Research: Three Tactics For Winning The LTE Game

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Three Tactics for Winning the LTE Game

Addressing the Challenges Nadine Manjaro
Senior Analyst, Mobile Networks
Executive Summary
Operators are beginning their move to LTE, evolving their business models to achieve exciting new
services and improved financial results. While LTE offers new opportunities in service capabilities,
significantly improved data rates, and latency performance, it also brings business and operational
challenges. Operators will need strong vendor partners to help separate the hype around LTE from the
real challenges of understanding and deploying this new technology. This research brief will highlight
three tactics for wining the LTE game: (1) efficient deployment, (2) smooth integration, and
(3) optimal operations and management execution.
LTE deployment will require large upfront investments, starting with the costs of acquiring spectrum,
followed by network planning and deployment, service development, customer migration, marketing, and
other transformation expenses. Backhaul, real estate, and service delivery expenditure are also three
major cost components that should be carefully planned. Operators will have to develop a detailed
end-to-end migration strategy to minimize their costs.
Operators will need assistance in developing revenue-generating services as well as strategies for
provisioning and billing for these services. Without a thorough understanding of these issues and a
strategy for addressing them, operators will face delays and frustration. Strong vendor partners are
essential to minimize the risks of migrating to LTE by bringing together the required ecosystem to develop
and deploy new services and service combinations. Leading network equipment vendors have proven
experience in managing the transformation of multi-technology, multi-vendor networks and can assist
operators in navigating these challenges.
This research brief provides an overview of the current LTE market and addresses the technical and
business challenges that operators will face as they migrate to all-IP networks. It provides insight into
operators’ common questions and helps them address the following:
• How do we effectively plan for and design the networks to mitigate risks or uncertainties?
• How do we implement our end-to-end networks most efficiently with the least disruption and the
lowest cost?
• How do we concurrently manage and operate both the new networks and the legacy networks and
how do we decommission the legacy networks over time?
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Table of Contents
Section 1.LTE INTRODUCTION............................................................................................................................................ 3
1.1 What Is LTE? ................................................................................................................................................................... 3
1.2 Provider LTE Intentions ................................................................................................................................................... 4
1.3 LTE Equipment and Services Market Forecast ............................................................................................................... 6
1.4 Business and Convergence Uncertainty ......................................................................................................................... 8
Section 2.Factors for Implementing LTE Efficiently............................................................................................................. 10

2.1 Network Architecture for LTE......................................................................................................................................... 10
2.2 Migration and Transformation Considerations............................................................................................................... 11
2.3 Criteria for Selecting Network and IT Vendors .............................................................................................................. 12
Section 3.Network Deployment Planning and Design: How to Mitigate Uncertainties........................................................ 14

3.1 Spectrum Requirement and Costs................................................................................................................................. 15
3.2 Cell Site Selection.......................................................................................................................................................... 16
3.3 Backhaul Changes......................................................................................................................................................... 16
3.4 RF Planning ................................................................................................................................................................... 17
3.5 Network Deployment Costs ........................................................................................................................................... 17
3.6 Real Estate and Cell Site Reuse Strategy..................................................................................................................... 18
3.7 Network Equipment Reuse ............................................................................................................................................ 18
3.8 2G and 3G Integration ................................................................................................................................................... 19
3.9 Network Security Assessment and Planning................................................................................................................. 19
3.10Implementing IMS and RCS ......................................................................................................................................... 20
Section 4.MANAGING AND OPERATING THE NEW NETWORK ..................................................................................... 20

4.1 Operational with Excellence .......................................................................................................................................... 20
4.2 Managed Services ......................................................................................................................................................... 21
4.3 Leveraging an LTE Ecosystem...................................................................................................................................... 22
Section 5.SUMMARY .......................................................................................................................................................... 24
Section 6.REFERENCES .................................................................................................................................................... 24
© 2009 ABI Research • abiresearch.com 2

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Section 1. LTE INTRODUCTION

The era of LTE (Long Term Evolution), is upon us, providing faster bit rates and
more capacity for an increasingly wide mix of mobile services. Always-on and
high bandwidth mobile services will now be possible with ubiquitous coverage.
This introduction explains LTE basics and the current market trends for
deployment timelines, and describes some of the go-to-market challenges that
may slow widespread use.
1.1 What Is LTE?

To improve the 3G mobile phone standard so that it can cope with future technology
evolutions and faster data service needs, the 3GPP (Third Generation Partnership
Project) created a project known as 3GPP LTE. The objective is improving spectral
efficiency, lowering costs, improving services, making use of new spectrum and re-
allocated spectrum opportunities, and integration with a host of open standards,
including those related to Internet Protocol.
The LTE air interface is part of the specification in Release 8. Although an evolution
of the UMTS flavor of 3G, the LTE air interface is a completely new system based on
OFDMA (Orthogonal Frequency-Division Multiple Access) in the downlink and SC-
FDMA (Single-Carrier Frequency-Division Multiple Access) (DFTS-FDMA) in the
uplink that efficiently supports Multi-Antenna Technologies. The architecture resulting
from this work is called EPS (Evolved Packet System) and comprises
E-UTRAN (Evolved UMTS Terrestrial Radio Access Network) on the access side and
EPC (Evolved Packet Core) on the core side.
With LTE, a new range of mobile services will be possible because of faster access
and upload speeds and lower cost per bit of traffic to operate; 1 Mbps of data
delivered over LTE will cost one-fifth less than delivering 1 Mbps of data over UMTS.
The advent of LTE will enable new services ranging from more mobile multimedia to
e-health to machine-to-machine applications. Handsets with ever-improving OS and
applications, dongles, and other new end devices will also be part of the equation.
Technical benefits of LTE can be derived from both changes in the air interface and
all-IP e2e networks, and enhanced by configurations with more antennas.
LTE characteristics include:
• Significantly increased downlink and uplink peak data rates and spectral efficiency over
3G with peak data rates up to 50 Mbs up and 100 Mbs down for 20 MHz of spectrum.
• Scalable user bandwidth from 1.4 MHz to 20 MHz in both the uplink and the downlink
• Less than 10 ms latency for small-size IP packets
• Optimized performance for slow mobile speeds of 0 to 15 km/h; supported with
high performance from 15 km/h to 120 km/h; usable from 120 km/h to 350 km/h
• Co-existence with legacy standards while evolving toward an all-IP network
All of these technical characteristics have similar goals in terms of improving spectral
efficiency, with the widest bandwidth systems providing the highest single-user data
rates. Spectral efficiencies are achieved primarily through the use of strong, higher
order modulation schemes and multi-antenna technology that ranges from basic
transmit-and-receive diversity to the more advanced MIMO spatial diversity. The LTE

