Analyst Report: LTE changes everything; LTE changes nothing


When Verizon Wireless revealed in 2008 that it would pursue LTE as its future 4G strategy, the wireless technology wars officially came to an end. The world had been divided for a decade between rivaling CDMA and GSM camps, but Verizon’s decision to pursue the latter’s community’s 4G standard set off a chain reaction among other CMDA operators, and the globe converged under a single wireless technology.

But while everyone settled on common radio technology, they didn’t agree on the slice of electromagnetic real estate on which to settle their new communal network. Driven by the huge demand for more mobile-data capacity and faster broadband speeds, carriers and governments worldwide began laying claim to any patch of airwaves they could find, finagle or repurpose for LTE. The result today is a hodgepodge of LTE bands that threaten to create more wireless fragmentation than the split between CDMA and GSM ever did.

Just how much fragmentation is that? Wireless Intelligence has identified 38 different frequencies that will carry LTE signals by 2015, and those aren’t divided up in any orderly way (region by region or country by country, for example). In the U.S. alone we will see networks this year and next in five different bands: 700 MHz (AT&T, Verizon), AWS (AT&T, Verizon, Leap Wireless, MetroPCS), PCS (Sprint, MetroPCS), 2.5 GHz (Clearwire) and 800 MHz (Sprint). If Dish Network gets permission from the FCC to launch LTE in its recently acquired satellite broadband spectrum, we can add 2 GHz to the list. LightSquared, too, wants to repurpose its 1.6 GHz satellite licenses for LTE, though getting approval looks increasingly unlikely.

To compound matters, there isn’t just fragmentation among U.S. bands; there is fragmentation within bands, too. In 700 MHz, for example, at least three band profiles have emerged, each requiring specific radio chip and antenna support. Clearwire’s 2.5 GHz spectrum is unpaired, meaning it doesn’t have separate download and upload channels. The network splits time over the same frequencies for uplink and downlink, which necessitates its own variant of the 4G standard called Time Division-LTE. AT&T has unpaired frequencies of its own in 700 MHz that the company is using to build a lopsided LTE network that has far more bandwidth devoted to the downstream.

Much of this confusion can’t helped. The explosion in smartphones has set off a gold rush for whatever capacity can be found. From a pure megahertz perspective, the demands of voice and 3G voice are miniscule compared to the bandwidth required to run true mobile-broadband networks.

But fragmentation has a huge impact on every aspect of the wireless industry and particularly on handset vendors and smaller operators. It’s entirely likely that at some point nearly every U.S. operator will require different handsets designed for their specific configuration of LTE spectrum and legacy 2G and 3G technologies. That’s not a problem if you have the clout of 100 million subscribers like Verizon or AT&T does (their customer bases are larger than the populations of most countries). But smaller and regional operators such as C Spire or Cincinnati Bell will find themselves quickly passed over for new devices as handset makers focus on the bigger prizes. Roaming among LTE networks will become increasingly difficult. And the international phone, which was already an elusive object in the pre-LTE world, may cease to exist altogether.

Vendors have some hard choices to make

As mentioned above, fragmentation will affect both network and handset makers. The effect on network vendors is relatively small: They will have to optimize their base stations and radios for each customer’s configuration of frequencies, but by nature each network is a very customized product. For instance, the first operator to launch LTE in the U.S., MetroPCS, had no trouble securing two vendors, Ericsson and Samsung, to build a network tuned to not only its unique configuration of bands but also its odd carrier sizes.

The real impact will be felt by the handset vendors. They will be faced with the tough decision of which bands to support in their devices. For a company like Apple, which has always sought to build a single SKU for the iPhone, this will become a nightmare. Vendors can build multiband phones — global devices like the iPhone are veritable jigsaw puzzles of interlocking antenna components — but there are limits to the number of bands a device can support, and there are both financial and performance costs for every new band a vendor adds, said Barry Matsumori, the chief marketing and strategy officer for Ethertronics, a San Diego–based adaptive antenna builder.

Pentaband antennas are now common, and many vendors have managed to cram additional antennas into their devices. Each new band adds about $1 to the cost of a device, Matsumori said. That seems small, but a buck is a considerable amount in the narrow-margin business of consumer electronics. But cost isn’t the biggest problem.

“Physical volume is very much a consideration,” Matsumori said. “The X and Y axes are becoming less of a problem now that smartphones are getting bigger displays. The variable that is getting very competitive is the Z. We’re starting to see smartphones that are only 9 mm thick.”

If you look at a cross section of a device like the Motorola’s new Razr, you basically see the LCD screen, a thin shield and the battery. The remaining electronic components, including the antennas, are crammed along the sides and above the battery. Antennas need space and are also live components transmitting and receiving radio waves. Anytime a new antenna is placed in a device, it transforms its overall radio frequency profile. Those antennas can interfere with one another and can pick up interference from other electronic components. Even where a hand is placed on the device can change its fragile profile, as iPhone 4 users learned last year. Adding more transmitters produces more possible interference sources, which ultimately detracts from the overall performance of the device. “It’s just a simple fact,” Matsumori said. “It’s a matter of physics.”

The LTE puzzle

These problems will only be exacerbated by LTE.

First off, LTE will require not only the placement of a new antenna for every new band supported but also two antennas. LTE achieves its ultrafast speeds in part by utilizing two transmission paths, a technique known as MIMO. That requires two antennas and two power amplifiers, making MIMO a big reason why LTE phones drain much more battery life than their predecessors.

