in Japan. NTT DoCoMo is a very active supporter of LTE. It was the first operator to launch the brand name Super 3G on its network, its designation for LTE, making Japan another key early adopter region (alongside the US). NTT DoCoMo has chosen LTE for its network upgrade strategy, which will start in 2010. Since DoCoMo does not have any new spectrum bands for LTE, it will need to replace its existing 3G network, which will involve complex network planning. The implication of this is that DoCoMos roll out speed will be determined by the companys commitment to LTE and the demand for high speed data services in Japan. This demand was demonstrated when NTT DoCoMo rapidly rolled out its HSPA network nationwide. The roll out of LTE is not expected to be as aggressive, with the initial focus on major cities and densely populated urban areas. The current 3G network is expected to last for many years before retirement. Nevertheless on January 23 2009 the Ministry of Information & Communication (MIC) announced it will award four 3.9G licences to four operators probably DoCoMo, KDDI, Softbank and eMobile which have all expressed interest in LTE. Under the terms of the proposal, licences will be offered in the 1.5 GHz and 1.7 GHz bands. The MIC could make the official allocation by end June 2009, for commercial availability during 2010. As well as DoCoMo, the other operators in Japan are committed to LTE, with KDDI and Softbank Mobile having announced that they would deploy LTE in late 2010 or early 2011. The fourth Japanese 3G operator eMobile has announced that it intends to trial LTE services in Tokyo if its licence request is granted. Our research with other Japanese operators, however, indicates that they are more interested in service improvement than introduction of
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new technology. They will consider LTE when they feel there is demand for capacity or feel that the competition from NTT DoCoMo is starting to impact their market share. Again, since operators do not have any new spectrum, their rollout strategy will be constrained. It should be noted that WiMAX is also a competitive technology in Japan, and some operators have already deployed WiMAX network. The alternative mobile broadband solution will divert user traffic, hence, reduce the data usage increase on LTE network. As a result, operators LTE roll out strategy could be affected.
Figure A.5
LTE roadmap in Japan
Source: Ovum
The first commercial deployment of LTE in Japan by NTT DoCoMo is expected in 2010. Other operators will follow at a later stage between 2011 and 2013, initially focused on the 2.1 GHz FDD band and on the allocated bands. Other bands, such as 800 MHz, will be considered in the longer term. Spectrum in Japan The major Japanese operators hold 3G spectrum in the 2.1 GHz, 1.5 GHz and 800 MHz bands. Our industry survey indicates that the 2.1 GHz band is the current, initial, focus for LTE in Japan, although services will be offered using other bands in the future. UMTS-TDD spectrum is currently available in Japan, and it will be possible to use this for LTE TDD. MIC, the Japanese regulator, is also considering the reallocation of spectrum freed up in the digital dividend, but the competitive market will force operators in Japan to deploy LTE before this spectrum comes available.
South Korea: LTE faces competition from other technologies

Figure A.6 illustrates the LTE development roadmap from 2008 to 2013 in South Korea, where LTE faces competition from WiMAX (WiBro) which was launched in South Korea in 2006. It was not successful initially until large scale marketing from KT in 2007. Both KT and SKT are going to expand their WiBro investments with strong backing from the Korean government (government policy influences both the operators and the manufacturers
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decisions). At the start of 2009, KCC, the Korean Regulator, had no publicly-stated plans to release spectrum for LTE. Whilst Korean operators are deploying WiMAX now, they currently have no clear roadmap which shows a preference for LTE, and it is expected that both WiMAX and LTE will be deployed in South Korea. The first commercial LTE deployment in South Korea is expected in 2011. Operators are investigating both FDD and TDD, but no decisions have yet been made about which form of multiplexing may be adopted. Since KCC has no plan to release new spectrum for LTE, it is difficult to speculate on which frequency bands may be used.
Figure A.6
LTE roadmap in South Korea
Source: Ovum
Spectrum in South Korea The major South Korean operators hold 20 MHz 3G spectrum in the 2.1 GHz band for their WCDMA and CDMA2000 networks; spectrum which is ideal for LTE deployment. However, government policy also encourages WiMAX based services at present and this of course will influence operators decisions.
A.3 Impact of LTE standardisation