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specification also presupposes a strong all-IP network, and essentially redefines

wireless network services beyond one or two ad hoc voice and data services to a new
business reality of always-on location-agnostic services.
1.2 Provider LTE Intentions

More than twenty-five global operators have announced plans to deploy LTE. In fact,
operators took the lead in developing LTE in contrast to other wireless technologies
where the OEMs and chipset vendors led efforts. In September 2006, several
operators (Sprint Nextel, China Mobile, Vodafone, Orange, T-Mobile International,
KPN Mobile, and NTT DoCoMo) formed a limited liability company called the NGMN
(Next Generation Mobile Networks) Alliance. Subsequently, NGMN defined the high
level requirements for all next-generation broadband wireless networks including LTE.
These requirements, around which LTE was developed, are incorporated into the
3GPP Release 8 standard.
Even though operators were able to define many of the key features of LTE through
participation in NGMN, this does not eliminate the challenges that arise with the
deployment of any new technology. These challenges include detailed planning for
the new network and seamlessly integrating it with the existing network. In addition,
operators will need business plans, services, and an ecosystem of partners to recoup
their investments in deploying LTE. A map of many of the confirmed LTE adopters
appears in Figure 1.1, page 5. According to 3G Americas, more than 80% of the
world’s wireless operators will adopt LTE over time. The one uncertainty is the exact
time frame for operators to migrate to the technology

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Figure 1.1 Operators Deploying LTE
(Source: ABI Research)

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1.3 LTE Equipment and Services Market Forecast

The market for LTE equipment and services will grow solidly over the next few years.
Equipment growth will come from new and updated bases stations, antennas, and
feeders, and traditional and alternative power. Services and life-cycle costs will
include transport, civil works, and real estate.
The eNodeB, which is the LTE name for the base station, is the key element in the
LTE RAN (Radio Access Network) architecture. For new mobile broadband cell sites
in Europe and North America, Heavy Reading found base stations to be less than
25% of total costs now, because other life-cycle costs are rising. 1
ABI Research’s forecast for global shipments of LTE base stations is approximately
11,672 units in 2009, growing to over 615,000 by 2013. CDMA operators, such as
Verizon Wireless, are expected to launch LTE first, while UMTS/HSPA operators will
follow suit shortly thereafter. CDMA operators will deploy LTE to remain competitive
with UMTS/HSPA operators, who can scale their networks to reach more than
42 Mbps in the downlink and over 11.5 Mbps in the uplink in a 5 MHz FDD
(Frequency Division Duplex) carrier. CDMA is currently limited to 3.1 Mbps in the
downlink and 1.8 Mbps in the uplink in a 1.25 MHz FDD carrier. However, operators
with legacy 3GPP networks will quickly surpass CDMA operators in deploying LTE,
since LTE is the evolution of current 3GPP standards. Most LTE deployments will
be derived from those providers upgrading their existing 3GPP networks and others
migrating to 3GPP standards for their fourth generation networks. Chart 1.1 depicts
the LTE base station shipment forecast.
Chart 1.1 LTE Base Station Shipments: 2009 to 2013 (Cumulative Number of Base Stations)
700
600
500
400
(000)
300
200
100
0
2009 2010 2011 2012 2013
CDMA2000.1X.EVDO.RevA.B.CDMA-LTE UMTS.HSDPA.HSUPA.HSPA+.LTE Total
1
LTE Base Station & the Evolved Radio Access Network”, Vol. 6, No. 16, Heavy Reading,
December 2008.

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Chart 1.2 LTE End User Market Forecast for 2010 to 2014 (Number of subscribers around the
world)
250,000,000
200,000,000
Number of Subscribers
150,000,000
100,000,000
50,000,000
0
2009 2010 2011 2012 2013 2014
WE EE AP NA SA ME AF Total
ABI Research estimates that the ARPU (Average Revenue per User) for LTE will
be close to the $55 to $60 range, based on the assumption that LTE will begin with
data devices, PC cards, USB dongles, and embedded laptop modules. LTE ARPU
calculations will use only LTE subscribers, not the blended averages used by
wireless operators today. Initial LTE devices will be data–only, unlike 3G, which
includes PDAs and handsets. This will limit the overall ARPU since voice ARPU is
the highest portion of overall wireless ARPU and voice will not be included.
Over the next five years, LTE services will expand beyond 3G to leverage the higher
capacity, low latency features of the technology. During this time, handsets and PDAs
will become available in the market. Operators will also begin to migrate voice
services to LTE, which will significantly increase the ARPU to a level close to that of
overall wireless. Today, most of the wireless ARPU is attributed to voice, but data
ARPU is capturing a larger percentage year-over-year.
LTE revenue will be derived from multiple services including some that exist today.
Operators with fixed-line networks will include mobile, fixed, and nomadic services while
pure wireless operators will focus on mobility and personalized solutions. Some of the
basic services will include mobile broadband connectivity through USB dongles, PC
cards, embedded laptop modules, and home gateways. Other services will include:
• Expansion of e-health services with remote monitoring, diagnostic, and imaging

capabilities
• Machine-to-machine communication
• Digital signage

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• Mobile advertising
• In-vehicle video and audio services
• Personalized services combining location, preferences, presence, and address
book information.
Several factors will lead to differentiated LTE services, including open network and
open devices, which were mandated as a part of the 700 MHz
C-block requirements. This requirement will spur third-party development. In
addition, the completion of RCS (Rich Communication Suite) specifications will
enable device–to-network IMS capabilities that were not previously present.
Efforts by vendors and operators to formalize the service development ecosystem
will also lead to innovations.
1.4 Business and Convergence Uncertainty

