VOL. 1, NO.

6, NOVEMBER 2010

The LTE Device Ecosystem:

2011-2012 Market Outlook
TABLE OF CONTENTS
I.

Introduction: LTE in the Short Term

II. Device Types & Design Considerations

Handsets From Day One

New & More Bands

The Antenna Conundrum

Voice

The Roles of HSPA & WiMax

III. Key Findings

Report Highlights
Spectrum fragmentation
hinders LTE's goal of being
GSM-like in terms of global
convenience
Some carriers want firstgen LTE devices that can
support 8 to 13 bands
Although dongle modems
will be the most common
LTE device type through
2012, the selection of
handsets and tablets will
grow quickly
In 2011, up to 1 million
LTE devices will ship
worldwide, with 10 million
possible by 2012
Wide industry support for
HSPA/HSPA+ will both help
and hinder LTE
Some vendors defecting
from WiMax are reusing
designs to speed their
entry into LTE
It is unclear when or how
LTE will add voice support,
increasing the importance
of 3G fallback
Use of this PDF file is governed by
the terms and conditions stated in the
Subscriber License Agreement
included in this file. Any violation of
the terms of this Agreement, including
unauthorized distribution of this file to
third parties, is considered a breach
of copyright. UBM will pursue such
breaches to the full extent of the law.
Such acts are punishable in court by
fines of up to $100,000 for each
infringement.

I.

Introduction: LTE in the Short Term

What will Long Term Evolution (LTE) user devices look like? Other than perhaps slightly larger,
richer displays, not much different from 3G devices. For device vendors and their component
suppliers, the big differences are under the hood. So are plenty of problems and opportunities.
Take spectrum: Like GSM, LTE is designed to be a global standard, with at least one network in
virtually every country. The catch is that unlike GSM, LTE will be available in far more bands. A
GSM "world phone" typically supports at most four bands: 850, 900, 1800, and 1900 MHz. LTE is
much more fragmented, so LTE devices will have to support far more bands to support global or
even regional roaming. For example, Latin America alone already has nine bands for LTE, but
they are not all available in all of that region's countries.
Spectrum fragmentation is not a minor issue. Adding bands to a device increases its cost,
complexity, addressable market, and potentially even its form factor. And besides multiple LTE
bands, the device also has to support bands for its "fallback" technology, such as UMTS/HSPA,
as well as GPS and WiFi. The antenna and chipset vendors briefed for this report say they are
already seeing carriers request first-generation devices that support eight to 13 bands in order to
accommodate all of these technologies.
"Your eyes cross when you think about designing that RF [radio frequency] front end," says Craig
Miller, Sequans's VP of marketing and business development. "It's a huge challenge. That's
where the most innovation has to happen."
But for device vendors and their suppliers, this challenge also is a market-differentiation
opportunity. And in the case of dongle-style LTE modems, support for a wide variety of bands is
one of the few ways other than price and performance that these products can stand out from
the pack in the eyes of carriers and end users.
That pack will be relatively small over the next two years. In 2011, the industry will ship at most
between 500,000 and 1 million LTE dongles, handsets, tablets, and other devices, based on
Heavy Reading's discussions with vendors. In 2012, volumes could hit 10 million worldwide. The
final tallies depend on at least two factors. The first, obvious one is how quickly and how many
carriers launch LTE service. The second factor is the recession, which affects not just how many
people are willing and able to buy LTE devices, but also how quickly fabs and other component
manufacturers are able to ramp production back up to meet demand. The recession-imposed
cutbacks of 2009 have created parts shortages that have plagued recent, high-profile 3G and
WiMax devices, such as the HTC Evo.
Over the long term, the market for LTE devices also depends on how many carriers offer
wholesale access, thus enabling a new breed of mobile virtual network operators (MVNOs). The
possibilities go beyond just MVNOs that appear, to end users, to be facilities-based carriers.
Possibilities include consumer electronics vendors, such as makers of e-readers, digital cameras,
and handheld game consoles. Depending on the target market and application, these devices will
have significantly different requirements than modems and handsets. For example, a digital
camera's LTE hardware probably would not have to support as many bands, thus reducing the
cost of adding LTE to that product.
The LTE device selection also depends on how many and how quickly existing and prospective
WiMax operators migrate to LTE. Clearwire and Yota are two WiMax incumbents that have
recently signaled their intention to offer LTE soon. Meanwhile, there is considerable debate over
whether the winners of India's Broadband Wireless Access (BWA) auction will deploy WiMax now
and then do an LTE overlay when that technology meets their business requirements, or whether
they will skip WiMax and go straight to LTE. India's enormous device volumes will be a decisive
factor in how aggressive WiMax vendors are in abandoning that technology to focus on LTE.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

