Industry looks ahead to LTE implementation

Newsroom 28/03/2011 | 13:55

Countries like the United States, Japan and some northern European states are spearheading the transition to LTE/4G, described as the cutting-edge technology of the future for mobile data. Romania is a market at odds with itself, as it is driven both by the penchant of the end-user for low prices but also by the big pull of last-generation services, which may set it on the 4G path before other countries in the region. The market is already starting to move in this direction, with preliminary talks underway among suppliers of network capabilities and telecom operators.

Otilia Haraga

“4G/LTE is a reality. The question is not if this technology will be introduced, but when exactly. From a technological standpoint, Europe is following in the footsteps of the USA. In the US, this technology is already functional, owned by two large operators AT&T and Verizon Wireless,” Raoul Ros, vice-president of Alcatel-Lucent for Eastern and Southern Europe, tells BR.

Long Term Evolution (LTE) is said to enhance the experience of the end-user since it provides a superior network and higher transfer speeds, which can surpass 100 Mb/second. 4G/LTE is the first radio mobile technology tailor-made for data traffic, and so is more efficient than 2G and 3G, which were developed and optimized mainly for voice traffic.

LTE can offer mobile access at lower prices than 3G and 3.5G technologies that are now in use, say industry players, and will penetrate the market when the need for higher speeds becomes obvious. The growth in traffic will also push up prices, thus creating the demand for the introduction of LTE.

To set the 4G/LTE technology in place, there are several requirements: available spectrum for this technology, licenses granted for the spectrum, compatible handsets and telecom operators willing to make the necessary investments. “A realistic term from our point of view for having the first completely functional commercial network in Romania is approximately three to five years,” says Ros.

This year and the next should see significant progress in the launch of data and voice handsets to accommodate this technology. Their penetration on the market will depend on when the 4G networks are in place and when 4G commercial services are launched.

Countries in Western Europe, especially northern ones like Sweden, Norway, Germany and Austria, are spearheading this change. Some of them have already launched mobile data services commercially; others have granted licenses and started to install the networks.

By 2015, it is estimated that Romanians will use over 7.5 million laptops and PCs and over 26.7 million mobile phones daily. According to Nokia Siemens Networks, more than 13,221,544 Terabytes of traffic per year will be generated. In this context, LTE will be the technology able to provide higher broadband speeds.

“Based on the progress registered by devices, networks and new services, there has been a boom in the use of mobile broadband which has transformed the habits and expectations of the users. They are starting to use more sophisticated applications and services than just e-mail and internet surfing. LTE offers greater network efficiency, an optimum use of the spectrum and impressive speeds,” says Dragos Chivu, country director at Nokia Siemens Networks.

“The Romanian authorities have said that the switch to digital television should be made by 2015. In this context, operators will soon be able to expand the coverage of broadband services by exploiting the digital dividends that will become available.”

The implementation of LTE technology in Romania will first of all require available spectrum – in this case, the digital dividend and 2.6 GHz bandwidth. At the moment, the spectrum is not available. “There are ongoing discussions to clear this spectrum. Here at ANCOM, we hope the Romanian government will approve a new strategy for digital television this year. In this way, the authority will be able to grant the licenses for radio frequencies in the terrestrial digital system,” Catalin Marinescu, president of ANCOM, tells BR.

Once the radio spectrum is clear, the digital dividend will become available and can be put up for public bidding, so that operators are able to develop and make available 4th generation services.

In Romania, the telecom regulator received requests from three companies for LTE experimental licenses in the spectrum 2.5-2.69 GHz, and granted them all. These requests came from operators Alcatel-Lucent, which asked for two licenses, in Bucharest and Timisoara, Nokia Siemens and Orange Romania, each requesting a license for Bucharest.

Madalina Suceveanu, chief technology officer at Orange Romania, tells BR: “We have had preliminary discussions both with ANCOM and with the main suppliers of this technology.” She adds that the investments the company will have to make are “significant” and would require “a major transformation of the current network architecture. Not only will the radio access level (the antennas) be affected, but also the telephony centers. The total investment will be directly dependent both on the frequency spectrum and the requirements that come with the decision to grant the licenses for this new technology,” says Suceveanu.

Alcatel-Lucent opened one of its six existing global centers for R&D of LTE technology in the Romanian city of Timisoara. Earlier this year the company gave a public demonstration to interested parties – operators and authorities – of the LTE technology on a platform brought from the R&D center in Timisoara. Nokia Siemens Networks also gave a demonstration of its LTE end-to-end solution two weeks ago.

Next year it should be possible to organize public auctions to award LTE licenses in both spectrums that will be cleared by ANCOM. However, LTE adoption will also depend on how fast this technology evolves, since it is not yet a mature technology and at this point there are no voice handsets on the market compatible with it. Secondly, it will also depend on the economic climate in Romania. “Without a doubt, Romanians have shown a great deal of interest in mobile internet services as well as in intelligent handsets that facilitate the use of these services. This is visible in the high growth rate in the number of mobile internet subscribers: at this point, factoring in all types of connections (including those with lower capacity such as GPRS), the number of mobile internet subscribers is higher than that of subscribers to fixed internet,” Gabi Mustea, management consultancy manager at PwC Romania, tells BR.

However, given the low average revenue per subscriber in Romania compared to that of most EU countries, as well as the cost of the investment necessary to make the transition to LTE, he says it is difficult to anticipate the moment when mobile operators in Romania will decide to adopt this standard. “The adoption of LTE is contingent not only on the purchasing power of the public but also on the availability of content and applications to create the demand for broadband mobile internet that provides download capacities superior to those offered by 3G technology,” says Mustea.

Industry pundits seem to agree that in Romania, like anywhere, the investment needed in LTE infrastructure will also depend on the previous investments that telecom operators have made in their networks as well as the structure of those networks.

The ANCOM president is of the opinion that the competitive aspect of the Romanian market compared to other European markets suggests that it is less likely operators will make massive investments in 4G networks here before this technological generation has proven itself in other countries in Europe, and before 3G-3.5G technology reaches maturity from the point of view of coverage, users and traffic.

“A tighter budget crunch for end-users has led to a slight decrease in the consumption of telecom services and, as a result, operators have been more cautious over new investments. Nevertheless, the beginning of the year has, in my opinion, brought a bit more relief to the market and we have seen operators speaking more freely about new investments and projects. It is difficult to anticipate how the market will develop, but I expect to see increased operator interest and some interesting moves in terms of LTE solutions in the next one or two years,” Michele Gressani, country manager at Ericsson Romania, tells BR.

One of the aces that a country like Romania, which had “a relatively late start in the race for telecom development,” has up its sleeve, is precisely the fact that “it has little to worry about in terms of legacy infrastructure. This makes it easier for Romania as a market to develop faster and move on to implementing the latest technologies, such as LTE,” Gressani says.

He adds that Romania is one the biggest IT&C markets in the region and “singular” in terms of the speed at which it is developing. “Once the necessary bandwidth for supporting LTE is freed, I am confident that Romania will be among the first, if not the first, to implement commercial LTE services,” predicts Gressani.

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