PA Consulting experts offer some answers
After some years of underachievement, mobile data is finally taking off. Sales of HSDPA dongles are growing rapidly and key internet services (such as Facebook and Google Maps) are going mobile, with the result that mobile operators' data traffic uptake in the UK has shown growth of between 100% and 400%over a twelve month period.
For now, operators are looking to expand capacity on their existing mobile networks to cope with this growth. This will be achieved through successive upgrades to HSDPA, HSUPA and HSPA+. However, as this growth in data traffic continues, operators will still need extra capacity in addition to their existing networks by early 2013 and this will be achieved through the introduction of 4G network technologies. LTE will be the dominant such technology as many of the cdma2000 operators around the world are looking to LTE, as well as the traditional GSM/WCDMA operators.
But while this market will be very large, it will also be very tough. Alcatel-Lucent and Nokia Siemens Networks have struggled to overcome the integration difficulties of bringing their organisations together. Even Ericsson, the leader in mobile network infrastructure, has seen profits dropping recently.
So, all this begs the question – What does a vendor need to do to be successful in LTE? At a high-level, this means vendors have to get ever better at putting themselves in the minds of the operators, seeing things from their position and helping operators overcome the challenges that they in turn will face in deploying these networks. There are a number of areas where this can be seen in practical terms.
Deliver on time – but vendors need to accelerate LTE development
Operators are going to need LTE networks to take significant volumes of data traffic by early 2013, meaning mature networks and significant terminal penetrations will have to be achieved by then.
Vendors are happy to talk up the near-term availability of LTE equipment. But on closer examination, the time-scales for delivering these networks are looking particularly challenging.
Operators are going to need LTE networks to take significant volumes of data traffic by early 2013, meaning mature networks and significant terminal penetrations will have to be achieved by then. Working back from this, the following milestones have to be put in place:
- Given the introduction and churn rates for new handset technologies, LTE terminals must be available by mid-2010, if a significant market penetration is to be achieved by early 2013.
- New networks also take some time to deploy and are a pre-requisite to enable the introduction of LTE terminals. LTE equipment must be deployed from early 2010, with reasonable network coverage available from early to mid-2011.
However, the current position is that LTE standards won't be finalised till end-2008. This only leaves 15 months to shipping equipment in volumes. During this time, vendors have a huge amount to achieve:
- Vertical and horizontal stack integration
- Load testing
- Performance and field trials
- Reliability levels for commercial deployment.
Accelerating the product development life-cycle can be achieved using techniques such as rapid development with "agile" frameworks, and project anti-patterns detection to achieve process optimisation. Vendors may also need to act as solution integrators to achieve fastest time-to-market, with strategic procurement and partnerships with IP vendors and using off-shore R&D effort for sub-systems.
Forget the hype – focus on capacity and the customer experience
The big vendors have been guilty of generating hype that hasn't been helpful in positioning LTE, either because the technology has been too immature to deliver on the promises made, or because the hype has failed to focus on the areas that actually impact the operators or end-customers.
Spectrum is an increasingly expensive resource for mobile operators and vendors would be much better to focus on increases in spectral efficiency offered by LTE that deliver greater network capacity from the same amount of spectrum. For example, market hype on 4G technologies typically focuses on peak speeds delivered. This is despite the fact that these speeds may only be achieved by a stationary user standing next to the base station antenna – in practice, these speeds will be rarely, if ever, achieved by customers in a real network deployment.
End-customers (who ultimately pay all the bills) are interested in data rates, but their experience will not be shaped by peak speeds, but rather by average speeds and minimum (edge-of-cell) speeds. Also, latency (both at service set-up and in-service) can have as big an effect on customer experience of mobile broadband services as the data rate.
Operators, meanwhile, are far more concerned about capacity delivered across the network. Spectrum is an increasingly expensive resource for mobile operators and vendors would be much better to focus on increases in spectral efficiency offered by LTE that deliver greater network capacity from the same amount of spectrum.
In practice, vendors need to address and successfully explain how their solutions deliver:
- The higher average data rates that customers want by supporting channel bandwidths greater than 5MH
- High-capacity single-frequency networks through interference cancellation
- Higher minimum edge-of-cell data rates that limit the customer experience through a combination of both of the above.
Share the risks
As networks become more data intensive, the revenue per bit is decreasing rapidly, forcing operators to look closely at ways of reducing the costs and sharing the risks of installing and running such networks.
From a technical perspective, this means reducing not just the cost of the boxes themselves, but the cost of installing and running the network as well. In particular:
- Providing multi-standard, cost-optimised basestation equipment that is built around a common, software-upgradeable, modular platform. This will reduce installation and maintenance costs through easy upgrades from existing technologies, such as GSM and 3G, to LTE as customer demand takes off.
- As existing sites and towers become ever more congested, enabling site reuse for LTE will be crucial. Challenges to vendors include size constraints of the equipment, multiband antenna solutions (to reduce the number of antennas per site) as well as power and cooling constraints.
From a commercial perspective vendors need to further expand their horizons beyond selling boxes and be willing to work in partnership with the operators. From a commercial perspective vendors need to further expand their horizons beyond selling boxes and be willing to work in partnership with the operators. They can do this by taking over the cost, detail and risk of designing, building and operating networks. At the same time, they must deliver a service to the operator that is based on a small number of critical key performance indicators that drive the network and service performance delivered to the end-customers. This will allow the operator to focus on being a service provider and managing the customer relationship.
In particular, relationships and contractual processes need to encourage the right behaviours at the right time. Operators want the best network and will pass the risk of how much infrastructure it requires to the vendor. If the vendor gets it right and commercial exploitation takes off, then they in turn will be rewarded.
The Way Ahead
Vendors must become ever more focused on what the operators want from them if they are to succeed in the LTE market. They can address many of the key challenges this entails by:
- Reviewing their development approach to speed up delivery time scales
- Proving their equipment delivers the features and performance that the operators' customers really want
- Delivering all this in a package that makes commercial and operational sense to the operators.
Robert Westwick (above left) and Steve Griffin (right) are Consultants in Wireless Technology at PA Consulting Group. They can be contacted via tel: +44 (0)1763 267492, email : firstname.lastname@example.org, or visit www.paconsuting.com/wireless