a nexius report · a nexius report lte: ... cdma, and umts, long term evolution (lte) ... (gsa) has...

A Nexius Report LTE: Paving the Path Forward

Authors: Joe Baeumel, Nexius VP of Professional ServicesPaul-André Raymond, Nexius VP of Technology

11951 Freedom Drive 13th Floor, Reston, VA 20190 Tel: (703) 650 7777

ExEcutivE Summary

A new wireless technology promises to bring 4G capabilities to wireless users. Superseding technologies such as GSM, CDMA, and UMTS, Long Term Evolution (LTE) is not an incremental change in technology. It is a real generational leap coming to reality in a well choreographed march.

LTE responds to a need for new solutions. The pressure on the cellular industry comes from the confluence of changes, including new ways to use the technology, terminals that are more capable, changes in the value chain, new players (emerging and consolidating), and regulators making new spectrum available. Meanwhile, users become savvy of what is possible with faster wireless speeds and critical of delays in availability. This is perhaps in contrast to technologies like UMTS or EDGE, which seemed to be pushed by the industrials onto a skeptical marketplace. The transition to LTE is clearly subject to a greater demand from consumers than we have seen in prior transitions.

We are not witnessing an overnight revolution, but the beginning of a process. This change is coming to reality just in time to respond to market needs: the standards are converging, the suppliers have finished their implementations, the operators are accelerating their network speeds, and the industry is bringing a major new technology to the market. 4G has been making the news for so long that it may seem that progress is slow. Our analysis indicates that it is not slow at all. In fact, the transition is a little faster than similar, major technology evolutions in the past.

Many operators are either well on their way in the deployment of LTE or have a clear strategy of how to bring it to reality. But the transition itself is not easy. It involves migrating from a time-division multiplexing (TDM) mindset to an all IP environment. It requires enhancing the network to deal with a large amount of traffic. An LTE deployment involves developing new applications, new content, new devices, and teaming up with partners. The strategy is the first step. Its execution, and the scaling that will be associated with mass LTE adoption, remain ahead of us.

Nexius has delivered on multiple LTE projects in the last three years and presents the following document as an educational reference guide for operators who are looking for a brief introduction to LTE technology. This paper presents LTE technology, addresses the drivers for this transition, and benchmarks progress towards LTE against prior technological deployments. It also advises how operators should prepare for the 4G path forward.


WirELESS NEtWOrK EvOLutiON: a BriEF HiStOry

Major transformations are happening in the wireless industry. It is significant that companies, like Google, Microsoft and Apple, are moving their attention to the mobile world. For instance, Google has focused on the shift from broadband services towards the mobile environment, noting that mobile web adoption is happening eight times faster than it did in the desktop environment 10 years ago. According to Infonetics Research, the number of mobile broadband subscribers (558 million) surpassed the number of wireline broadband customers (500 million) in 2010. In analyst reports, financial markets have linked Microsoft and Apple stock valuations directly to their mobile play. Not only is broadband now accessed increasingly from mobile devices, but this shift is happening faster than past technology adoptions. The computer industry and the internet industry are embracing the change. In the late ‘90s, the upcoming 3G wireless technology generated significant skepticism, particularly about the new uses this technology would bring. There was also a lot of frustration with adoption of WAP, the slow uptake of SMS in North America and the delays in the realization of MMS promises. A key question was “what application was driving the transition to 3G and whether the market would accept it?”. Remember, subscriber concerns at the time focused on dropped voice calls, not data rates over Circuit Switched Data or GPRS. The industry was putting forward a lot of applications and solutions, but many were hindered by device constraints, slow network speeds and lack of interest in the market place.

4G will arrive in a significantly different environment. Several factors are converging to make the market very receptive to a new technology. One such factor is user demand. Subscribers expect data services, demand new data services and are very critical of the quality of the data services they receive. Rarely do you hear discussions about voice call quality, but you can hear – and read – a lot about issues in using the iPhone and Android devices over cellular networks.