Our industry survey indicates that standardisation uncertainty is another risk factor impairing the smooth evolution of the LTE ecosystem. 3GPP achieved functional freeze of 3GPP Release 8 in Dec 2008 and the completion and issue of Release 8 is now expected in quarter 2 2009. The timing of these standardisation activities means that for early LTE deployments, i.e. from early 2010, operators and infrastructure suppliers will build systems and networks using pre-standard implementations. To achieve fully tested, wide scale inter-working between vendors is always a challenging, time-consuming process, and although industry bodies, such as the LSTI, are working hard to ensure interoperability between vendors, the complexity of inter-working means that there are some risks that problems will sustain through early commercial deployments. However, if all goes according to plan, the impact of LTE standardisation to LTE deployment will not be significant.
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A.4 Industry view on future LTE development scenarios

2010: commercial LTE deployment starts
As discussed earlier, 2010 will be the year when first commercial LTE networks are launched. The deployments are in their early stages, with limited scale, device and service support. Operators and vendors are learning from the early deployments. The initial devices will be data-only devices, such as USB dongles and PC cards, although both single mode and multimode (e.g. LTE and HSPA) devices are expected to appear. Considering that standardisation work is planned to continue during 2009 (issue of Release 8 and work on Release 9), it is reasonable to say that the initial devices will be pre-standards. Services and applications will focus on general data and internet services, but with a range of service packages to suit different user needs for access speed and download volumes. Voice services will be only cautiously introduced during the period to 2015, as 2G and 3G voice services are major revenue generators which service providers will not wish to jeopardize. The initial limited LTE coverage will limit the uptake of LTE. A small number of consumers will be happy to pay more for the latest technology, which is expected to be priced at premium rates. More consumers will join as the coverage widens and technology becomes more mature. LTE networks will start to offer data service to complement the existing data networks, such as HSPA and EV-DO, which are expected to continue to grow more rapidly, despite the availability of LTE network introduction. During this initial period, voice service will still primarily be carried over legacy 2G and 3G networks as operators experiment with the business models and packaging of LTE VoIP services. 2G and 3G voice services will need to be retained in devices anyway to allow wide-scale roaming.
2015: LTE is a mature technology

By 2015, the majority of operators in the world will have deployed LTE and the ecosystem will be reasonably mature as network coverage continues to grow. Continued deployment of LTE to 2020 and beyond will drive the ecosystem ever wider and deeper. The major cities in the initial countries (the US, Japan, the UK, Germany and France) in which LTE was deployed are expected to have full LTE coverage and nationwide coverage is expected in leading Asian and Western European countries. The mobile industry expects that HSPA/EV-DO networks will remain the dominant technology for operators to provide data services and 3G and 2G networks, which though fully depreciated will still be fully functional. Some operators will start to offer VoIP services through LTE network.
2020: LTE becomes the dominant technology

By 2020, LTE is expected to be the dominant technology and LTE-enabled device volumes will be higher than those for any other network technology. Technology innovation will see the evolution of LTE to LTE Advanced.
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Our end user survey indicates that there will be demand for a wide range of innovative user devices with embedded LTE connectivity. As well as PCs, PDAs and small handheld devices there is consumer interest in combined LTE/GPS devices, in-car applications, digital/video cameras and mobile TV devices. Multi-mode devices will allow users to roam between LTE and other networks when they are outside LTE coverage. The initial sales volume of LTE devices will be less than other network devices but high growth is expected during the period to 2020 and beyond as users become more familiar with LTE device capabilities and service offerings, underpinned by mobile broadband.
A.5 Trials and industry activities