Second, devices will need to support not only the carriers’ new LTE frequency bands but also all the legacy bands of their 2G and 3G fallback networks as well as the growing wireless radio stack. Your typical global GSM smartphone already supports five bands, plus GPS, Wi-Fi, Bluetooth and often an FM radio receiver. LTE won’t be a new beginning; it will only add to the band and radio complexity of devices.

Handset vendors will be forced to pick and choose the bands they want to support based on the volume of shipments they can expect for each variation. That model favors the big operators over the small. That has always been a problem in the U.S., where the CDMA/GSM divide has required vendors to make separate devices for the different camps, but that fragmentation problem will only grow worse.

CDMA operators Sprint and Verizon already plan to launch LTE in separate bands. A device maker may try to accommodate both of them simultaneously with tri-band LTE devices at PCS, 700 MHz and AWS, but once Sprint incorporates Clearwire’s forthcoming TD-LTE network into its 4G service, all bets are off. Vendors would need to incorporate not only Clearwire’s 2.5 GHz band but also a completely new baseband for TD-LTE.

Smaller operators know that fragmentation is going to leave them in a desperate position, which is why the Rural Cellular Association has fought AT&T’s efforts to further break up the 700 MHz band. In order to build its lopsided LTE network, AT&T needs to create a new band profile. The devices targeting AT&T’s specialty band would no longer be interoperable with dozens of LTE networks’ rural and regional carriers that plan to build in the lower 700 MHz.

It is going to be very difficult for an operator with less than a million customers — or even a carrier consortium with a few million — to convince a device maker to build smartphones specifically for their networks. If there is no interoperability, then there is no roaming, further limiting the scope of LTE devices. It has always been a hardscrabble world for the small guys. They have always had to be content with the big operators’ leftovers. In the new LTE era there may no longer to leftovers to be had.

Maybe the solution is no solution at all

Technology might be the answer to the fragmentation problem, and there are a lot of companies devoting a lot of intellect to solving the issues. The most prominent are the adaptive antenna makers such as Ethertronics, WiSpry and SkyCross. Such adaptive antennas replace the bulky array of disparate antennas in a device with a single micro-electrical-mechanical element that can tune itself to a broad array of different frequencies. The first adaptive antennas are already starting to make their way into tablets and phones.

That only solves part of the problem, though. Different frequencies need support in the baseband chip, too, but adding new frequencies, just like adding new radio technologies, at the silicon layer adds cost. Companies like NVIDIA have programmable basebands, which could allow handset makers to design generic devices and then set the exact configuration of frequencies and radio technologies later on a carrier-by-carrier basis. But the true holy grail would be a software-defined baseband chip that could dynamically change its configuration to any radio frequency or technology. Companies like Cognovo are developing such versatile software radios, but it will be a while before we see them in phones.

The aim of a universal phone seems like an admirable one, but it may be a misguided goal, according to Peter Jarich, the service director for service provider infrastructure at the research firm Current Analysis. Jarich believes that the fragmentation problem won’t be as bad as it is currently made out to be: Thirty-eight bands have been identified for LTE, but only a quarter of them will really be utilized globally, he said. Ultimately vendors like Apple will still have to make several versions of their phones to capture all of those bands, he said, but that’s not a bad thing in light of the new realities of the mobile broadband age.

“You’re going to hurt all of your RF performance by shoving too many things into devices,” Jarich said. “If the vendors are forced to put more radios and frequencies in their devices then everyone’s performance goes down. If you have a bunch of poorly performing devices, then your network is performing badly.”

Jarich said devices need to be more specialized, not less. It might result in higher device prices, but if those devices make much more efficient use of the network, then not just operators but society, too, benefits. If our phones made better connections to the network, operators could get much more capacity out of a cell, which would mitigate the need to buy new spectrum or split new cells. More-efficient networks could mean governments would not need to mine every spectral nook of the publicly owned airwaves for more spectrum. And theoretically, at least, operators could cut the price of mobile data plans. Better-performing devices wouldn’t solve the so-called capacity crunch entirely, but they could definitely be part of the answer.

Of course, that doesn’t solve the problem of the smaller operators left out in the cold by a new world order of highly optimized specialized phones. But perhaps that is where government should step in. If more-efficient devices are in everyone’s best interests, the government could provide incentives to device makers to provide those handsets to everyone. That could take the form of subsidies to handset makers as opposed to outright requirements. Who would pay those subsidies? AT&T and Verizon won’t like it, but you could make the argument that the big operators should be on the hook. If the big operators are allowed to use their networks in a vacuum — gaining more efficiency, more capacity and more profits — maybe they should ensure that their smaller counterparts don’t lose access to 4G in the process.

If smaller operators are going to make any kind of viable 4G business model, their customers will need to roam onto the big operators’ networks. The Federal Communications Commission will have to require some form of interoperability. The FCC took its first step toward implementing those requirements in December when it approved AT&T’s purchase of Qualcomm’s 700 MHz spectrum, and Chairman Julius Genachowski vowed to revisit the roaming problem this year. If interoperability was enforced, that would mean small operators will have to accept less-optimized multiband LTE handsets. Maybe those devices won’t perform as well, but at least they will be able to leave the confines of the rural or regional network. In the end, that may be a worthwhile trade-off.

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