In the early days of GPRS and UMTS, when Nexius was helping operators with the evolutions from 2G to 2.5G or 3G, the data network was built as an afterthought on top of the voice networks. The uptake was slow, and the deployment was slow. The transition to 4G will be both faster and smoother; the market is already indicating its readiness with the speedy High-Speed Downlink Packet Access (HSDPA) deployment worldwide. LTE will follow in HSPA’s footsteps.

HSPA, EV-DO Rev A and SVDO may provide comparable service initially, but they also seed user demand and expectations and create appetite for services.


iNtrODuciNG LtE

Long Term Evolution (LTE) is the next step of the evolution of both CDMA and GSM standards.

The work on LTE started in 2004 and aimed at reducing the cost per bit, enabling new services, increasing flexibility, simplifying architecture and improving terminal power consumption. Specific goals were established and the standardization work on an LTE air interface and new system architecture (SAE) gave birth to a new core architecture (EPC) and new access network (eUTRAN).

The LTE standard is based on OFDM, as is the competing WiMAX air interface. Both are defined as 4G technologies by ITU, as is HSPA+. The first releases of LTE will fall short of that objective but will nonetheless bring higher data rates (100Mbps with MIMO in a 20MHz band). Likewise, a fourfold increase in spectral efficiency, low latencies and a tenfold improvement in number of users per cell mean that users can maintain always-on network connections.

LTE benefits from a new, core architecture: the Enhanced Packet Core (EPC). EPC is based on the latest advances in communications technology, e.g., separation of control and bearer, a flat architecture, all IP transport. It is also based on IETF protocols featuring, in particular, IPv6, Diameter, and SCTP.

Figure 1: LTE/EPC Architecture and Key Characteristics


LtE NEtWOrKS EmErGE

Each of the past three decades had its own wireless technology. The advent of cellular technology made analog cell phone service possible in the ‘80s. The need for more capacity and progress in digital signal processing enabled the transition to TDMA and GSM in the ‘90s. As spectral efficiency and capacity began to improve and consumer interest in data services slowly grew, the industry introduced more efficient technologies in the new millennium with the publication of the UMTS standard in 2000 and with the equivalent CDMA 1x technology.

Today’s mobile explosion demands a fourth generation. 2010-2019 will be the decade for LTE and LTE- Advanced

The industry is learning from past experience. The development of LTE focused first on the long-lead items such as the air interface or handset requirements. Only later did attention turn to the infrastructure. The full set of LTE standards published as Rel 8 in December 2008 was completed over the course of 2009 into a stable set of specifications. (Rel11 is currently frozen at Stage 1). The handset manufacturers have been working in parallel. The vendors have been doing interoperability tests. The operators have been holding trials. All this culminated with TeliaSonera’s December2009 announcement of a commercial offering of LTE services.

There are high expectations for LTE. As of August 2011, LTE service in the United States is now available in over 100 cities.

• MetroPCS was the first to launch commercial 4G LTE services in the U.S., with service in Las Vegas and Dallas/Fort Worth. It has expanded to serving 14 metropolitan areas to date and plans to expand into the remaining MetroPCS cities.

• As of the end of July, Verizon has launched 102 cites and announced plans to cover more than 185 million potential subscribers in 175 towns and cities in the U.S. with its LTE deployment by the end of the year and mirror 3G coverage by EOY 2013.

• AT&T executives announced their first five LTE markets are going live this summer in Atlanta, Chicago, Dallas, Houston, and San Antonio. The operator started selling new LTE/HSPA+ devices in stores and online on August 21. And, it expects its 4G technology to be available in 15 markets by the end of the year.

Figure 2: Technology Roadmap to LTE


• Sprint and LightSquared have entered into a 15-year, network-sharing agreement that will drive rural LTE build out to “national” coverage based on FCC requirements to cover 260 million Americans by 2015.

• USCC announced that it will deliver high-speed 4G LTE services and 4G-enabled devices to more than 25 percent of its customers in 24 markets by the holiday season.

• Clearwire also made a significant announcement earlier this month that it would add an “LTE Advanced-ready” technology to its 4G network. Testing confirmed download speeds in excess of 120 Mbps, showing the LTE network could “achieve far greater speeds and capacity than any other network that exists today.”

