LTE won’t be economically viable in UK until 2015

16 Nov 2010

It won’t be economically viable to upgrade current UK mobile broadband networks to Long Term Evolution (LTE) to address traffic demands and improve user experience until 2015, analysts claim.

Due to the dense deployment needed to meet coverage requirements, UK HSPA networks will be able to handle current and future traffic demands in the medium-term, Informa Telecoms & Media said.

Informa does not expect traffic congestion to start appearing until 2013 and even then only in certain hotspot areas.

As such, large-scale LTE deployments do not offer an economically viable solution to meet traffic demand, unless user behaviour changes significantly, putting additional strain on mobile broadband networks.

“UK mobile broadband operators are faced with fierce competition while margins from voice are shrinking,” Dimitris Mavrakis, a senior analyst for Informa Telecoms & Media explained.

“Even though there is growing demand for mobile data by smartphones and USB modems, current UK mobile network deployments are so dense that it would make the introduction of LTE both an investment heavy and somewhat unjustifiable decision.

“By upgrading current HSPA networks, UK mobile operators will be able to meet traffic demands and alleviate capacity constraints until 2015, after which the upgrade to LTE may be justifiable since economies of scale for hardware will have reduced infrastructure costs. Plus, a complete LTE ecosystem will be established, including handsets and portable devices,” Mavrakis said.

LTE deployment costs

Informa estimates that a new LTE deployment will cost an additional US$58m compared to upgrading existing networks, assuming that the LTE deployment begins during 2013.

The cost of each gigabyte (cost/GB) of traffic on the network is US$6.5 during 2011, gradually declining to less than US$2 during 2015. Given that network deployment is primarily coverage driven and networks are densely deployed, there is significant unused capacity in the network throughout the forecast period, increasing cost/GB above average values.

Informa has developed a mobile broadband network planning tool that allows modelling of mobile broadband networks in order to calculate Total Cost of Ownership (TCO) and cost to transfer a GB (cost/GB) over the mobile broadband network.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years