LTE promises remain unfulfilled

Arete Research
07 Feb 2012

After being positioned as the next big technology platform, LTE's promise of providing new revenue streams at non-prohibitive costs have remained largely unfulfilled. According to a study by Arete Research, the expected gains from LTE have yet to materialize.

In a study titled “LTE: Less transformative than expected,”Arete Research analysts Richard Kramer and Alban Cousin related that since the LTE hype started three years ago, deployment had been slow and sparse, handset rollouts are only just beginning in volumes and the “revolution” and “transformation” that was expected to take place in the market has been delayed by many practical technical challenges, as well as business model questions.

LTE deployment is fueled largely by market-specific reasons, notably spectrum and the sophistication of the user base. In markets where there had been actual rollouts, operators are adopting LTE by moving to single radio access networks (RANs), mainly as a way to make more efficient use of their limited spectrum, and to limit the overall opex costs of their networks. Single RAN makes moving to LTE cheaper and easier, and obviates the need for a grand overlay strategy

Operators that were initially excited about the prospects for LTE have take their time in rethinking strategies, resetting pricing structures and ending unlimited plans. While LTE promised better use of spectrum and, in effect, room for more revenue-generating offerings, handsets supporting the technology had been slow to hit the market. Currently available LTE-enabled devices remain confined to high price tiers

LTE was initially promoted as a platform that would allow operators to engage in “new business models” based on faster data speeds, similar to how 3G was positioned several years ago. Its main selling points were lower latency, enabling faster loading of websites and videos, and faster peak data speeds for better media streaming.

Operators could only capitalize on these benefits, however, if there were enough handsets available in the market to bring such perks to consumers. At this point, the LTE promise for operators could only materialize and hit its full potential when prices of chipsets and consumer electronic devices supporting the technology fall sharply, something that is more likely to come in 2013 or beyond.

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