USA Wireless Telecom market


USA market is considered as one of the most important markets in the wireless industry, with subscriber population currently  estimated to have reached 294 million with a 95% penetration, as  compared to the  4.8 billion cellular subscribers globally with 71% penetration. US is also estimated to be  leading in terms of number of  3G subscriptionswith almost 122 million subscriptions contributing to roughly 18% of the total global 3G subscriber population till date followed by Japan, South Korea, Italy and UK.

With 3G technology maturing, operators in USA are already planning to lay the  next generation network (NGN) roadmap to sustain the tsunami of data generated and consumed  by the growing sea of wireless devices on its networks right from  smartphones to tablets. The primary goal being to transition to an all IP data-oriented NGN, providing cutting edge services at a higher spectral and network efficiency and thereby, improve profitability and provide a compelling  end-user experience.



The NGN roadmap for the top 5 US operators (by size- number of subscribers) can be summarized as follows -


  • Verizon Wireless (the Big Red !!) opting to disrupt its 3GPP2 CDMA evolution path and jump to 3GPP based LTE, with plans to roll out LTE network starting Q4 2010


  • AT&T Mobility (the Big Blue !!) already on a GSM > GPRS > EDGE > UMTS(HSPA) path is in a precarious situation, with an option to directly jump to LTE path or adopt HSPA Evolution path with HSPA+ deployments before moving to LTE in late 2011 or early 2012.


  • T-Mobile following the GSM>GPRS>EDGE>HSPA path has adopted HSPA+ in the way to LTE as it seeks funds to deploy LTE in late 2011.


  • Sprint on the other hand has moved from 3GPP2 CDMA>EVDO Rev A path to WiMAX as its NGN solution partnering with Clearwire, currently covering 28 markets. It aggressively looks forward to expand the WiMAX footprint announcing cool smartphones like HTC EVO 4G for its subscribers. We might even see a flavor of TD-LTE in parallel to WiMAX in some markets.
  • MetroPCS the pre-paid carrier is evolving from its CDMA roadmap is following the Big Red’s footsteps in adopting LTE as its NGN solution and will start deploying LTE base stations in Q4 2010. It has partnered with Samsung to provide the first LTE smartphone for its network.


With Verizon Wireless, Metro PCS, Sprint and T-Mobile quite clear with their NGN roadmap, all eyes are glued on to AT&T  on its NGN roadmap.The case here is whether the big blue operator should roll out HSPA+ or jump directly to LTE or even both.


While T-Mobile is on the verge of completing its network upgrade to HSPA 7.2 and ready to roll out HSPA+, AT&T is still upgrading its network to HSPA 7.2. So, by the end of 2010, AT&T might be in a sticky situation facing the fight of mindshare as well as the subscribers. The Big Red and MetroPCS will be ready to attack from top and bottom, with their LTE solutions, followed by strong squeeze from both the sides by Sprint with its maturing high speed WiMAX offerings and T-Mobile with its comparatively faster HSPA+ offerings.  Henceforth, AT&T will have to act promptly in deploying its NGN solution to keep up with the competition.


AT&T NGN (3G-4G) Roadmap


As AT&T has committed to LTE deployment, it has following options in planning its NGN roadmap:


Option I : HSPA+ in 2010 -2011 & LTE in 2012




 AT&T 3G 4G LTE Roadmap


HSPA+ (21Mbps / 42Mbps) by far should be the plausible  solution for the Big Blue’s strategy to continue the momentum build by the Apple iPhone until it rolls out LTE in 2011. This will not only  eliminate the hiatus between HSPA 7.2 and LTE but will enable a smoother transition to the next generation solution for the second largest operator in USA. Additionally, if AT&T has already planned to enter late in the market for its LTE play, it gives them a distinct advantage in terms of juicing out its existing 3G networks for a better return on investment (ROI) and also expanding its existing 3G coverage to move ahead with a larger network.


Another key advantage is that the competition will be rolling out LTE networks primarily based on 3GPP Release 8 specs which offers limited  features compared to the recently finalized Release 9 and promising Release 10 specs. As a result,  AT&T will have “time on hands” to completely observe and  thoroughly test the LTE solution’s robustness and backward compatibility with the legacy networks. Thus, rolling out HSPA+ mitigates the practical fears of massive drop in the speed and thus the user experience for the subscribers, when switching from a very high speed LTE network connection to the comparatively  very low speed 3G network connection. With this strategy AT&T  also has an option to gain a competitive advantage by skipping LTE and instead deploying LTE Advanced (Rel 9 & Rel 10 specs) directly in early 2012 and compete with HSPA+ in its arsenal rather than with HSPA 7.2 against LTE and WiMAX.

Option II: HSPA 7.2 in 2010 and LTE in early 2011


AT&T 3G 4G LTE HSPA roadmap



If AT&T decides not to deploy HSPA+ and instead directly jumps to LTE, then the operator should start rolling out the LTE network in early 2011 to compete with the advance competitive networks and avoid increase in churn. LTE Release 8 will be on cards for the initial deployments, starting with key markets where the subscribers with ” USB dongles” will be higher as the initial Verizon Wireless rollouts in those markets will be for “dongles users” and not for smartphones,  maybe until Q2 2011.


Additionally,  AT&T needs to also consider deploying LTE in rural markets too as the 700MHz spectrum offers exceptional coverage. The other advantage being data usage patterns in rural markets is relatively low compared to urban techno savvy population, with no imminent threat for network crumbling down and at the same time it will save cost/bit/user with light to moderate consumption. If everything workd fine, might get some aid from Federal Government under Rural Broadband Development program.

So everything boils down to the timing and selection of right markets for rolling out LTE networks to maintain the mindshare and not lose subscribers to the competition’s advance networks. The only disadvantage will be the massive drop in the speed and thus subscriber’s experience  traversing between HSPA 7.2 and high speed LTE network.


Option III: HSPA+in 2010-2011 and LTE in early 2011



AT&T 3G 4G LTE Roadmap solution

AT&T might also have an option to go ahead with a two pronged strategy in deploying HSPA+ and LTE simultaneously starting early 2011, selecting specific markets for each of the  deployments. The benefit would also be two-fold, preserving the user experience as well as the mindshare. The only disadvantage being the cost of simultaneous rollouts, but in  long term scenario this offers to be  the best case solution  and somewhat similar to “agile development” concept in programming world.


AT&T with its huge  network intelligence data and the “iPhone-data-carnage-experience” is better positioned to decide which market has the highest data hungry devices penetration (iPhone, iPad) and play the cards accordingly. Subscriber’s data usage behavior,  service expectations and pocket size should be other good indicators for the operator to map which solution should be deployed in a particular market (HSPA+ or LTE).


Recommendations


To summarize, US market is positioned well ahead in deploying NGN with aggressive push from Tier I as well as Tier II operators.


As all eyes are on AT&T’s NGN roadmap, I would recommend that, AT&T with the amount of spectrum, resources and scale it has, the US’s second largest operator should go ahead with option I,  deploying HSPA+ network in 2010 and continue it till 2011 and start rolling out LTE in 2012. The operator can also adopt option III  to be extremely  aggressive and flatten the competition.  Option II is not recommended in such a dynamic and fast growing market like North America from subscriber’s user experience perspective too….


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