Carriers and pundits must move beyond speed battles to achieve more of the potential benefits available from commercial deployments of long term evolution (LTE) mobile networks, Ericsson has urged.
The fourth generation successor to 3G and HSPA networks is currently being trialled by all major Australian carriers, as well as WiMAX service provider vividwireless and utility EnergyAustralia, with hopes it will provide a future proof technology for both data and voice networks. While the technology offers advantages such as an all-IP, self-organising network, benefits currently trumpeted by pundits have largely focussed on the ability to utilise speeds of up to 150 megabits per second (Mbps) in trials and 3 gigabits per second (Gbps) once the technology is fully capable.
“I guess in Australia we’ve probably had a bias toward looking at mobile broadband evolution being a speed-based game, particularly Telstra leading the market with evolution from the original HSPA to 21 and 42 [megabits per second],” Ericsson strategic marketing general manager, Kursten Leins, said. “That leads us to automatically assume in many cases that LTE will be more of the same.
“Some look at the speed game, others look at pure cost efficiency - how can they deliver the lower cost per bit and therefore have a price advantage over competitors.”
Carriers have continued to struggle with decreasing average revenue per user (ARPU), compounded by increasing data consumption from subscribers. Ericsson estimates indicate Australian broadband use for increase eight or even ten-fold in the next five to ten years, while revenue is only likely to increase by 25 per cent in the same timeframe.
Both Telstra and Vodafone Hutchison Australia reported declines in ARPU of 22 per cent and 14.6 per cent respectively across the 2010 financial year, drops Telstra cited as indications of increasing moves toward prepaid plans.
Optus, however, reported continued increases of 6 per cent in ARPU for its mobile broadband subscribers across 2009/2010.
Ericsson strategic marketing manager, Warren Chaisatien, said the vendor had been working closely with carriers to address the issue of declining revenue, but argued innovation was necessary to prevent further losses.
New business models would also be required, Chaisatien said, moving beyond merely ‘bucket plans’ encompassing speed and data-based pricing to focus more on additional features such as exclusive content and different capabilities.
Ericsson’s vision has so far carried weight with commercial deployments in the US, where competing carriers Verizon and MetroPCS have utilised their rollouts to capitalise on multimedia offerings and improved reception, rather than upgrading existing capabilities.
Verizon hopes to achieve nationwide coverage with the network by 2013, but its introduction of bucket plans are a marked departure from the unlimited plans usually offered over both fixed line and wireless broadband. Though currently data-only, the network will also provide a test base for future use of IP Multimedia Subsystems (IMS) over voice calls over LTE.
However, Chaisatien’s comments come into conflict with European carriers which so far have relied on traditional business models of speed and data to encourage adoption.
Northern European carrier, TeliaSonera, deployed one of the first commercial networks and currently offers data-only LTE dongles in four countries on the continent. Its plans are currently tiered based on speeds of between six and 80Mbps, with backwards compatibility over 3G networks for lower end models. The “Total 4G” plan offers 30 gigabytes of data for 599 Swedish Krona ($AUD88 at time of writing).
German branches of carriers T-Mobile and Vodafone have also begun launching their own LTE networks, with country regulation stipulating rural and regional homes are given first priority. Here, too, plans are largely speed-based, with Vodafone’s plans expected to cost €72.50 ($AUD97.50 at time of writing) for 30GB of data at speeds of up to 50Mbps.
“Don’t automatically assume it’s all about speed,” Leins said. “It’s one benefit, but it’s not necessarily the prime driver.”
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