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Launching LTE: Operators consider various deployment strategies

March 13, 2014

Smartphone proliferation, increasing penetration of 3G networks and growing adoption of bandwidth-intensive applications are driving data service growth. While this augurs well for operators, they are facing challenges in supporting this data traffic growth and in meeting the bandwidth demand despite the roll-out of next-generation networks. This is also affecting the quality of service and bandwidth availability for other data users, especially during peak hours. Given that data services are expected to be the biggest revenue growth driver in the future, addressing this issue has become a priority for operators.

They are now deploying/are likely to roll out long term evolution (LTE) networks to cater to the demand for higher bandwidth and reduce capacity pressure on 3G networks. However, one of the biggest issues for operators is the choice of the strategy for LTE network roll-out – network overlay or single radio access network (SRAN) (also known as converged network). Operators are looking forward to a strategy that enables them to monetise LTE services in a shorter time vis-à-vis 3G offerings. Rapid network roll-out, investments, network upgradation costs and seamless service launch are some of the factors considered by operators while selecting their LTE deployment strategies.

As part of the network overlay strategy, a new LTE-enabled base transceiver station (BTS), eNode B, is being deployed on existing 2G and 3G networks. Under the SRAN strategy, existing 2G/3G BTSs are replaced with new multi-standard BTSs, which support not only LTE, but also 2G and 3G.

Both the network deployment strategies have their advantages and limitations. The network overlay strategy for LTE services ensures shorter time-to-market with minimal investment requirements. Moreover, as a separate LTE BTS is installed without disrupting the existing 2G and 3G networks, services would remain undisturbed during LTE network roll-out. This is expected to result in less downtime, thereby reducing operational risks for service providers. Another advantage is the flexibility to allow network infrastructure to accommodate the integration of future technologies such as LTE Advanced and 5G. However, the network overlay strategy entails high opex due to significant maintenance expenses on existing 2G and 3G networks.

On the other hand, the SRAN strategy ensures modernisation of the overall mobile network, lower opex (including tower lease costs) and reduced power consumption due to improved efficiency of the multi-standard BTS. However, one of the biggest drawbacks of this strategy is the potential disruption of 2G and 3G services. This would not only lead to significant revenue loss for the operator, but also affect its brand image, which may trigger subscriber churn. Moreover, the SRAN arrangement has a vendor lock-in period, which can pose business risks for the operator in terms of delays in network upgrades, etc.

Further, the operator’s preference for one strategy over the other would be influenced by past investments in 2G and 3G networks. Operators with large network infrastructure will prefer the network overlay strategy due to the lower upfront investments associated with it. This has been the strategy of most European, North American and East Asian operators. For instance, South Korea-based SK Telekom and Japan’s NTT DOCOMO have opted for the network overlay strategy to leverage their existing backhaul infrastructure to offer high speed LTE services. This has also allowed them to gain the first-mover advantage in their countries due to expeditious BTS deployment. Similarly, Telefonica Spain has adopted this strategy to launch LTE services across the country in a short period.

In India, only Bharti Airtel has launched commercial LTE services in Bengaluru, Chandigarh, Pune and Kolkata. Despite having nationwide network infrastructure, Airtel has adopted the SRAN strategy for launching LTE services. A possible reason for selecting SRAN could be the lower opex associated with multi-standard BTS. This would also reduce the maintenance costs associated with legacy 2G networks. The SRAN strategy also reduces the requirement for BTSs, which enables operators to comply with the new emission radiation norms. Reliance Jio Infocomm Limited, which is rolling out wireless networks for the first time, is likely to adopt SRAN due to lower upgradation requirements and opex in the future.

Going forward, it will be interesting to see which strategy is preferred in the market, especially with a large number of operators ready to replace their legacy mobile networks. With both strategies offering several advantages, operators will have to be careful about selecting the best option to gain an edge in the LTE-driven telecom market of the future.

 
 

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