Technical challenges with LTE mean broad acceptance eight years away

LTE (Long Term Evolution) is considered by some the Holy Grail for CDMA carriers anxious to upgrade to high-capacity next-generation networks. But, as analysts warn, ongoing technical challenges, uncertainties surrounding Nortel Networks Corp. and billions of dollars in new capital investments could make LTE too little, too late and far too expensive.LTE (3GPP Release 8) is supposed to be ratified by December, though there may be a delay. The standard will feature downlink peak rates of 100Mbps, and uplinks at 50 Mbps, as well as flexible bandwidth and frequency support. What makes LTE so attractive to CDMA carriers is that it supports connections to existing GSM, CDMA and high speed packet access (HSPA) networks."CDMA is near the end of its evolutionary path," Alan Nogee, a principal analyst at communications' research firm In-Stat, tells Report on Wireless. "But LTE will cost billions. The RF base station is completely different. The stations, the transmitter cards - this is not a trivial upgrade."Daryl Schooler, a senior analyst at In-Stat, notes concerns about backhaul as well as other matters continue to dog LTE. "There are a lot of links of the chain that have to line up, including bandwidth and handsets. However, it's true that the carriers are coalescing around LTE," he says.While Telus Corp. prepares for its eventual migration to LTE - CFO Bob Macfarlane highlighted this in a recent presentation at the BMO Capital Markets Media and Telecom Conference on September 9 - Bell Canada has yet to make its technology migration plan public. Meanwhile, there is less pressure on a GSM carrier like Rogers Communications that has invested in HSPA."HSPA has a migration path right up to the bottom of LTE speed," says Ian Grant, managing director at the telecom consultancy Seaboard Group. As a result, the potential customers are really the CDMA operators that don't have a migration path to HSPA."How much time do the CDMA operators have?"CDMA now has a direct and one step evolution path," says Maniam Palanivelu, senior manager, global CDMA and LTE marketing for Nortel. "The CDMA guys can put bandwidth on new overlay networks, and at some point - in 2015 or so, when LTE is a normal part of everyone's life - the cost of keeping a CDMA chipset will be minimal, and the old CDMA network will be kept for things like 911."The handset is an important part of the equation. At the end of August Nortel and LG Electronics announced that they were the first to demonstrate mobile LTE handover. Nortel engineers in Ottawa showed streaming HD video on an early LTE mobile device from LG while driving 100 kilometres per hour between coverage sites. The problem is that manufacturers like Nortel and Siemens AG, which has also had some successful LTE tests, may show up with gear that no-one is ready to buy."On the handset side Ericsson is doing trials as well," says Nogee. The problem is that, ideally, everyone - handset makers, gear manufacturers, and operators - should hit the market at the same time, but it is not happening with LTE."At first we were supposed to get the gear in 2010-2011," adds Nogee. "Now it looks like 2013-2014. Then, though the equipment will be ready, will the demand be there? Operators need to believe that it will save them money; it will take both time and money to install. Sometimes first-mover status is good, sometimes not so good. Some operators still have to make their money back from 3G expenses, and the performance shift from 3G to 4G isn't as big as from 2G to 3G. We are beginning to hit the laws of physics."Maniam Palanivelu from Nortel contends the performance improvements on LTE are significant enough to drive demand."LTE MIMO can adapt itself for better performance at the edge of the network," he says. "It can double or quadruple bandwidth - this gives service providers more breadth."Palanivelu says that for the balance of this year and into 2009 the focus will be on the device level for commercial form factors for data cards, USB drives, and PC cards. Despite the recent trial LG hasn't committed on the chip-side."Today LG doesn't make chip sets for CDMA or GSM," says Palanivelu. "They only make the final devices. For LTE they need to understand what the device battery and lay-out requirements are. They want to get a full understanding before everyone else."In fact, Nortel might drop out of the LTE business and OEM its technology. CEO Mike Zafirovski alluded to this possibility in a conference call recently, suggesting that the company was not in a strong enough position to go head-to-head against multiple competitors."LTE is eight years away, and that scares Mike Z," says Grant. "We all want Nortel to survive - it's a Canadian icon - but the path forward isn't clear."The time-line, it seems, is just too long, and the pay-off not good enough. The CDMA carriers may also find that LTE is too little, too late, for too much money."Right now," says Schooler, "LTE is firmly in the hype-cycle, and a lot can happen in eight years."

Technical challenges with LTE mean broad acceptance eight years away

News | September 24, 2008

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