The industry is co-ordinating itself well to support the standards activities, enable trials and create a complete environment in which LTE can successfully develop. The Next Generation Mobile Networks (NGMN) Alliance, founded in 2006 by a worldwide group of leading mobile operators, has the mission to complement and support the work within standardisation bodies by providing a coherent view of what the operator community is going to require in the decade beyond 2010. Its key objectives include: the reuse of existing assets, including spectrum, sites and antennas; competitive customer propositions; no impact to the current HSPA roadmap, and to support a new Intellectual Property regime for the licensing of NGMN technology IPR. The LTE Trial Initiative20 (LSTI) is a global industry group with objectives of to: drive industrialisation of 3GPP LTE technology; demonstrate LTE capabilities against 3GPP and NGMN requirements; and stimulate development of the LTE ecosystem. The LSTI work plan includes parallel activities to: use proof of concept to verify the technology, testing LTE against the industry requirements from basic functionalities to general network performance using prestandard equipments conduct interoperability tests to determine whether or not a vendor device meets the standards (it will introduce cross vendor device and network interoperability tests using standards compliant equipment from different vendors throughout 2009 and part of 2010 consumer trials on live field trials.
With 23 major LTE equipment vendors and nine major operators working with representatives from across the whole LTE ecosystem, the LSTI has been testing and demonstrating LTE functionality and performance with pre-standards proprietary equipment. Proof of concept results, presented by the LSTI at the Mobile World Congress in February 200921 in Barcelona, demonstrated operation in real world conditions. The results
20
http://lstiforum.org/ http://www.lstiforum.org/file/news/Latest_LSTI_Results_Feb09_v1.pdf
21
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demonstrated the low latency levels necessary for real time services and predicted end user data rates under various conditions, as shown in Figure A.7.
Figure A.7
LSTI Proof of Concept - Predicted end user data rates
Source: LSTI
Additionally, the LSTI proof of concept test programme has demonstrated other end user performance and functionality levels that are achievable in real world live-air networks, including low data round trip delay and fast handovers between LTE cell sites with device speeds of over 100km/h with no perceivable interruption to an established HD video conference when handover occurred. The results build upon LSTIs earlier work which concluded that it is feasible to make LTE equipment that can meet industry expectations. Details of the NGMN and LSTI activities are available on the organisations web sites.
Additional trials
Other interoperability trials are making good progress. A number of LTE demonstrations have involved multiple vendors, showing that interoperability testing is making good progress. For example, Starent and Samsung conducted a demonstration combining Starents EPC solutions (MME, SGW and PGW) with Samsungs LTE base station solution. Nortel and Alcatel-Lucent used LGs LTE device prototype for their respective LTE demos, while NSN used Qualcomms LTE terminal chipsets.
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Motorola has conducted a real LTE field demonstration. Motorola has demonstrated, among other things, the live LTE-to-UMTS handoff capability of its solution. To perform the demonstration, Motorola used 2.6 GHz spectrum with a 10 MHz channel size and a 2x2 MIMO configuration, with an Aeroflex TM500 system simulating the LTE user equipment. LG has undertaken trials with the smallest LTE device known to Ovum. LG has participated in several LTE trials and demonstrations, but in the past it used large prototype devices as many vendors are still doing. An LG single-mode LTE USB dongle, using 2.6 GHz band with an integrated 2x2 MIMO configuration and based on LGs own chipset, has been used in trials with Nortels, Alcatel-Lucents and T-Mobiles LTE demonstrations. It is steps like these that raise confidence in the industry that LTE devices could be ready for the earliest roll outs in 2010. However, as is the case for any new technology, the biggest issue is device availability. Although LGs prototype demonstrated good progress, it remains true that there is little evidence of devices yet in the market. The challenges to developing small and powerefficient multi-standard/multi-band devices remain high. Ultimately, however, several vendors have performed LTE TDD demonstrations, including Alcatel-Lucent and Nortel. Others have already announced products supporting the technology, such as Ericsson, Huawei and Qualcomm.
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Annex B: Supporting initiatives

Next Generation Mobile Networks (NGMN) Alliance
The NGMN22 Alliance was founded in 2006 by a worldwide group of leading mobile operators, including China Mobile, KPN Mobile, NTT DoCoMo, Orange, Sprint-Nextel, T-Mobile International and Vodafone. The NGMN Alliances mission is to complement and support the work within standardisation bodies by providing a coherent view of what the operator community is going to require in the decade beyond 2010. Technologies ultimately selected by NGMN members should be chosen based on the factors such as performance, price and quality. The NGMN Alliance currently consists of 53 leading global network operators, technology vendors and universities. In late 2006, the NGMN Alliance published the third release of its white paper giving more details on those requirements. The key objectives set by the NGMN Alliance were: reuse of existing assets, including spectrum, sites and antennas (compatible shape and size with existing antennas) with no periodic upgrades competitiveness in terms of overall customer proposition (support for cost efficient endto-end low latency and cost efficient 'always on') at the time of introduction and ahead of rival technologies no impact on the current HSPA roadmap, but NMGN must be ready in time to capture the appropriate window of opportunity new Intellectual Property regime for the licensing of NGMN technology in order to enable greater transparency and predictability of the cost of IPR for operators, infrastructure vendors and device manufacturers.
The NGMN Alliance has defined a network architecture based on a new IP core network and a new radio access network supporting full mobility features. NGMN architecture will initially co-exist with existing circuit-switched voice infrastructure and existing radio access networks and ultimately will replace the circuit switched network part. To achieve NGMN requirements in accordance to the NGMN system, the NGMN Alliance has defined detailed recommendations for both Access and Core parts of the network. Figure B.1 gives more details.
22
http://www.ngmn.org/
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Figure B.1
Examples of NGMN requirements