These wild cards determine the market for devices that can switch between LTE and WiMax, as
well as the outlook for WiMax chipset vendors that are looking to capture a share of the much
larger LTE market. Besides offering LTE-WiMax combo chipsets which can switch between a
carrier's legacy WiMax network and its LTE overlay these vendors also can reuse the parts of
their WiMax designs and expertise that are applicable in LTE. Ultimately, LTE-WiMax devices are
a niche play, to the point that some WiMax vendors, such as Altair Semiconductor, are focusing
completely on LTE.
Another market-size factor is when and how LTE ecosystem members resolve the issue of voice.
Although LTE is best-known for data speeds in the tens and hundreds of megabits, voice is still
important to customers that want to buy a smartphone rather than a dongle, tablet, or embedded
laptop. Until the LTE industry picks a voice standard, LTE smartphones will rely on 2G and/or 3G
for calls. In theory, a LTE-only handset could support voice by using a Skype-style voice over IP
(VoIP) client that packetizes calls for shipment over the data connection. But in practice that
approach is not viable until LTE has extensive geographic coverage something it will not have
for at least a few more years.
But 3G will be key for LTE data, too, by providing at least some level of broadband connectivity in
areas where LTE service is not yet available. In those situations, the challenge for carriers,
application developers, and others will be to figure out ways to mask the fallback to
HSPA/HSPA+, CDMA2000 1xEVDO Rev. A, WiMax, or other technologies. If this fallback is
frequent and highly noticeable, such as a video stream that suddenly becomes pixilated because
the fallback network cannot deliver anything near LTE speeds, customers will wonder whether
LTE is worth whatever premium they are paying in terms of device and service.
These issues bear watching not only by investors in device vendors, but also those with wireless
carriers in their portfolios. For example, carriers with less-popular spectrum holdings will struggle
to get a broad selection of devices that support their bands, and they will be poorly positioned to
capture inbound roaming revenue from other carriers.
This report identifies and analyzes these and other key issues that will affect the global LTE
device market through the end of 2012. It also discusses carrier and vendor strategies for LTE
devices, including options for reducing their cost and complexity to the point that they can be
successful in price-sensitive applications and markets.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

II.