Even with all of this potential, a number of challenges remain. These include:
• Developing the right service mix with good price/value parameters

• Viable overall business case
• Dealing with first mover issues
• Successful integration with powerful and creative industry partners
Business cases are typically structured around profitability and risk over a given
set of years. So, in addition to reducing and managing costs, operators must
focus on developing new revenue streams. Next-generation services will include
existing 3G services with improved latency and higher data rates. However, this
will not be enough to persuade many customers to purchase new devices or pay
more for these services.
LTE will enable delivery of voice as an IP service at a lower cost. However, operators
will need assistance with leveraging their improved capability to offer new services for
which customers are willing to pay.
The first operators with commercial LTE deployment will face challenges including:
lack of precedent in addressing potential issues with the technology or equipment; and
higher equipment costs due to lack of scale in early deployments. LTE first movers
will also bear a sizeable portion of the initial testing burden since test facilities may not
yet be in place. Nonetheless, they can leverage large IP laboratories from vendors
such as Alcatel-Lucent’s network of IP transformation centers, and learning from
major IP transformation programs already underway involving MPLS, IMS,
multimedia, and other all-IP efforts. Leaders in LTE deployment will need a strong
ecosystem of vendors working cooperatively to address issues as they arise.
Otherwise, the operators will face delays and performance problems as the new
networks are deployed.
Choosing strong vendor partners is more critical now than ever. Operators want to
ensure the long-term viability of their vendor partners. Vendors will need to continue
R&D investment to improve product performance and reduce equipment costs. ABI
Research studies show that the leading infrastructure vendors spend an average of $4
billion to $5 billion annually on R&D. Therefore, vendors’ financial viability is a vital
part of the decision criteria.

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In addition, changes in business plans may require vendors to absorb some of the
development costs and participate in revenue-sharing to reduce operators’ risks.
Over time, the equipment vendors, software and content partners, and integrator roles
will evolve and become more interwoven into the management and running of the
operators’ networks. Operators will choose vendors with expertise in managing and
administering multi-vendor, multi-technology networks, which will lead to more
cooperation and coordination among vendors.
There are uncertainties about which services will gain traction and which will fail.
IMS-enabled architecture helps reduce the risk and costs of testing and deploying new
services. The IMS framework also supports open network, device, and application
initiatives that will spur the development of new applications and services. In addition,
the completion of RCS standards in 2009 will increase IMS-capable device availability,
which will enhance unified communication across networks, devices, and platforms.
A recent ABI Research report shows that IMS deployment is increasing in mobile
networks. LTE deployments will expand IMS adoption since IMS is a fundamental
part of the architecture. Completion of RCS standards and adoption by the GSM
Association will increase the availability of IMS-capable devices. A combination of
these factors will help reduce operators’ risks in planning and deploying new services.
In summary, meeting challenges ranging from business case analysis to

converged networking demands tight industry cooperation and strong business
management. Providers around the globe are moving ahead with LTE and this will
result in a new world of mobility for subscribers. LTE is more than just capacity or
cost; it has the potential to redefine what the mobile communications business can
do for society, and how providers go to market with their solutions and partners.
The following will examine in more detail three factors to ensure the successful
delivery of the true 4G promise.

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Section 2. FACTORS FOR IMPLEMENTING LTE EFFICIENTLY

ABI Research believes that several factors will determine how quickly a provider can
launch and profit from rolling out 4G:
• Architecture choices
• Timeline
• Vendor partners management
The transformation from the current network to LTE will require detailed planning,
regardless of currently deployed technology or vendor partners. Operators will need a
systematic approach to simplify the complexity and to optimize the manageability and
predictability of the network and service migration. This will require a thorough
understanding of existing networks, services deployed, subscribers, service-level
agreements, and present mode of operation. Thorough understanding of the future
architecture is also required to evaluate various options and stages for reaching the
LTE architecture.
Operators will develop the networks in stages to minimize any impact on their existing
customer bases and services. Will operators leverage existing network elements to
support LTE or will they deploy a complete overlay network? Network transformation
planning will address all of these questions and outline various options along with any
financial, service, and subscriber impact for each option. The operator can then select
the option that best meets service delivery and timeline goals.
2.1 Network Architecture for LTE

At the onset, the move to LTE raises many strategic questions in terms of network
architecture and an implementation timeline. A typical transformation will take a
detailed analysis of the current network layers (see Figure 2.1) and define the impact
to each layer during the transformation process as well as the end result.
The downturn in the global economy has not seriously impacted operators’ plans
to roll out LTE. In fact, LTE deployment and 3G upgrade in the Asia-Pacific region
will provide the most opportunities for equipment vendors in 2009. Two early
movers in LTE deployments will be Verizon Wireless in North America and
NTT DoCoMo in Asia.

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Figure 2.1 Network Layers
LTE
Current Technology 8
Layers
Services MM
OSS/BSS OSS/BSS
Mgmt Mgmt
subDB HSS
Call Control IMS
Core MPLS
Backhaul Ether/IP
RAN LTE/UMTS
UE UE
Operators will analyze each layer, starting with the device or end user equipment of the
application or services layer. For example, operators will need to understand the new
devices introduced by LTE and whether they will work on their current networks. Does
the device need to support multi-mode capabilities? If so, what are the different price
points? How will device changes impact business models? Should the new devices be
subsidized? Will existing billing systems require modification to support the new
devices? What sort of device testing needs to take place?
Next, the operator will address similar questions about the RAN (Radio Access
Network). What are the proposed changes to the RAN? How will this impact the
existing RAN? Can any of the existing equipment be reused to reduce costs? What
are the risks associated with leveraging the existing equipment? What are the
benefits? Are the existing base stations upgradeable to support LTE? The operator
will continue this Q&A exercise for each layer.
2.2 Migration and Transformation Considerations