Essential recommendations Preferred recommendations Peak: > 100 Mbit/s (20 MHz) The average instantaneous bit rate for active users shall be greater than 40 Mbit/s. Higher rates for LOS & indoor.
Downlink speed
Peak: > 100 Mbit/s (20 MHz)
Uplink speed
Peak: 3050 Mbit/s (20 MHz)
Peak: >50 Mbit/s (20 MHz) The average instantaneous bit rate for active users shall be greater than 20 Mbit/s.
Core, RAN & end-to-end Latency Spectrum efficiency Capacity
Core < 10 ms, RAN < 10 ms End to end < 30 ms 3-5 x HSPA and EV-DO Equivalent to 60 concurrent VoIP sessions/Cell/MHz (when using the full bandwidth for VoIP) with speech quality comparable to 3G AMR 12.2kbps
Core < 5 ms, RAN < 10 ms End to end < 20 ms 6-8 x HSPA and EV-DO Equivalent to 80 concurrent VoIP sessions/Cell/MHz (when using the full bandwidth for VoIP) with speech quality comparable to 3G AMR 12.2kbps Seamless mobility management based on intelligent infrastructure e.g., a unified network & service layer to serve in all environments
Mobility Support Seamless mobility management across all bearers with service continuity through a minimum of 120km/h
Source: Derived from NGMN White Paper 3.0
LTE-SAE Trial Initiative (LSTI)

The LSTI is a global industry group consisting of operators and vendors, who work collectively under a technology trial initiative to accelerate the availability of commercial and interoperable next generation LTE mobile broadband systems. LSTI was founded in May 2007 by telecommunications companies Alcatel-Lucent, Ericsson, Nokia, Nokia Siemens Networks, Nortel, Orange, T-Mobile and Vodafone. As of February 2009, its members have expanded to include 23 LTE equipment vendors and nine operators. The objectives of LSTI are to: drive industrialization of 3GPP LTE technology demonstrate LTE capabilities against 3GPP and NGMN requirements stimulate development of the LTE ecosystem.
As illustrated in Figure B.2, LSTIs work plan is divided into three main phases, running in parallel:
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Proof of concept (POC): POC verifies the technology. It aims to test LTE against the industry requirements from basic functionalities to general network performance using pre-standard equipments. POC currently focuses on LTE FDD test cases which include data rates, latency, quality of service etc. Earlier tests are conducted in a lab environment followed by testing a real radio environment, from single-cell to multi-cell, and from single-user to multi-users. LTE TDD test cases will be added in 2009 depending on the availability of devices. Interoperability test (IOT): the IOT determines whether or not the vendor device meets the standards. LSTI is currently defining the test scenarios. It will introduce cross vendor test and interrupt test using standards-compliant equipment from different vendors in 2009. Results are expected by end 2009. Friendly consumer trial: the consumer trial will be conducted among the friendly users in 2009. This work tests LTE network in near commercial environment using equipments from vendors. It is the final stage for vendors and operators to prepare a commercial launch. It is expected that both radio interface and EPC end-to-end performance will be tested. This work will be carried out throughout 2009.
Figure B.2
LSTI activity timing
Source: LSTI
Interoperability Testing (IOT) is designed to show that participating companies have the same interpretation of the standard which implies a level of maturity in the standards. Interoperability Development Testing (IODT) precedes IOT and has focussed initially on the air interface, with an agreed feature set and baseline standards.
LTE recent trials and demonstrations

Figure B.3 highlights industry LTE trials and demonstrations in 2008 and early 2009.
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Figure B.3
February 2009
Industry LTE demonstrations