The union of AT&T and T-Mobile has tremendous ramifications for subscribers outside of major metropolitan areas. Fortified by the T-Mobile network, AT&T will cover 55 percent of the U.S. land mass. And it will reach up to 97 percent of the U.S. population – up from 80 percent – thanks to the enhanced focus on rural build outs. Without merger, AT&T’s rural build-out would not cover significant areas. AT&T’s LTE transition plans include upgrading 44,000 LTE sites in next two years and adding 18,000 new LTE sites.

In its recent surveys, the Global mobile Suppliers Association (GSA) has found that 174 firm LTE network deployments are in progress or planned in 64 countries, including 26 networks that have commercially launched. A further 63 operators in 21 additional countries are engaged in LTE technology trials, tests or studies. taken together, 237 operators in 85 countries are now investing in LtE.

The development of handsets and their production in large volumes requires a lot of advanced planning. Demos and trials can be conducted with a small number of handsets. Early commercial systems provided LTE-only service with devices that have minimal functionality (such as a single mode, data only or USB dongle). However, to attract millions of customers, multi-mode (i.e. 2G/3G and 4G) devices that can provide voice and data services must be available. The suppliers have been working on this. For instance, Samsung launched the first multimode LTE capable cellular phone in 2011 for MetroPCS. And HTC, LG, and Motorola have since joined the game with multimode phones for AT&T, Sprint, T-Mobile and Verizon. Market researcher iSuppli expects a significant percentage of cellular devices shipped in 2012 to be LTE capable. Validating the iSuppli prediction, Verizon reported sales of 1.2 million LTE devices for Q2 2011.


tHE cONSumEr NEED FOr SPEED

Data usage is exploding. Numerous reports show that the industry is at an inflexion point. The iPhone and Android smartphones brought high data usage to the mass market. In one interview, the CEO of AT&T Mobility, Ralph de la Vega, claimed that wireless data usage on its network increased 5000% in three years, most coming from smart-phone users. The impact of this increase continues to be felt as more and more smartphones hit the market, and as more and more applications are available for these phones. Smartphones are a growing fraction of worldwide hand-set sales (13.6% in Q1 2009, 17.3% in Q1 2010 and 23.6% in Q1 2011). This trend is even stronger in western markets with growth higher than 20% in Europe and in the USA. This trend realization is hitting all decision makers in the industry. Last year, Cisco Visual Networking Index calculated global mobile data traffic was 237 petabytes per month in 2010. Cisco predicts that number will increase 26 times between 2010 and 2015, with global mobile data traffic reaching 6.3 exabytes per month by 2015.

The regulators are not sitting idle. Confident in predictions of soaring demand for spectrum, the FCC has put spec-trum policy high on the agenda of the new broadband plan and is looking to make 500MHz of new spectrum avail-able in the next ten years. Some operators may have unused spectrum that would be suitable, though certainly not enough to meet this level of demand. With new spectrum available, operators will invest in the most efficient technology for that spectrum and LTE provides the best spectral efficiency and the most flexibility of any of the cur-rent technologies.

LTE investments are already being made in recently auctioned spectrum. Verizon is deploying LTE in the 700MHz band it acquired in 2008. Other US operators have unused spectrum awaiting a deployment. Any new deployment is expected to use the latest technologies. Some would rather upgrade to HSPA+ temporarily, but in all cases LTE has been a serious contender and will be more and more attractive as time goes by.

LightSquared plans to construct an integrated satellite/terrestrial 4G network in the L-Band, an example of how convergence also creates a need for a new technology. Dish Networks is following in its footstep with plans for LTE-Advanced. Satellite/terrestrial convergence is one aspect. For others, it could be cable-wireless convergence. The cable industry has been leading the transition to IP telephony and to IMS. Among wireless operators, IMS is slower to penetrate the market in part because of technical challenges. LTE is changing that in many ways. LTE is more spec-trally efficient, provides higher data rates, is always on, and has low latencies, among other advantages.


mOviNG tOWarD cONvErGENcE

The time for convergence is upon us. End users would clearly benefit from a single IMS unified multimedia solution across all access technologies. However, when it comes to implementation, operators are weighing the short-term challenges of such a change against the long-term benefits of a converged voice solution.