Device Types & Design Considerations

This section discusses myriad factors that affect an LTE device's design, affecting its wholesale
price, carrier subsidy, retail price, competitive position, and addressable market. Many of these
factors apply or have applied to 3G and WiMax, too, such as how being a brand-new technology
carries a price premium. But some are unique, such as LTE's spectrum fragmentation, which
along with the need for fallback technologies have some carriers requesting first-generation
devices that can support eight to 13 bands. These complex RF front ends increase costs.
Costs are important for any technology, but especially so for LTE, because WiMax has a multiyear head start in building the volumes that let it ride down the cost curve. As discussed in the
July 2010 Heavy Reading Mobile Networks Insider report, M2M on the Rise: The Technology
Perspective, a single-mode WiMax chipset that is, with no other wireless technology as a
fallback cost about $20 at the end of 2009. Some vendors expect prices to drop to $12 to $14
by the end of 2010. By comparison, an LTE module with 3G fallback not an apples-to-apples
comparison with single-mode WiMax, but instructive nonetheless currently costs $120 to $190.
Some in the industry might be surprised by the competitive price of WiMax modules. One reason
is because there are a dozen or more vendors competing at every component level, with price as
the only or most effective way to differentiate. Whether pricing pressure in WiMax remains strong
or levels off depends on if the hypercompetitive environment abates now that so many WiMax
chipset vendors and other suppliers are expanding into LTE, sometimes abandoning WiMax.
Eventually LTE will be the bigger market in terms of device volumes, customers, and networks
because it is the natural choice for carriers that use the GSM family of technologies, which has a
90 percent global market share. Plus, a growing number of CDMA and WiMax carriers such as
Verizon Wireless and Yota have either committed to or are considering defecting to LTE. So a
decade from now, LTE should enjoy a global cost structure on par with GSM.
Over the next several months, the outlook for device prices will be a factor in whether some
carriers particularly the winners of India's recent BWA auction deploy WiMax now and then
migrate to LTE when it meets their business needs, or go straight to LTE. "LTE is already going
to cost more than WiMax for a variety of reasons," says Sequans's Miller. "You've got a royalty
structure that doesn't exist on WiMax. You've got only a marginally more complex modem; that's
almost negligible. It's really the RF front end that's going to add huge costs to these things."
But those costs do not necessarily mean that carriers in highly price-sensitive markets such as
India will automatically go with WiMax in the short term. For example, a vendor could significantly
reduce the cost of an LTE device by supporting only one band, with no fallback technologies. This
design is not a drawback if the target application is providing fixed or portable broadband access
to homes and businesses because the lack of roaming is not a drawback for the carrier and its
customers. This strategy is viable not only for developing markets, but also rural and urban areas
in developed countries, such as the US. One example is CenturyLink, which plans to use LTE in
areas where DSL and fiber are not cost-effective.
MetroPCS is using a variant of this strategy. Its initial LTE device, the Samsung Craft handset,
uses 1.7 GHz and 2.1 GHz for LTE, plus 1.9 GHz for CDMA for voice and SMS. The carrier says
this design should not be a drawback for its customers because the vast majority of them do not
travel outside of their home metropolitan area.

A. Handsets From Day One

The Samsung Craft is an example of how LTE is quickly going beyond data-only devices which
offer a convenient way around the voice problem to offer handsets, too. The 16e version of
WiMax has been in global commercial service for a few years, but only in the past several months
has its device ecosystem added handsets, such as the HTC Evo.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