Timeline and process considerations also need to be examined in the move to LTE.
Questions include:
• Device availability and offer plan

• Data vs. voice and data early introduction
• Data vs. voice-only
• Urban density needs
• 2G and 3G overlay roadmaps
• Hybrid service plans

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Addressing these questions is just one of the steps in the end-to-end methodology for
systematic IP transformation. The overall transformation includes a well-defined,
process-driven, and technically focused plan with firm guidelines. Answering
questions about the current networks and proposed LTE architecture will enable
operators to define migration strategy and the specific tasks to be completed each
step of the way. The process ensures that the financial and network impact resulting
from each task is clearly understood by all parties involved, reducing risks and
increasing predictability.
A vendor with proven leadership in IP and wireless transformation can help operators
address these questions and provide the structure needed to manage each stage of
the migration to an all-IP network. This will require tighter integration between mobile
networks and fixed networks to ensure end-to-end QoS required to support LTE real-
time services. In addition, traditional fixed-to-wireless convergence will drive further
integration and require vendors with cross-network expertise.
In planning LTE deployments, operators also have to consider future migration plans.
They have to deploy networks with flexibility to grow as bandwidth demand increases
and end-user requirements change. Detailed plans will include transition from the
current 3G networks to LTE and considerations regarding LTE Advanced. LTE
Advanced is not fully defined, so operators must plan around high level requirements
developed by the NGMN Alliance.
In terms of integration and migration, functional, load, and regression testing involving
eNodeBs, MME, S-GW, femtocell, several IP backhaul technologies, applications, and
devices must be accomplished professionally and with program management best
practices. Additional integration and migration planning must consider in-building
(towers, tunnels, residential, stadiums, and so forth) and long-range radio planning,
IPV6 migration, subscriber management, and systems and applications integration
and migration. Systems and application integration and feature testing are not limited
now to OSS fulfillment and assurance, but extend to billing, CRM, mediation,
web services, and device management.
2.3 Criteria for Selecting Network and IT Vendors

In order to move to LTE quickly, providers most line up network and IT integrators who
can work well in partnership mode. The reason: more and more applications and
services will be intertwined forcing operators to take on holistic management roles.
An end-to-end network and services solution provider understands the challenges that
operators face when deploying new networks. The company can act as a partner and
guide the operator in planning, designing, implementing, and managing the new
network, while also maintaining the existing network so the operator can focus on the
new network or vice versa. The end-to-end provider understands the business
beyond deploying the physical network and can assist the operator in defining and
developing this business plan.

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Some of the services provided by an end-to-end network and service integration firm
include:
• Strategic execution with business case development to determine technical and

business roadmaps.
• Proof-of-concept development, testing, and implementation for new applications,
new devices, and new service combinations.
• Ecosystem partner development program to bring the right teams together to
assist the operator in deploying new services.
• Assessment services for the selection of network, power, and real-estate options,
and cost models.
• Business and pricing tactics to create the right service mixes and blends to
monetize the network.
• Manage LTE migration with an emphasis on service continuity and integration with
existing 2G/3G networks.
• Manage transformation to a service-oriented, all-IP mobile network including IP
backhaul and an EPC (Evolved Packet Core) in harmony with existing services.
A true end-to-end solution company connects with the operator to either directly or
indirectly meet its needs through alignment with key industry partners. Such partners
will act as a central point of contact to coordinate all resources needed by the operator
to successfully deploy LTE.
Starting with strategy and advanced integration services, solution vendors must offer
expertise in a range of wireless and IP domains including mobile backhaul, in-building,
and applications and service delivery. In the present mode of operation, vendors
provide equipment, implementation capabilities, and some level of integration. Starter
services are typically related to network deployment and management; increasingly,
equipment vendors are adding valuable business consulting and complex integration
services, and in many cases, managed services. A true end-to-end telecom solution
company provides services beyond those directly related to the network, assisting with
business planning, service creation, and revenue generation.

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Section 3. NETWORK DEPLOYMENT PLANNING AND DESIGN: HOW TO

MITIGATE UNCERTAINTIES
The LTE network will vary from legacy technologies due to its all-IP architecture. This
architectural change may require retraining of current network staff. Aside from those
team members participating in the standards development, the rest of the team
usually lacks an understanding of the new technology. Operators need assistance
educating team members beyond the touted new capabilities and marketing hype.
Operators should understand specific changes that will affect the network and
operations as a result of migrating to the new technology. Detailed understanding of
RF planning requirements, real estate requirements, network security risks, and other
components will minimize an operator’s risk and ensure a low cost, robust network.
Figure 3.1 LTE Network Architecture Diagram
SGSN
HSS
GPRS Core
S3
MME
SAE S6a S4
Serving PCRF
SAE GW/PDN GW
S7
S11
S8b
S1_
MME S2b
IP Services
S1_U
(IMS, PSS,
PSS, …)
…)
S2a
WLAN
Access
Access
eNode-B
Trusted non Network
Network
3GPP IP Access
Evolved Ex.
Ex. CDMA,
CDMA, TD-SCDMA
TD-SCDMA
RAN and
and WiMAX
WiMAX
Though business cases are usually developed around revenue generation, cost is
a major concern as the credit market tightens. The recession will be over while
LTE is still growing. Business cases are based on NPV and Profile. LTE
deployment is happening at a time when operators have increased concerns about
their return on investment. As such, they are reviewing the licensing, equipment,
and services costs in deploying LTE so they can find ways to offset, delay, or
circumvent portions of those costs.

