With over 600 million 3G subscribers globally, the technology is gaining critical mass. However, even as 3G networks get deployed rapidly in global markets, the industry has started looking for options beyond 3G. Newer and faster technologies including long term evolution (LTE) are now a key focus area for the industry.

Nonetheless, with China and India, two of the most populated countries of the world, just starting to deploy 3G and in the process of licensing 3G spectrum to operators respectively, more people will experience mobile broadband via a 3G network than they will from either of the two technologies (LTE, Wi-Max) commonly referred to as 4G.

While China will benefit from huge investments in 3G network deployment, India is also finalising 3G licensing arrangements despite the regulatory battles that have hindered developments on this front.

Even in the US, T-Mobile launched its 3G network only last year. This clearly indicates that LTE trials notwithstanding, the business case for 3G is beginning to build around the world and 3G deployments will continue to witness growth.

3G global market

According to research firm In-Stat, at the end of 2008, 3G subscribers accounted for only 11 per cent of the global wireless subscriber base. But by the end of 2013, the percentage of 3G and 4G subscriptions is likely to reach 30 per cent.

While the CDMA2000 technology platform accounts for the majority of 3G subscribers in the total 3G subscriber base in countries like Japan, South Korea and the US, which have rapidly adopted the technology, in western Europe, WCDMA is the dominant 3G technology. Moreover, with the launch of high speed downlink packet access (HSDPA), a technology that improves the downlink performance of WCDMA networks, the demand for WCDMA technology will continue to be strong in the near future. According to a report by RNCOS, a telecom research and advisory firm, the number of WCDMA subscribers will surge at a compounded annual growth rate (CAGR) of 50.7 per cent from 2008 to 2010.

Europe has been an important laboratory for 3G networks and services, and for emerging technologies such as EDGE and HSDPA. While financial considerations from 2001 to 2004 hampered developments in 3G rollouts with operators being saddled with debilitating debts due to the 3G spectrum auctions, since 2005, this region has witnessed rapid uptake of services. Germany, Spain, France, Italy and the UK registered 63.4 million 3G subscribers in 2008, up by 46.6 per cent from 2007. While Italy and Spain have higher 3G penetration rates at 38.3 per cent and 37.2 per cent respectively, 3G penetration in France stood at only 17.1 per cent.

According to a study by market research firm comScore, Inc., the number of 3G mobile subscribers in the US increased by 80 per cent to 64.2 million in 2008 from only 35.6 million in 2007, overtaking the subscriber base in the five largest countries in western Europe.

The study attributes the US subscriber growth to the release of new telecom products with enhanced capabilities and features that support 3G services. These include the 3G iPhone and Verizon’s Centro, which runs on Verizon Wireless’s high speed 3G data network. Telecom operators AT&T and Verizon have also expanded their 3G coverage areas. For instance, in 2008, AT&T deployed the high speed uplink packet access (HSUPA) technology across the operators’ entire 3G wireless broadband network and became the only US carrier to have fully deployed the HSPA technology in its 3G network.

The 3G subscriber base is increasing steadily with the Asia-Pacific region leading the market owing to 3G’s prominence in Japan, South Korea, Hong Kong, Taiwan and Australia. Japan and South Korea are the poster boys of 3G with penetration levels at over 80 per cent.

Going forward, the large developing markets of China and India are expected to contribute significantly to the robust growth of the region’s 3G subscriber base after 2008. The subscriber base in the Asia-Pacific is forecasted to grow at a CAGR of 50.1 per cent to reach 178 million subscribers by the end of 2011.

In 2009, China’s wireless operators are expected to make multi-billion dollar worth of investments in infrastructure to support the rollout of 3G networks. These companies are moving aggressively on their 3G rollout plans after the Chinese government finally announced its intention to award three 3G licences as part of a major restructuring plan in May 2008.

China Unicom and China Telecom got their official 3G licences in the first quarter of 2009, and China Unicom is expected to launch its WCDMA services in the second half of 2009.

China Telecom has already started to secure quotes from equipment suppliers for the build-out of its 3G CDMA2000 1xEVDO network. Research and advisory firm iSuppli believes that the carrier will have to invest a significant portion of its capex on the networking core in addition to base stations, gateways and switching centres.

Meanwhile, in India, the bulk of the 3G spend will start in 2010.

Femtocells

Continuous enhancements in 3G technologies have given rise to advanced versions like EV-DO Rev. A, HSDPA and femtocells that provide outstanding capabilities, making 3G the pre-eminent choice of technology for operators.