That said, data-only devices, such as dongles, tablets, routers, and embedded PCs, will make up
the lion's share of shipments through the end of 2012. "We will ship tens of thousands of units
this year to commercial deployments, all in the form factors of dongles and customer premise
equipment (CPE)," one semiconductor manufacturer says. "Ninety percent of the dialogue
between us and our customers has to do with dongles and CPEs."
Part of their appeal is that, as data-only devices, they are relatively inexpensive for carriers to
market and support compared to handsets. Their downside is few differentiation opportunities
aside from price and bundling. At a minimum, throughput has to be noticeably superior to 3G in
order to attract and retain customers. But to differentiate itself from rival LTE products, a dongle
or router must be noticeably faster than the competition. "The metric now is not, 'Can you give me
a $25 device?'" one vendor says. "It's, 'Can you give me one that actually delivers the throughput
that LTE promises?'"
With data-only devices the norm over the next two years, smartphones are a way for carriers to
stand out from the pack just as Sprint used the HTC Evo to make a splash earlier this year.
Many vendors expect major carriers to have at least one buzzworthy LTE handset at or shortly
after launch. This expectation has handset vendors rushing to proffer marquee devices both to
establish or maintain a relationship with certain carriers and to create a perception in the
marketplace that they are innovative.
Some vendors say that carriers are pushing them to produce LTE handsets sooner rather than in,
say, 2012. In some markets, there is also pressure from upstart carriers, such as MetroPCS not
just because it was able to get Samsung to produce what may be the world's first commercial
LTE-CDMA handset, but also because the carrier believes its move will force other carriers to
accelerate their handset plans. "We're really challenging the Tier 1 carriers' thought process,"
says Tony Lau, director of handset product management at MetroPCS.
Unlike dongles, one challenge for makers of handsets and embedded LTE devices, such as
tablets, is getting power consumption down to at least 3G levels, if not better. Lau and his
colleagues say they have been using the Samsung Craft for several months, and that even with
heavy use, it does not have to be charged for at least two days. (MetroPCS's minimum
requirements, regardless of technology, are 200 minutes of talk time and 200 hours of standby.)
Some vendors report similar experiences: "The power numbers we've measured to date are
comparable to those of HSPA and HSPA+," says Eran Eshed, founder and VP of marketing and
business development at Altair Semiconductor.
LTE should help improve battery life because it can send data at higher speeds, reducing the
amount of time and power that the device spends communicating with the network. But this
efficiency is offset by the need for fallback technologies because in the early generations of
devices, they are "Velcroed" to LTE: Instead of putting 3G or WiMax on the same chipset, they
are separate, a design that draws more power and adds at least $20 to $30 to the RF section. But
in the next year or two, these combinations will start to move onto a single hardware platform.
For embedded devices, such as tablets, laptops, netbooks, and digital cameras, the decision
whether and when to include LTE depends largely on coverage. In the US market, for example, a
PC vendor might wait until a single carrier has LTE service in the 25 largest markets. The
decision also depends on the speed of the fallback technology. With HSPA or WiMax capable of
providing a fast connection, frequent fallbacks might not be as noticeable to end users.
One wild card for all LTE devices is manufacturing. Since the global recession began, many fabs
and other manufacturers dramatically scaled back their production capabilities. As a result, some
device vendors and carriers have struggled to meet demand for popular smartphones, regardless
of technology. For LTE, the ideal scenario would be that there are no parts and manufacturing
shortages by late 2011, when shipments and sales will start to ramp up.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

Among the vendors willing to forecast sales, most expect industry-wide shipments of all LTE
device types to total at least a few hundred thousand in 2010, and between 500,000 and 1 million
in 2011. The most optimistic projection was for 2 million units shipping in 2011. By 2012, some
vendors expect global volumes of around 10 million. The actual amounts will depend, of course,
on how aggressive carriers are in launching and building out LTE. Figure 1 illustrates these
different scenarios.
Figure 1: LTE Device Shipments Forecast Three Scenarios

Source: Heavy Reading 4G/LTE Insider

As shipment volumes increase, some believe that the cost of LTE modules will quickly become
competitive with WiFi, whose chipsets currently go for about $3 apiece. Vendors targeting this
space also say that LTE modules for, say, a digital camera or handheld game console can be
cheaper simply because they do not need to be as sophisticated such as in terms of bands
supported as ones that go into handsets. "So it's entirely possible in three years to go build
modules that are in the $3 to $4 range and enter that market," says Raj Singh, president and
CEO of Wavesat.
If so and that is a very big if LTE would be able to target the machine-to-machine (M2M)
market faster than some might expect. Although LTE provides far more bandwidth than most
M2M applications need, some M2M developers and vendors are already preparing for it because
they are concerned that their 2.5G and 3G devices will be orphaned when carriers start phasing
out those networks. "We're seeing a lot of attention being paid to M2M communications," says
Jon Hambidge, IPWireless' CMO. "We have a device we use for intelligent traffic backhaul, [such
as] camera backhaul."

B. New & More Bands

LTE can be deployed in about 41 spectrum bands worldwide, with the selection in each country
depending on what the regulator there allows. Figure 2 illustrates the spectrum breakdown by
world region.
Figure 2 belies LTE's spectrum fragmentation. For example, although 700 MHz might appear to
be a single band, the International Telecommunication Union (ITU) divides it into four sub-bands.
Some bands also are designated for use in frequency division duplex (FDD) mode and others in
time division duplex (TDD) mode. Some operators have FDD spectrum in one part of a country
and TDD in others. This challenge is an opportunity for vendors that have LTE solutions that can
seamlessly hand off between FDD and TDD, such as IPWireless and Wavesat.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

Figure 2: LTE Bands by World Region

Source: GSM Association (GSMA)