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3.1 Spectrum Requirement and Costs

The first step in planning for LTE involves securing high cost, scarce spectrum.
Even though LTE was developed to operate in channel bandwidths between 1.4
MHz and 20 MHz, at least 5 MHz of spectrum is needed to have data rates
comparable to HSPA and 10 MHz is required to really experience the higher
capacity data rates being touted. Most operators will not have enough spectrum to
deploy LTE in channel bandwidths greater than 5 MHz and the cost to acquire
even the minimum bandwidth is high.
In North America, where the first LTE deployment will be launched, operators are
spending billions to acquire spectrum. Table 3.1 depicts the typical costs for securing
this valuable resource.
Table 3.1 US AWS Auction 66 (2006)

Total Bids
Bidder Winning Bids Population (Millions) Price Per MHz
T-Mobile USA 120 475 $4,182 $0.63
Verizon Wireless 13 192 $2,809 $0.73
Sprint / Cable JV 137 267 $2,378 $0.45
MetroPCS 8 145 $1,391 $0.96
Cingular / AT&T 48 199 $1,335 $0.55
Cricket / Leap 100 176 $984 $0.45
US Cellular 17 42 $127 $0.25
NextWave 154 60 $116 $0.13
Aloha Partners 15 36 $75 $0.20
In the US AWS Auction 73, the top two spectrum winners, AT&T and Verizon
Wireless, spent $9.4 billion and $6.6 billion respectively. In Canada, winners of
the AWS spectrum auction, Rogers, Telus, and Bell Mobility Inc, spent $1 billion,
$880 million, and $740 million, respectively. In Europe, Sweden auctioned off
fourteen pairs of 5 MHz spectrum in the 2.6 GHz band for approximately $346
million. In general, operators begin planning for LTE deployment by securing high
cost spectrum licenses.
Another spectrum-related challenge is global harmonization to reduce region-specific

equipment that can increase costs. Lower numbers of frequency bands mean less
variation in equipment and better economies of scale. Table 3.2 depicts the most
commonly available bands for LTE deployments globally. By deploying LTE in
commonly used bands, operators can ensure wider availability of equipment and
devices at a lower cost.

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Table 3.2 Potential LTE Bands
Region 2009 – 2010 2011 – 2012 2013 –beyond
AWS (1.7 GHz, 2.1

North America GHz), 700 MHz 850 MHz and 1.9 GHz
2.6 GHz & UHF 900 MHz, 1.8 GHZ, 2.1
Europe (790 MHz to 862 MHz) GHz
2.1G Hz, UHF

Developed Asia (790 MHz to 862 MHz) 1.7 GHz, 1.8 GHz 850 MHz
South America 850 MHz and 1.9 GHz
UHF bands
Globally (450 MHz to 470 MHz)
3.2 Cell Site Selection

Once the spectrum is secured, then operators are challenged with planning network
deployments. They have to consider the impact of deploying the new networks on
their existing networks. Operators begin by evaluating the physical aspects of
deploying the new networks, determining whether existing cell sites can accommodate
the new equipment, or if they need to secure additional sites. Real-estate expenses
can have a significant cost impact when deploying new technologies. Reusing
existing cell sites without changing existing lease agreements can greatly reduce
operators’ overall costs. This is the current strategy for the new Clearwire deployment
of its WiMAX network and for Verizon Wireless with its LTE deployment.
Some issues to consider include the size of the antenna required to deploy the new
technology. LTE leverages MIMO (Multiple In, Multiple Out) technologies, which, as the
name suggests, control multiple arrays of antennas at the base station. The antenna
architecture can greatly impact the space required to deploy new technology. Operators
should be aware of the potential impact when selecting an LTE antenna scheme.
Another factor to consider is the proximity of the cell site to the wireline infrastructure.
Cell sites located less than a mile from wireline transport can leverage fiber for
backhaul, which is ideal for transporting LTE traffic.
3.3 Backhaul Changes

Backhaul typically accounts for 20% to 40% of carriers’ operational expenditures,
depending on whether the carrier owns or leases the backhaul network. The
challenge with backhaul is that no one solution fits all operators’ needs and more than
one solution will have to be considered based on the cell site location and capacity
requirements. North American operators leverage copper T1s for more than 85% of
current backhaul needs; those in the Asia-Pacific region leverage fiber and
microwave; and European operators use microwave for about 60% of backhaul
needs, fiber for 25%, and copper for the remaining 15%. Operators deploying LTE will
manage networks with multiple wireless technologies, each with its own requirements.
The backhaul must be able to support the strict synchronization needs of some
networks, such as CDMA, or support ATM (Asynchronous Transfer Mode) interface
requirements for UMTS. As a result, operators need backhaul solutions that can be
scaled to meet a variety of needs. Operators will want to transform their backhaul

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from mostly TDM (Time-Division Multiplexing) and ATM backhaul to IP/Ethernet

backhaul solutions. Overall, aggregation infrastructure access has to evolve to
support packet-based networks.
Operators are faced with expanding their current backhaul networks to meet high
bandwidth demand beginning with HSPA and then migrating to LTE. In regions like
North America and parts of Eastern Europe, operators rely on E1/T1 circuits to meet
backhaul capacity, which offers limited network capacity. E1 provides theoretical data
rates of 2.04 Mbps and T1 provides theoretical peak data rates of up to 1.5 Mbps.
LTE technologies touting peak data rates of over 100 Mbps cannot physically be
accommodated by T1/E1. In addition, LTE is a packet-based network and requires
packet-based transport to support end-to-end IP requirements. As a result, operators
are turning to high capacity Ethernet over microwave and Ethernet over fiber solutions
to meet their growing backhaul needs.
Operators in North America and Europe already began migrating their backhaul
networks to Ethernet over fiber solutions, but will need assistance in implementing this
transformation. Most operators will be unable to implement a flash cut from TDM to
Ethernet over fiber, needing instead a detailed strategy with options for managing the
transformation, the elements that will be impacted, and how to mitigate the impact on
the current networks.
From Current Analysis, “The most important component of any mobile backhaul
solution may be the professional services expertise to help an operator architect the
ideal transport network and integrate the products (in-house and third-party)
necessary to make it a reality.”
3.4 RF Planning
RF planning is critical in deploying wireless technologies, especially since spectrum is
such a scarce resource. Those deploying the network must truly understand the
limitations of their companies’ spectrum assets and actual coverage capabilities. RF
planning includes understanding required guard bands to meet government-mandated
requirements and to prevent interference from out-of-band emissions. Enough
spectrum must be available in each market to meet advertised data rates. In addition,
proper synchronization planning with adjacent networks is required to prevent
interference. There should also be multiple configurations for each morphology type to
overcome potential issues. RF optimization for different types of situations from indoor,
to restricted signal public areas, to urban and rural areas, needs to be planned.
3.5 Network Deployment Costs

The cost to deploy a new wireless network today ranges from $5 billion to $20 billion
and beyond, depending on the size of the network. As a result, operators have to
ensure that they can recoup their investment or that the new network is essential to
remain competitive.