There are multiple forms of convergence, too. More and more internet applications can be accessed on the wireless phone, for example video. Some argued that viewing HD content on a 3-inch screen is not appealing, but the market chose otherwise and users are doing it. Short, low-resolution videos such as those found on YouTube seem very appropriate and YouTube has been reported to make up 22% of all mobile data in H1 2011. Apple may be resisting the implementation of an Adobe Flash Player on its platform; however, the company felt compelled to get YouTube to provide an alternative way to access its content. Watching video on a wireless device is now a commonplace and growing application that is driving up the load on the network.

Beyond streaming video, some of the most popular applications on mobile devices are bandwidth-hungry. Social networking is driving usage up. A lot of media, music, pictures, videos, movies, are being downloaded over public wireless networks. Video communications, once the reserved domain of cable operators, are now colliding with wireless communications and putting a lot of strain on the networks. Cisco, for instance, sees mobile video as the most bandwidth-demanding data application and predicts it will represent two- thirds of mobile data traffic by 2015.

New kinds of devices are also getting connected to the mobile web. Apple changed how they promote its iPod touch: It is now a gaming platform. What is true for the iPod touch is also true of the iPhone. Meanwhile, gaming has emerged as a top application category. The gaming industry is responding in kind. For example, Sony has publically announced its NGP (Next-Generation Portable) gaming device that includes 3G connectivity. Portable gaming platforms will bring new devices to the wireless broadband network with new sets of requirements. Gamers will certainly find the low latency of an LTE network even more compelling.

Book publishing is also converging onto the wireless platform. Whether it happens over a Nook, an eBook reader, or an iPad, these platforms – though very different from a smartphone or a cell phone – will likely be broadband-enabled and require a connection, putting additional strain on the network.

The conclusion is clear. Convergence of video, telephone, gaming and cell phone industries is creating a demand for new solutions.

Of course, convergence means additional traffic, and it drives the need for more capacity on the network. But it is not only about capacity. Some of the new usage and new applications, video and television services in particular, are putting more strain on the 2G and 3G technologies than anticipated. 3G has been thought of first and foremost as a cell phone environment, which has implications for design choices, such as:

• 3G devices go to sleep often

• 3G requires many seconds to set up a new connection

• Many 3G devices cannot handle voice and data at the same time (for instance EV-DO rev A and CDMA 1x are on different carriers, although slated SVDO release resolves the simultaneous broadcast)

• Information sent over a 3G network takes many milliseconds to reach its destination.


LTE brings improvements in all those aspects; improvements that would have been hard to achieve through incremental changes in 3G technology. As a result, LTE is very appropriate for instant messaging, voice over IP, tracking, gaming, and many other applications.

LtE: tHE riGHt SOLutiON at tHE riGHt timE

The wireless market is in flux, setting the stage for the success of a disruptive technology. The market will welcome LTE’s technical improvements as each is an opportunity for operators to differentiate, optimize their networks for specific applications and show value to specific market segments.

The previous section talked about technical convergence. Now, consider the economic aspects. The entire value chain is changing. Operators are still trying to define their revenue model from broadband. Is the flat-rate unlimited plan still sustainable? Many have moved away from it. At the same time, operators’ revenue sources are being challenged. Customer ownership is shifting and companies like Apple are now getting direct revenues from mobile users. Others like Google are offering free services and applications to get advertising revenues. VoIP and other over-the-top applications are available on some broadband phones. Operators are feeling the squeeze put on by players coming from other industries while traffic is growing.

New applications, new usage patterns, new spectrum and convergence of industries are all happening at once and call for changes.

LtE iNDuStry mOmENtum

The industry is behind LTE in a way rarely seen in this industry in the past. Prior changes of generation were supported in more fragmented fashion. For 2G, the debate was over TDMA or CDMA. With 3G, the competing technologies were UMTS and CDMA 1x, with additional ambiguity as EDGE came to reality at the same time.