Some countries, such as India, have auctioned or plan to auction new bands for LTE, while
others allow carriers to use their existing 2G and/or 3G spectrum for LTE. Still others, such as the
US, have done both. Sometimes regulators in a region will follow the lead of their larger
neighbors when deciding what to do. For example, Brazil recently chose what is known as ITU
option 1 for the 2.6GHz band, and the consensus is that others, such as Chile, will now follow
suit. Brazil also is an example of how not all countries in the Americas are willing to clear out the
700MHz band for LTE.
These variables create challenges for device vendors, their suppliers, and carriers. Indeed, the
vendors interviewed for this report used terms such as "quagmire" and "a very sad mess" to
describe the fragmentation. Take roaming: A GSM world phone typically supports three or four
bands. LTE devices will have to support at least that many for international or even continental
roaming, plus multiple bands for their fallback technologies. Keep in mind that until carriers have
extensive LTE footprints a task that will take each one at least a couple of years roaming on
other LTE networks, WiMax, or 3G will be key for convincing customers to sign up for LTE.
"We've seen some carriers requiring up to 10 bands because they want to be able to service the
700MHz band in the US and other bands in Europe and Asia," says Chuck Riggle, VP of
SkyCross, an antenna vendor. Other vendors say they are seeing requests or requirements for
similar amounts, generally between eight and 13. (The antenna-design implications are discussed
later in this section.)
One bright spot is that some bands are already rising to the top in terms of popularity. "We are
beginning to see some kind of default spectrum bands beginning to emerge: Digital Dividend, 2.5
GHz, unpaired for TDD at 2.3 GHz, and 700 MHz in the US, which is spreading into Latin
America," says Dan Warren, the GSMA's director of technology. This is still a far cry from having
just one or two bands that work anywhere on the planet an impossible dream but if four or five
bands turn out to be head-and-shoulders above the remaining three dozen in terms of popularity,
it is better than having to support even more.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

Carriers with less-popular spectrum will face challenges in two respects. First, they could have a
limited selection of devices if vendors focus on the bands with the most potential customers.
"Operators with Band 12 here in the US are going to have a real challenge getting smartphones
to support their band," one vendor says privately. A competitor agrees and adds: "A lot of Band
12 operators are joining together to try to get volume and stimulate the ecosystem to try to get
devices for their bands." Second, unless other carriers require their devices to support their lesspopular bands, holders of oddball spectrum will not be able to capture inbound roaming revenue.

C. The Antenna Conundrum

The more bands that a device must support, the more antennas and other RF hardware such
as filters and power amplifiers that have to be paid for and then shoehorned inside. The LTE
antennas also must share space with those for GPS, WiFi, and any fallback technologies.
In theory, the smaller the device, the more difficult it should be to find room for multiple antennas.
That assumption is correct, but that does not imply that handsets, tablets, and other larger
devices have ample extra room compared to dongles. Just the opposite: Antennas frequently
take a back seat to battery life, cameras, stereo speakers, and other hardware that vendors know
customers and reviewers will notice when comparing devices.
Figure 3 illustrates how close the quarters typically are. (The antennas are visible as metallic
strips.) Note that this phone is a Samsung BlackJack, which is a 3G model. An LTE version would
require space for additional antennas.
Figure 3: Limited Room for Antennas

Source: SkyCross
On top of everything, LTE also uses multiple input/multiple output (MIMO) antennas to achieve
benefits like higher data rates and improved reliability. Some 3G devices also have a diversity
antenna to help hold onto a signal during fades and other challenging RF conditions.
"The difference for LTE is that now the requirement for that second antenna is essentially the
same as the main antenna because you're not just trying to pick up a fade whenever you have a