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Here are a few examples of costs for building a wireless network once spectrum is
secured:
• AT&T spent $20 billion to fully deploy HSDPA/HSUPA over four years.
• The new Clearwire will need over $5 billion to deploy WiMAX in hot zones.
• T-Mobile spent over $2 billion to deploy its 3G network to date, which is still not
near completion.
Once operators secure spectrum for the new technology, deployment costs can add
billions to the overall price of the network. As a result, operators need to be efficient
to ensure successful deployment at the lowest possible overall cost. Some of the
highest cost items include the cell site lease and backhaul.
3.6 Real Estate and Cell Site Reuse Strategy

Real-estate requirements can greatly impact network costs if not carefully planned.
As chipset processing capabilities increase and size decreases, the base station
footprint also decreases. This means that more equipment can fit into smaller spaces,
enabling cell site reuse for technology overlay. Operators need to carefully evaluate
existing sites and the space required to deploy new technologies to ensure that
current lease agreements are not affected.
In most cases, multiple operators share tower space, which provides opportunities for
RAN sharing to reduce costs as is done in Europe by Vodafone and Orange. Both
companies share masts, antennas, sites, cabinets, power supply, and other elements.
Vodafone also expanded RAN sharing to India where Vodafone Essar and Bharti
Airtel will share passive infrastructure on 70,000 towers, resulting in over $1 billion a
year in savings. Operators deploying LTE can leverage their vendor partners to learn
more about RAN sharing and to negotiate potential opportunities.
Cell site reuse will be of particular significance for CDMA operators. CDMA
technology requires tight synchronization (< 10µsec drift per day), making it
difficult to implement non-TDM backhaul. Each CDMA cell site is equipped with a
GPS receiver, which, if reused, will reduce the cost of deploying next-generation
backhaul to support LTE.
3.7 Network Equipment Reuse

Vendors have been developing multi-technology base stations to reduce
operators’ total cost of ownership and to simplify the network architecture. These
platforms can be upgraded to support LTE via a card added to the existing base
station chassis and through software-defined radios. Products, such as the
Alcatel-Lucent 9x26 Digital Series, Nokia Siemens’ Flexi Multiradio Base Station,
Huawei’s 3900 Series, and Ericsson’s RBS 6000 Series, support LTE along with
legacy technologies like GSM and UMTS.
Other elements with multi-technology support include GGSN (Gateway GPRS Support
Node) platforms for current HSPA networks, which can be upgraded to support SAE
(System Architecture Evolution) gateway functions and bandwidth requirements. If

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the IMS infrastructure is already deployed, it can also be leveraged to support LTE.
Reusing some existing equipment will simplify LTE deployment and reduce overall
costs. Nonetheless, mobile data forecasts and stringent IP service requirements will
demand new architecture and capacity.
3.8 2G and 3G Integration

Part of network planning must include scenarios for migrating customers and networks
from previous releases to 4G. Moreover, it will be necessary to establish
interoperability with these previous standards because the older networks will cover
more geography at the start as 4G rolls out.
In planning for 4G, there will be different scenarios for moving from 2G, 2.5G, and 3G
CDMA versus GSM/USDPA versions to LTE. Nonetheless, common integration test
procedures must be followed for an effective migration. This is accomplished with
end-to-end architecture, design, and use cases covering everything from devices to
end applications. Testing and verification processes must simulate real-world indoor
and outdoor situations, covering high and low speed movement. Profile-specific
testing must address subscriber management issues and handset inter-technology
and international handovers. Authentication and device compatibility are also
essential at this stage.
3.9 Network Security Assessment and Planning

Open networks, always-on connections, higher data rates, and network-sharing
introduce security risks that are not evident in current wireless networks. As
consumers use their wireless networks more like fixed-line networks, similar security
risks will be introduced. The primary difference is that air interface is limited in terms
of an operator’s ability to quickly add more bandwidth.
The migration toward user-controlled environments leads to additional risks. Users

are now developing and sharing content across operator networks and high capacity
mobile networks like LTE will expand this capability. Operators need solutions that
can track how the network is being used, the impact of various applications, and how
to protect the network from potential harm.
The best approach to these security concerns is to implement a multi-layered solution

that is software-upgradeable to continuously address new threats. In the past, most
solutions were developed to work on the TCP (Transmission Control Protocol) and the
UDP (User Datagram Protocol) in the TCP/IP stack. Recent security solutions are
more focused on the SCTP (Stream Control Transmission Protocol), which works on
multiple streams of data instead of a one-byte stream. SCTP is more aligned with
how data is sent today in multiple message streams and was designed to replicate the
reliability of traditional signaling networks like SS7.
SCTP-based solutions offer network-level fault tolerance, congestion avoidance,

and resistance to flooding or masquerade attacks. Intrusion detection and
prevention products that inspect content and provide anti-spam/anti-virus solutions
should be implemented. These solutions are usually designed to detect problems
in the signaling applications layer. A comprehensive solution should include
unified access control and AAA (Authentication, Authorization, and Accounting), IP
spoof detection through access control lists on the routers, stateful firewall, and
intrusion detection and prevention.

