LTE Rollout Hampered By 3G Migration Costs

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

LTE is being hampered because mobile operators have been bogged down with the costs associated with moving from 2G to 3G, an analyst has warned

As speculation continues to surround whether WiMAX or LTE (Long Term Evolution) will form the foundation of choice for 4G services, an analyst company has warned that LTE and the like is being hampered because mobile operators are still dealing with the costs of upgrading their 2G networks to 3G.

“We are in the midst of the mobile infrastructure market transitioning from 2G to 3G technologies,” said Scott Siegler, senior analyst of mobile infrastructure research at Dell’Oro Group. “The impact of this technology evolution is that steep declines in the GSM and CDMA markets will significantly offset strong growth forecast for the WCDMA market over the next five years.”

“While we expect WCDMA to drive the market in the foreseeable future, we also expect to see very strong growth in both the WiMAX and LTE markets,” he added. “However, despite this anticipated growth in the 3G and 4G markets, we forecast revenue of the total market in 2014 to still be below the peak levels reached in 2008.”

Dell’Oro Group, in a newly released report, said that mobile infrastructure market revenues are forecast to grow over the next 5 years and reach $42 billion (£27 billion) in 2014, but will still be shy of the record revenues of over $43 billion (£27.5 billion) achieved in 2008.

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That said, the report also points out that initial LTE deployments will begin in 2010, although the WCDMA market is expected to be the prime contributor to the market over the next 5 years. It said that “LTE revenue during the same period is forecast to be nearly equal to aggregate revenue from the GSM, CDMA and WiMAX markets.”

In the US, AT&T has previously said it would conduct LTE trials in 2010, with deployments in 2011, while competitor Verizon Wireless has previously said that it plans to launch commercial LTE service in up to 30 local markets in the United States during 2010.

There has speculation that WiMax has been losing out of late to LTE, but a report last year from analyst firm Maravedis, found that WiMAX subscriber growth in the second quarter of 2009 increased 16.5 percent over the first quarter, showing a 74 percent year-over-year growth since the second quarter of 2008. It found that the total number of worldwide subscribers was approximately 4 million worldwide.

Elsewhere in the world, Scandinavian mobile operator TeliaSonera has completed work on two LTE networks in Oslo and Stockholm, with customers slated to start using this year. Meanwhile in the UK, O2 has tested LTE in Slough in partnership with Huawei. O2 claimed a cell peak downlink rate of 150Mbps was measured during the trial.