September 18, 2014 — LTE has moved from the operator deployment to the subscriber adoption phase with 320 commercial 4G LTE networks operating in 111 countries and LTE users projected to grow from 127 million to nearly 200 million by year-end 2016, according to Berge Ayvazian, UBM analyst, who spoke at the 4G World/Tower and Small Cell Summit opening plenary session last week.
“Carriers today face the challenge of keeping up with data traffic growth and with the demands of consumers and subscribers, while also getting a return on their investment into 4G,” he said. “The paradigm is to build, operate, monetize and then evolve the networks for the future.”
From Deployment to Operations
U.S. carriers are in various stages of completing their initial 4G LTE rollouts, with Verizon (308 mm LTE pops) and AT&T (300 mm LTE pops) leading the way. Sprint is coming to the end of its rip-and-replace Network Vision deployment at year-end, with 254 million LTE pops. T-Mobile has plans to cover 280 million pops by mid-2015. Tower companies report a gradual increase in collocations and new towers versus modifications of existing towers as carriers complete LTE rollouts and seek to densify certain areas.
“We are moving from the infrastructure deployment phase to the subscriber adoption phase,” Ayvazian said. “Why do we care about the transition from deployment to adoption? It is about the change in behavior. LTE users use considerably more data than their 3G counterparts – not just in America but around the world.”
Monetizing LTE Takes Many Shapes
Carriers are monetizing their mobile networks through a number of avenues, including advertising, premium content/apps, consumer and business cloud services and location services. A Maravedis-Rethink operator survey projects that business cloud services will grow the most at more than 20 percent of additional revenue by 2018.
“Users are moving toward app-centric and content-centric activity data traffic, fueling unbridled growth that the carriers are having to address,” Ayvazian said.
To date, the focus has been on advertising and location awareness, but by 2018, context-aware business services will be leading, according to Caroline Gabriel, research director, Maravedis-Rethink, who spoke at 4G World. Ayvazian noted that the 30 percent adoption rate of 4G LTE has triggered the service providers’ drive to develop new revenue streams from subscribers, but not without some difficulty.
“With the current 4G price wars, operators cannot generate incremental revenues from data usage,” Ayvazian told AGL Link.
Service providers need more information on the data consumption across their networks pertaining to content [such as music, video, messaging, social media and VoLTE services] in order to properly monetize their digital service offering and gauge the popularity of various data packages, according to Ayvazian.
“I think the OTTs are the only ones currently making money on 4G LTE, such as Google via advertising, Amazon via shopping, Netflix via video downloading. I don’t expect that to change anytime soon,” he said.
Evolution – the Network Never Rests
Concerning network evolution, 4G networks will evolve in the future with respect to managing traffic growth, optimizing video content, improving indoor coverage and deploying virtualization, Ayvazian said.
“All the elements are now being implemented for LTE Advanced, including MIMO, SON, carrier aggregation and COMP,” he said. “The deployment of small cells, Wi-Fi offload and cloud RAN will all drive network densification and RAN virtualization –– [all of which will increase the need for backhaul].”
Core network virtualization and the cloud will be key components of future networks, according to Ayvazian, including the use of content delivery networks at the network edge to serve end-users with high availability and high performance.