LTE: What happened and what's next

Value Partners analysts and John C. Tanner
12 Sep 2012

It's been over two years now since TeliaSonera announced the world's first LTE commercial deployment. Since that time, more than 50 LTE networks have been launched around the world, with another 300 planned for launch in the next two to three years.

(To put the latter number in perspective, consider that at the start of this year, only 40 new deployments had been announced in the same timeframe.) Almost half of all the operators in the world are going to have LTE networks by 2015.

Naturally, operators committed to launching LTE in the next few years are interested in the experience of the first-movers - not just in terms of the technical challenges involved, but also how to bring LTE services to market, how successful they've been so far, the challenges they've faced and what they've learned in the process.

We have examined the positioning strategies of the top LTE operators by subscriber base over the last two years, and have documented some key trends in LTE service deployments.

For a start, LTE penetration trend is consistent with that for 3G, with most operators at 0.2-4% subscriber penetration in the initial two years.

Also, LTE services are typically marketed at roughly a 40% markup over the most expensive 3G plan as a premium speed offering with a lower price per GB, aimed at high-end users. That said, for some operators - notably in the US - there is no differentiation between LTE or 3G plans. LTE access is based on device and coverage availability and data plans are tiered by volume.

We've also observed that most operators have positioned LTE as an opportunity to change their business models - e.g., to migrate from unlimited plans to tiered service packages, or to market LTE as a replacement for fixed broadband (i.e. DSL), to offer IPTV, etc. However, offloading and replacement objectives have not yet been met due to the low take up of LTE.

And in terms of devices, we've seen various LTE devices offered, ranging from smartphones and tablets to dongles and mobile hotspots. Smartphones and tablets are seen to be key drivers for LTE as they are likely to become affordable much sooner than they did during the 3G era.

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