Some may see WiMAX as a competitor to LTE. It does bring a lot of the same benefits as LTE and has a good head start. However, WiMAX comes from a different ecosystem with its initial, fixed implementation evolving to nomadic and then mobile implementations. WiMAX had strong backing by the likes of Sprint, Google and Intel. But it will not have the same economies of scale that LTE will have, nor the level of backing that LTE has. Even Clearwire, the biggest supporter of broadband wireless by WiMAX, has announced its intent to add LTE technology to its 4G network. Meanwhile, sales of LTE infrastructure already exceed WiMAX.

The momentum behind LTE is overwhelming. The whole 3GPP ecosystem, with 4 billion active devices, is looking very closely at LTE. We saw how fast HSPA rolled out through this environment: volumes are huge and the entire mobile ecosystem wants to participate. Suppliers were among the first to sign on. They came in large numbers and were very active in the standardization and development of the technology. Remember, 237 operators in 85 countries are now investing in LTE.


Many markets are evaluating and adopting LTE in similar timeframes. TeliaSonera already has a commercial offering. Verizon in the USA and NTT in Japan had large-scale launches in 2010. China Mobile is expected to rollout LTE in 2012, and China is expected to represent a quarter of LTE adoption as early as 2015. This is also very different from the 2G to 3G transition, which saw Japan take the lead with early WCDMA deployments in 2001, two years ahead of most. China was late to come to the 2G-to-3G transition party (deployment of TD-SCDMA is very recent). This simultaneity is great motivation for suppliers to be early in the market, and the competition is very intense to get the first contracts. Chipsets, dongles and test equipment are being made available from multiple sources. The GSA is reporting on some of the companies that are committed to LTE deployments and the list is growing. 3G developments and deployments had been slowed by intellectual property issues. The industry had learned a lot from that experience, and LTE licensing issues were dealt with much earlier on. Patent pools are in place and the intensity of patent battles for LTE is expected to be kept under control. Investors are much more confident that they can invest and see a return at a reasonable level of risk.

OPEratOrS accELEratE tHE traNSitiON tO LtE

All of these factors are contributing to build up the LTE promises, and LTE is expected to break the “too little, too late” tradition that past technologies have established.

To gain some perspective, compare the deployment progression of 2G, 3G and LTE technologies. 2G was triggered bythe first meeting of the “Groupe Spécial Mobile” in 1982. 3G was triggered by the creation of a UMTS task Force in1995, while LTE activities can be traced back to a 3GPP RAN evolution workshop in November 2004.

All in all, it took 12 years after this initial event for GSM to reach its first live trials, the first large-scale commercial networks and, finally, the one-million subscriber mark. UMTS made this same progression in about 9 years. LTE has completed that trajectory in 7 years with 4 Million LTE subscribers worldwide at the end of 2011. Only HSPA was faster than that, but HSPA was an incremental change on top of the UMTS structure, whereas LTE is a major change in architecture like GSM and UMTS before it.

Since the kickoff of LTE studies in 2004, it took about 4 years for 3GPP to publish a stable standard. Full-scale commercial trials were in place a year later. The commercial launch of a large-scale service with all features happened in 2010. LTE passed the 1M subscriber mark less than a year later, thanks to device availability. Neither GSM nor UMTS went this quickly; each had a bumpy ride along the way.

There are several reasons for this accelerated transition. Deployments of 2G and 3G were slowed by debates over which technology to use, debates on Intellectual property and royalties, and fragmentation in the industry. Perhaps with 4G, the industry has learned how to better handle these issues, so the WiMAX-LTE debate is not of the same scale as the CDMA-2000 vs. WCDMA debate. Perhaps there is something else: The market demand for LTE is a lot stronger than the demand for the previous generations’ technologies, and that demand is the key factor driving LTE forward at such a pace.

LTE is coming faster than any such technology has before. All organizations in the wireless space need to have a strategy around LTE or start preparing one now.


crEatiNG aN LtE actiON PLaN

CDMA operators are at the forefront of LTE. In the USA, Verizon deployed LTE in the 700 MHz band; Metro PCS was the first to market in the US with a Voice+LTE device built by Samsung. Others need to be looking at LTE very closely.