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

need for diversity; you're actually trying to use the second antenna in a MIMO situation so that
you can enhance the capacity," says SkyCross's Riggle. "The requirements of the second
antenna are approximating the main antenna, which means that its size and complexity are going
to be the same as the main. So now you're not only adding a whole bunch of bands, but you're
also adding a second high-functioning antenna to that mix, increasing the complexity yet again."
The complexity increases further depending on the frequency differences between the various
LTE bands. A worst-case example but also a real-world one is a device that needs to cover
multiple bands between 700 MHz and 2.6 GHz. "[Carriers] looking for eight or 10 bands inevitably
want the US market," Riggle says. "So whether their local market is 1.7 GHz or 2.6 GHz, if they
have to include 700 MHz for roaming, that makes it a big challenge from a design capability."
For carriers with spectrum at lower frequencies as well as those that don't, but want their
devices to support roaming at lower frequencies another challenge is an RF rule of thumb: The
lower the frequency, the physically longer the antenna.
Regardless of technology, a well-designed antenna system improves battery life. For example,
there is a 1:1 relationship between antenna gain and radiated power: If the antenna's gain can be
increased 1 dB, the power amplifier can be throttled back 1 dB, all while maintaining the same
radiated power. This efficiency also can be an advantage in RF-sensitive applications, such as
health care, where the lower a device's radiated power, the less likely it is to interfere with
sensitive equipment nearby.
Antenna efficiency also provides device vendors with another tool for delivering LTE devices that
last at least as long as 3G hardware. "The processing requirements of 4G have grown
dramatically over previous generation, but the battery capacity can't grow in the same rate," says
Eyal Bergman, director of product marketing at CEVA, whose DSPs are in commercial LTE
products, such as the Samsung dongles that TeliaSonera sells.
Yet antenna vendors say it is still a challenge to convincing device vendors and carriers that
antenna systems should not be an afterthought. That argument should be easier in the wake of
the iPhone 4's antenna problems, which illustrates the PR and financial costs of a questionable
design. Some might argue that "antenna-gate" did not hurt iPhone 4 sales, but it is worth
remembering that few devices have such a devoted following.
In the case of dongles, there are not many differentiation options aside from price. But if an
antenna enables performance that is noticeably superior to rival LTE devices, then it could help a
dongle stand out from the pack. In our experience with testing 3G modems over the years, we
have found significant differences between devices in terms of data rates and have seen reviews
that note these differences.
If a carrier launches commercial LTE service with a high-performance dongle, the positive
reviews and buzz also will help convince potential customers to sign up for service. After all,
multi-megabit throughput is supposed to be LTE's big market differentiator, and if a carrier's initial
device line-up cannot deliver on that promise, that carrier will have to spend more in the future to
overcome the negative market perception.
"Device manufacturers that do not address the antenna issue early in the design phase will wind
up degrading their throughput performance and will be defeating the purpose of LTE," says Jeff
Shamblin, CTO of Ethertronics, an antenna vendor. "LTE is all about data rates."
A good antenna system can be a market differentiator on handsets, too. For example, an antenna
with high gain can help maximize battery life because the device does not have to work as hard
to deal with poor signal conditions. Granted, reviewers and customers will not recognize the
antenna system's role, but they will notice the device's longer battery life and ability to provide a
good user experience in places where rival products struggle.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