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Operators deploying LTE need to address potential security risks and design the
networks to overcome them. Security cannot be an afterthought and must be
designed to evolve as network usage changes and introduces new hazards.
3.10 Implementing IMS and RCS

Moving a network to all-IP for LTE will often be done in conjunction with IMS (IP
Multimedia Subsystems) introduction. A structured all-IP and IMS deployment plan
will help operators understand and manage the risks as they transform their networks.
Further, the completion of the RCS (Rich Communication Suite) standard will extend
IMS to the device, enabling richer, blended services
IMS will be a key component in defining LTE services. Even though IMS has been
defined in the 3GPP standards since Release 5, Release 8 also specifies IMS
elements, such as the HSS (Home Subscriber Server) for subscriber data
management; CSCF (Call Session Control Function) diameters for subscriber
authentication and authorization; and PCRF (Policy Control and Charging Rule
Function) for QoS and charging. IMS enables all communication in a packet domain,
which is essential for LTE as it combines voice, data, and video services across LTE,
legacy networks, and wireline networks for a seamless user experience.
This IMS framework, combined with the next-generation application and services
ecosystem, will provide a strong source of new service components and applications
for operators to deploy. Services that gain traction and increase revenue can be
quickly deployed throughout the networks. Those that are not successful can be
easily replaced at minimal cost to the operators. This trial-and-error environment will
enable operators to develop compelling new services.
Completion of the RCS standard in early 2009 will provide a standardized IMS
client/server architecture for new IP-based mobile services on a variety of devices.
The combination of RCS with an IMS core and an LTE network will create a
plethora of new services. Mobile operators, such as NTT DoCoMo, have been
using a pre-standard version of RCS to leverage IMS on mobile devices and have
already deployed over 45 million IMS-capable devices. Combining LTE, RCS, and
IMS will result in more advanced media-sharing services together with
simultaneous voice services.
Section 4. MANAGING AND OPERATING THE NEW NETWORK

4.1 Operational with Excellence
Providers migrating to LTE will need to assess the impact on their current network
operations and IT environment, and how to integrate the new networks with existing
networks and services. After designing, planning deploying, and integrating the new
networks, operators may need assistance managing, operating, and servicing it.
Migration programs will also include MPLS integration, IPv6 introduction, and changes
in billing and provisioning systems to address new services without negatively
impacting existing services.
Integrators with proven network and IT migration capabilities will be instrumental in

ensuring successful LTE deployments. Integrators such as Alcatel-Lucent worked
with large, multi-national operators globally and managed more than forty network
transformations in multi-technology, multi-vendor networks. ABI Research ranks the

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company as a leader in managed services. Partnerships with experienced vendors

will reduce operators’ risks in deploying LTE, ensure a successful rollout of services,
and build operators confidence in deploying new services. Network transformation
services will simplify the migration process and reduce the stress and expense that
could be incurred by operators when migrating to a new technology.
Typical migration flow involves the following processes:
1. Transformation planning
2. Network deployment planning and design
3. Solution implementation
4. Operations and management
5. Decommissioning of legacy networks over time
Leading managed services vendors have experience in operating large, multi-

national, multi-vendor networks in CDMA2000/1X-EVDO/EVDO Rev A,
GSM/GPRS/EDGE/W-CDMA/HSPA, LTE, and WiMAX. As a result, they are able
to manage the following migrations:
• Migration from CDMA 1XRTT/EVDO Network to LTE

• Migration from GSM Network to LTE
• Migration from HSPA Network to LTE
• Migration from WiMAX to LTE
• OSS/BSS and IT migration
Operators will need vendor partners experienced in end-to-end network migration with
capabilities beyond providing best-of-breed equipment. Vendors must be experienced
in managing networks with competitors’ products as well as their own equipment to
maximize the operators’ return on capital and operational expenditures. Vendor
partners will need to provide assistance beyond network deployment and integration.
Large OEMs have international experience in deploying multi-technology, multi-vendor

networks. They have teams of experts specializing in planning, deploying, integrating,
and optimizing various types of networks. Moreover, they have consultants in the
areas of operation and IT change management. This combination of IT knowledge
with telecom operations and networking expertise enables them to effectively and
quickly assess, design, and deploy wireless networks.
4.2 Managed Services

LTE and other network advances are altering the value chain for services
providers. Increased network complexity and variety of service offers are forcing
some providers to outsource management of their legacy networks. This is
because the emphasis is now switching heavily to service providers, versus
network providers. The market and strategy of providers is demanding that they

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determine new ways to segment and charge for services. New business models
such as MVNOs and partnerships with other third parties for content, applications,
and converged services are putting stress on organizations.
Given this environment, it has become even more important for operators to
aggressively address their pressing business imperatives. They need a way to
increase revenues while improving time-to-market of new service offerings and
combinations, and reduce churn while improving customer satisfaction. They need to
enhance network performance, minimize risks, and streamline business processes —
all while lowering capital and operating expenses. Managed services can provide
relief for some of this stress.
Areas of managed services include outsourcing with strategic collaboration,

network optimization, management capacity, build/operate/manage solutions,
managed hosting of various applications/delivery platforms, and others. ABI
Research forecasts that managed services revenue for mobile operators will grow
to over $14 billion by 2013.
4.3 Leveraging an LTE Ecosystem

Leading infrastructure vendors, such as Ericsson, Alcatel-Lucent, and Nokia Siemens
Networks, are aware of LTE business case challenges and are already developing
solutions to address these concerns. These vendors are increasing their service
capabilities beyond equipment support to include managed services, business case
development support, and ecosystem development. In 2008, professional services
including managed services were cited as one of the few strong growth segments by
all three vendors.
One example of a vendor-led initiative for new services is Alcatel-Lucent’s Next