Proof of concept tests with all LSTI partners to demonstrate spectral efficiency, data rates, guaranteed bit rate support, latency and handover under typical field conditions with multiple users. Interoperability tests and customer trials undertaken.
September 2008
Nortel, LG Electronics and T-Mobile's trial demonstrated smooth, no interruption of data transmission to and from a vehicle driving at 100km/h over of a multi-cell end-to-end Nortel network. NSN and Vodafone Germany conducted a joint LTE demonstration in Dusseldorf. NSN demonstrated services such as High-Definition Television streaming, remotely-controlled Webcam and multi-user multimedia communication with VoIP and video.
August 2008
NSN demonstrated LTEs capacity to transmit data at 172 Mbit/s using 20 MHz of radio spectrum in Australia and New Zealand.
Engineers at Nortel's Research and Development Centre of Excellence in Ottawa showed
streaming HD video handover at speeds of 100km/h between cell sectors. Data speeds for the tests averaged 10 Mbit/s over a 10 MHz channel in Canadas AWS band.
June 2008
Huawei demonstrated its end-to-end mobile solutions highlighting seamless migration and evolution from 2G, 3G to HSPA and LTE based on Huawei's 4th Generation Base Station (BTS).
NSN carried out field trials of LTE and MIMO technology in Berlin achieving data speeds of
up to 173 Mbit/s. April 2008 Motorola performed demonstrations of its LTE solutions including: HD video blogging, HD video over LTE,CDMA/EV-DO Rev-A LTE hand-over. Online racing car game played live NSN demonstrated LTE
Nortel and LG Electronics demonstrated LTE over AWS spectrum,

March 2008 Alcatel-Lucent, LG Electronics and NEC demonstrated live high-speed video connection over LTE, supporting dozens of DVD-quality and high-definition video streams simultaneously.
T-Mobile conducted a LTE trial with Ericsson. Ericssons LTE network equipment supports
multi-user data rates of up to 170 Mbit/s in the downlink and up to 50 Mbit/s in the uplink per cell.
February 2008
Alcatel-Lucent and LG Electronics demonstrated LTE using 2x2 MIMO technology, delivering throughput of approximately 180 Mbit/s in total. Ericsson demonstrated an end-to-end phone call enabled by LTE technologies, employing handheld mobile devices, Huawei demonstrated its LTE solutions. Huawei showed multiplex HDTV services and mutual gaming applications based on LTE with transmission speeds of 100 Mbit/s. Motorola demonstrated LTE applications, NSN highlighted its Flexi Base Station products and demonstrated LTE on the Flexi Multimode Base Station.
Nortel, LG-Nortel, and LG Electronics demonstrated LTE.

January 2008 Ericsson demonstrated LTE in both FDD and TDD mode on the same BS platform.
Source: Ovum
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Ovum 2009

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LTE Mobile Broadband Ecosystem: the Global Opportunity

UMTS Forum Report 42

LTE has industry commitment

unless it is only the SAE core network which is being referenced.

Ecosystem drivers support LTE

Global Mobile Broadband: Market potential for 3G LTE.

Risks for LTE

End user expectations and needs

The LTE ecosystem overview

Illustration of LTE ecosystem

Foundation Group Infrastructure suppliers End user device vendors

Service/ content providers

Each generation ecosystem increases in size

Source: Forum Nokia

Key components for service access

Power User interface OS / applications Memory

Local client / device

LTE WiMAX WiFi Cloud applications and services:

Web or remote service resources

Different services share common components

Different categories of devices with unique functions and user interfaces

Phone/ voice device

Common applications, services and content useable from the Internet

Global LTE ecosystem roadmap

Overview of LTE ecosystem roadmap

3 LTE enabled services

3.2 Consumer services

Consumer services enabled and enhanced by LTE

Devices and user interface Application/ service specific

Security and control

Consumer electronics applications

General data services and applications

Video related services and applications

Content / devices preferences

80% 60% 40% 20% 0% Hollywood TV Sport film programme

TV device PC PMP Mobile phone

Source: Ovum - Video trends: the mobile story. March 2009

Real time and interactive services

Location based services

3.3 Enterprise services vertical sectors

Business services enabled and enhanced by LTE

Navigation, location, transport

National utilities and services

Emergency services; utilities

Storage , security and control

Industry applications Machine to machine

Source: Ovum Note: * Indicates machine to machine service

Machine to machine services

4 Devices and infrastructure

4.2 Chipset vendor LTE roadmap

Overview of chipset vendor roadmap

Current activities Expected activities

First commercial ready Data only device support

Embedded devices support

Small handheld device support

Test & trial Development

Test & trial

Test & trial

Impact on the ecosystem

4.3 Device vendor LTE roadmap

Overview of device vendor roadmap

Small handheld device Embedded device Data only device

Test & trial