UMTS operators need to invest in the evolution of their existing networks as well as in LTE. In the USA, T- Mobile is putting a lot more emphasis on its HSPA+ deployment than on future LTE plans, even with its pending AT&T merger. Meanwhile, AT&T has publicly announced plans for both HSPA+ and LTE. A key factor in determining the technology in which to invest is the selected spectrum. HSPA+ makes a lot of sense for improving spectral efficiency in bands currently used for GSM or UMTS. LTE seems to be the future-proof choice for exploiting new spectral properties.

In preparing for LTE, there are a few items that will require specific attention:

1 - all iP LTE and the EPC call for an all-IP environment to replace the TDM mindset of the past. This change is not trivial. In particular, it has implications on security and reliability, for both the access and the end-to-end perspective. Data services have traditionally lagged behind voice in terms of reliability. This difference will disappear. As subscribers depend more and more on data services, data services will grab a larger share of operator revenues, and reliability will need to follow. LTE and the EPC bring a lot of new features that will help. The question becomes which to use and how.

2 - Backhaul Spectral efficiency in LTE implies a substantial increase in the amount of traffic that needs to be transported to and from the cell site. In a 2G environment, most cell towers required only a fraction of T1 (or E1) for OAM and user traffic. In an LTE environment, transmission rates of 100+ Mbps per sector are projected in the downstream. Clearly, T1s are not enough and the backhaul network needs a major upgrade. This is a large expense with a long lead time. Action is urgently required by all operators.

3 - interworking with legacy Interworking with 2G/3G and roaming architectures will be key to user adoption of LTE as LTE coverage will not have the reach of 2G or 3G coverage initially. Technology reselection will be required. The LTE standard makes interworking possible, but operator design will make the experience acceptable to the user.

4 - applications The LTE network will need traffic. The iPhone and Android devices have shown that, given the right environment, users will find many ways to use the network. It’s up to the operators, then, to create this environment, find the right partners, enable applications, make content easily available, and give access to the right devices.

5 - voice over iP There are three ways to offer voice in an LTE environment. Falling back to 2G or 3G is possible now, but generally discounted as a long-term strategy because of interworking complexities and quality issues. The other two options – VoLTE/OneVoice and VoLGA – both involve some form of VoIP. (VoLTE is a 3GPP standard using IMS. VoLGA is an industry proposal using Generic Access). While the VoIP solutions will not be available in the first LTE rollouts, they are on everybody’s roadmap and need to be considered in transition plans.


cONcLuSiON: PaviNG yOur LtE PatH FOrWarD

LTE is paving the way to 4G networks. This change is well on its way and should happen faster than previous shifts in technology. However, this advancement is profound and it requires preparation.

Nexius is uniquely positioned to support operators in the transition to 4G. Our world-class team of wireless specialists supports operators through every phase of network deployments. From structuring optimal partnerships with 4G vendors through evaluation, design, and rollout, Nexius consultants provide the end-to-end services and software solutions that today’s wireless operators trust. Our Nexius subject matter experts have more than two years of direct experience in partnering with Tier 1 operators in the US to support their LTE networks, from technology selection through first field applications and more than a decade of experience in deploying networks and building operator teams worldwide.

aBOut NExiuS

Nexius is the leader in delivering end-to-end wireless services and software solutions to industries worldwide. Nexius applies its strategic insight, proven experience and practical knowledge to closely collaborate with customers and help transform their business through wireless. The company’s more than 400 dedicated professionals serve as subject-matter experts, providing Technology Strategy, Network Services and Software Solutions to many leading organizations. Nexius is on a steady growth path in the US and globally, ranking as the 103rd fastest-growing business in America by Entrepreneur Magazine and on the Deloitte Technology Fast 50 and the Inc. 5000 lists. Headquartered in Reston, Virginia, Nexius has offices in Washington D.C., Seattle, Dallas, Dubai, and Argentina.

more information is available at:Telephone: +1 (703) 650 7777Twitter: @NexiusInchttp://www.nexius.comFor information requests, please email us at: [email protected]

a nexius report · a nexius report lte: ... cdma, and umts, long term evolution (lte) ... (gsa) has...

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