Generation Connect program. The objective of this program is to develop an
ecosystem of device manufacturers, application developers, content providers,
gaming experts, computing, and other relevant expertise to create and test proof–of-
concepts for next-generation services. The company will provide the framework and
fund the project to ensure its timely availability in the marketplace.
Several companies are developing applications in silo that could benefit by partnering
with other firms to develop more compelling solutions. The iPhone is an example of a
device that combined various technologies and applications already in use to create
an attractive product. The same could be done on a wider scale by bringing together
multiple partners with expertise in different components of the application and services
industry. Key members would include experts from consumer entertainment, media,
content delivery, digital signage, video gaming, display technologies, R&D,
universities, and so forth.
Several standards organizations bring together various members of the ecosystem,

but the process is usually lengthy and typically focuses more on the technology than
the end application. A program such as that from Alcatel-Lucent could expedite the
application and the service development process by providing the framework,
facilities, funding, and guidance needed for a successful implementation.
Other service initiatives focus on monetizing the data that operators have in their
networks, which is extensive and could be leveraged to revolutionize the telecom
industry. However, lack of detailed knowledge on how to use this data is

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marginalizing current network operators as bit pipe providers. Companies are

beginning to find ways to access and use this data as indicated by recent reports that
both Sprint and Verizon Wireless opened their GPS data to third-party development.
However, no common framework or standardized means for monetizing this data
exists. Alcatel-Lucent’s Next Generation Connect program is the first step in
establishing this framework by providing global operators with a standardized means
for using their data and their network to recoup investments.

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Section 5. SUMMARY
LTE will enhance the ability to offer new services and service combinations
independent of location. The increased download and upload speeds combined with
a robust IP network will in effect pave the way for a mobile always-on communications
superhighway. Nevertheless, preparation and deployment efforts bring a number of
challenges including configuration, backhaul, design, and so on. We highlighted
procedures and methods for ensuring efficient deployment of LTE, smooth integration
to all-IP and LTE, and optimal operations and management execution. Further, we
discussed consideration for selecting service vendors with both IT and network
services expertise.
LTE will enable downlink data rates of over 100 Mbps and uplink rates of over 50
Mbps or higher, depending on spectrum availability. This greatly improved data rate
and speed will differentiate services. Some of the most successful services will be the
ones that users can share with friends, families, and colleagues, regardless of network
or location. As operators deploy LTE, their business models will need to evolve to
prevent them from being marginalized as bit pipe providers. Third-party companies
and multi-party sandboxes are developing new services and applications to capitalize
on operators’ networks without bearing any of the associated costs.
Delivering an improved and consistent Quality of Experience, containing network

costs and reducing risks for rapid LTE launch is critical, as is developing real
opportunities for new revenue streams through a combination of ecosystem
development and creative offers. A mobile IP transformation program that embraces
end-to-end LTE business planning, design, integration, migration, and implementation
will help guarantee a secure, rapid time-to market for LTE services.
Operators have valuable assets with their brands, networks, and wealth of customer
data. They need strategic partnerships with key network equipment vendors with
strong services capabilities and partners who can help redefine and make their
businesses profitable across the board.
Section 6. REFERENCES
CDG (CDMA Development Group) Web site

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Published 2Q 2009
©2009 ABI Research

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Three Tactics for Winning the LTE Game

Section 2.Factors for Implementing LTE Efficiently............................................................................................................. 10

Section 3.Network Deployment Planning and Design: How to Mitigate Uncertainties........................................................ 14

Section 4.MANAGING AND OPERATING THE NEW NETWORK ..................................................................................... 20

Section 5.SUMMARY .......................................................................................................................................................... 24

Section 6.REFERENCES .................................................................................................................................................... 24

© 2009 ABI Research • abiresearch.com 2

Section 1. LTE INTRODUCTION

1.1 What Is LTE?

LTE characteristics include:

© 2009 ABI Research • abiresearch.com 3

specification also presupposes a strong all-IP network, and essentially redefines

1.2 Provider LTE Intentions

© 2009 ABI Research • abiresearch.com 4

Figure 1.1 Operators Deploying LTE

(Source: ABI Research)

© 2009 ABI Research • abiresearch.com 5

1.3 LTE Equipment and Services Market Forecast

CDMA2000.1X.EVDO.RevA.B.CDMA-LTE UMTS.HSDPA.HSUPA.HSPA+.LTE Total

(Source: ABI Research)

© 2009 ABI Research • abiresearch.com 6

(Source: ABI Research)

• Expansion of e-health services with remote monitoring, diagnostic, and imaging

© 2009 ABI Research • abiresearch.com 7

1.4 Business and Convergence Uncertainty

• Developing the right service mix with good price/value parameters

© 2009 ABI Research • abiresearch.com 8

In summary, meeting challenges ranging from business case analysis to

© 2009 ABI Research • abiresearch.com 9

Section 2. FACTORS FOR IMPLEMENTING LTE EFFICIENTLY

2.1 Network Architecture for LTE

© 2009 ABI Research • abiresearch.com 10

Figure 2.1 Network Layers

(Source: ABI Research)

2.2 Migration and Transformation Considerations

• Device availability and offer plan

© 2009 ABI Research • abiresearch.com 11

2.3 Criteria for Selecting Network and IT Vendors

© 2009 ABI Research • abiresearch.com 12

• Strategic execution with business case development to determine technical and

© 2009 ABI Research • abiresearch.com 13

Section 3. NETWORK DEPLOYMENT PLANNING AND DESIGN: HOW TO

Figure 3.1 LTE Network Architecture Diagram

(Source: ABI Research)

© 2009 ABI Research • abiresearch.com 14

3.1 Spectrum Requirement and Costs

Table 3.1 US AWS Auction 66 (2006)

Another spectrum-related challenge is global harmonization to reduce region-specific

© 2009 ABI Research • abiresearch.com 15

Table 3.2 Potential LTE Bands

Region 2009 – 2010 2011 – 2012 2013 –beyond

AWS (1.7 GHz, 2.1

2.1G Hz, UHF

South America 850 MHz and 1.9 GHz

3.2 Cell Site Selection

3.3 Backhaul Changes

© 2009 ABI Research • abiresearch.com 16

from mostly TDM (Time-Division Multiplexing) and ATM backhaul to IP/Ethernet

3.5 Network Deployment Costs

© 2009 ABI Research • abiresearch.com 17

3.6 Real Estate and Cell Site Reuse Strategy