In 3G network deployments, operators are now considering the potential for 3G femtocells to address capacity and coverage needs in certain network deployments. Femtocells form a new way of delivering 3G wireless coverage to a small area at a cost lower than traditional macro network technologies. Effectively, a femtocell would give a customer a small 3G base station connected to the main network via a fixed broadband line.

However, the global recession has put a brake on expected large-scale femtocell deployments by major mobile operators, according to a new study from ABI Research. This is, however, expected to be temporary. ABI expects that 2010 will see shipments climbing above a million units.

This is because vendors are gearing up for a big push. For example picoChip, a key silicon supplier, recently announced a multi-million dollar injection of funds, geared towards a ramp-up. Moreover, investments in femtocells can be done in stages with fairly low entry points, making it easier to justify in a tight financial market.

There are, however, near-term challenges facing both vendors and operators.Price, for one, is a major hurdle. While femtocell business models can be enabled at various price points, the barrier of a $100 femtocell cannot be overlooked.Low-cost femtocells are essential to bridge the gap between niche market and massmarket deployments.

Recently, with Japan’s Softbank becoming the first operator to announce firm plans for full-scale rollout of the tiny base stations, femtocells are finally making the transition from trials to commercialisation. The carrier has signed a contract with NEC, whose gateway products incorporate femtocells from UK-based femtocell specialist Ubiquisys.

LTE deployments

While there is still ample scope for growth of 3G mobile services on a wide scale, operators and technology suppliers are already preparing for the inevitable upgrade to 4G services, and LTE is likely to gain significant ground in the coming one year.

This technology has the support of technology heavyweights like AlcatelLucent and Ericsson, as well as key operators like AT&T and Verizon. According to Maravedis Research, about 120 operators have committed to trial, deploy or migrate to LTE. However, the number of operators actually deploying or testing this technology remains to be seen, since it requires significant spectrum resources, and an IP network architecture.

The Asia-Pacific region is the most active in terms of the number of operators planning or implementing LTE networks. While China Mobile is currently building its 3G TD-SCDMA network, more than 60 per cent of the network will be able to migrate to LTE in the future. Its counterpart, China Telecom, also plans to migrate its CDMA mobile operation to LTE. The operator will initially focus on rolling out EV-DO Rev. A in key cities before moving to LTE in two to three years’ time.

In South Korea, while Korea Telecom is still deciding which 4G technology (WiBro or LTE) to opt for, SK Telecom foresees the launch of LTE in 2013.

In Japan, NTT DoCoMo has successfully field-tested LTE using multipleinput multiple-output, which resulted in high speed wireless transmissions in the range of 120 Mbps (using 10 MHz of bandwidth). This is equivalent to 240 Mbps throughput using 20 MHz of maximum bandwidth that LTE allows.

In Europe, T-Mobile in Germany is planning an LTE pilot deployment by end 2009, with the aim of upgrading its EDGE/ UMTS/HSPA network to LTE. In addition, the joint venture between Swedish operators Telenor and Tele2 is one of the most well-known LTE commitments. The two companies are planning to jointly construct the network and share spectrum in the 900 MHz and 2,600 MHz bands.

TeliaSonera in Sweden is another operator that intends to roll out the LTE network in mid-2010. It has already bought licences in Sweden, Norway, Finland, Denmark and the Baltics, and has teamed up with various equipment vendors for the LTE launch.

2.6 GHz is a favoured spectrum for LTE in Europe, but Finland has chosen to auction off spectrum in the 1,800 MHz band for future LTE deployments.

In the US, there are at least five mobile operators actively trialling or planning their LTE rollouts, including T-Mobile, AT&T, Verizon Wireless, Alltel and Metro PCS. The Canadian giants Bell Wireless, Rogers Wireless and Telus Mobility have also revealed aggressive plans. In the US, network operators such as AT&T and Verizon will use 700 MHz of spectrum to deploy LTE networks.

The downturn has clearly not impacted key operators’ LTE deployment plans. While many operators are looking at a 2011-12 time-frame, Verizon intends to accelerate its LTE deployment timetable and bring the launch forward from 2010 to 2009. According to ABI Research, NTT will also deploy LTE in Japan in 2009. The research firm expects that by 2013 operators will spend over $8.6 billion on LTE base station infrastructure alone. For operators that have already deployed 3G networks, LTE will be a key capex driver over the next five years.

Clearly, with 3G witnessing growth and new technologies like LTE and femtocells on the anvil, the telecom industry can look forward to exciting times ahead.