D. Voice
Although LTE uses multi-megabit speeds to differentiate itself, and although wireless data usage
has spent the past few years skyrocketing, LTE cannot ignore voice, which is a must-have for the
smartphone segment of the wireless market. The catch is that the LTE industry has yet to agree
on a standard for handling voice.
In February 2010, the GSMA announced the voice over LTE (VoLTE) initiative, which advocates
using an IP Multimedia Subsystem (IMS) architecture to handle voice and messaging. Based on
the work of the One Voice Initiative, VoLTE is backed by more than 40 companies. Its primary
competitor is VoLTE via Generic Access (VoLGA), which has roughly half as many members in
its promoter organization.
There are several reasons why a carrier or vendor might prefer VoLTE over VoLGA or vice versa.
For example, a GSM carrier might be attracted to VoLGA because it re-uses the carrier's
switching investments a non-factor for a Greenfield LTE operator or a CDMA carrier that is
doing an LTE overlay.
Some carriers say they want to move voice onto LTE as soon as possible because it is cheaper
operationally to run everything entirely on IP. Although VoLTE seems to have wider industry
support at the moment, it is too soon to predict which one will become the industry standard or
when. "Like everything that's supposed to be standardized big politics, big money don't
expect a quick solution," one vendor says privately. And even if a standard were chosen
tomorrow, implementation would not happen overnight.
The lack of a voice standard does not put LTE at a competitive disadvantage in the short term.
First, the vast majority of commercial LTE devices sold through 2012 will be data-only, such as
USB modems, tablets, and embedded laptops. Second, the LTE handsets sold during this period
will fall back to 2G and 3G for calls, just as today's WiMax smartphones do. This approach to
handling voice benefits 2G and 3G customers because it gives carriers yet another incentive to
keep those networks in tip-top shape.
But over the long term, this fallback approach becomes less viable. For example, the 2G/3G
silicon, antennas, and other hardware is an added expense, and the extra technologies incur
support costs for the carrier. And on the network side, LTE's all-IP environment reduces voice's
overhead costs, which is why carriers such as MetroPCS are eager to see the LTE voice issue
resolved as soon as possible.
Why not just put a Skype-style VoIP client on LTE handsets in order to eliminate the reliance on
2G and 3G? One obvious problem is that it is going to be several more years before LTE has
coverage on par with 2G and 3G, which have conditioned customers to expect voice service
pretty much everywhere. Thus this strategy is limited mainly to fixed applications, such as
displacing wired home phones, or to services that cater to people that rarely leave their home
metropolitan area. Another problem is getting the VoIP client to deal with the notoriously
unpredictable wireless environment.

E. The Roles of HSPA & WiMax

No technology exists in a vacuum, so it is worth looking at LTE's relationship with HSPA/HSPA+
and WiMax. HSPA and HSPA+ have the potential to both help and hinder LTE. On the plus side,
HSPA/HSPA+ offer speeds high enough to maintain a good user experience when broadbandintensive applications, such as streaming video, fall back from LTE. HSPA/HSPA+ also enjoy
wide support among carriers, device vendors, and infrastructure vendors.
"A lot of operators are looking at it and saying: 'This is pretty hot. What you can do with HSPA+ is
pretty good bang for your buck,'" one executive says privately. "It's an evolutionary step. And
what I've heard from the handset guys is, whereas Evolved EDGE has had real trouble getting

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

10

into their roadmaps, HSPA+ hasn't had any trouble at all. Most of the major handset vendors
have said it's in their roadmap."
On the down side, the growing device selection for HSPA/HSPA+, along with its high speeds,
could prompt some carriers to focus on those technologies rather than quickly move into LTE.
"For instance, some operators are pushing their existing 3G network to its limit by upgrading to
HSPA+ and delaying their LTE rollout, while others, such as Verizon, are racing towards LTE in
full speed," says CEVA's Bergman.
LTE's relationship with WiMax also is mixed. Obviously the two technologies are direct
competitors, and over the past few months, the LTE camp has spent an increasing amount of
time gloating over the number of WiMax carriers and vendors that are considering defecting to
LTE or have already jumped ship. The carrier defections create a market for devices that can
switch between WiMax and LTE, such as when a WiMax carrier does an LTE overlay but does
not want to force or pay WiMax customers to switch devices. Beceem and Wavesat are the two
main vendors targeting the LTE-WiMax combo market.
Device vendors and their suppliers can do only so much to facilitate seamlessness between LTE
and WiMax. Case in point: It is easier to facilitate a handoff between LTE and WiMax when both
networks are owned by the same carrier than when they are not. By comparison, there has been
much more work to facilitate standards for tasks, such as data handovers between GSM-based
technologies and LTE.
"About 2.5-3 years ago, Intel were very active in the Third Generation Partnership Project (3GPP)
to make sure that the interoperability between LTE and WiMax in the core network was in place
so that, in theory, you could do a handover," says the GSMA's Warren. "The mechanisms to do
that are not perfect. They haven't been worked on for a number of years, primarily because the
community of interest in 3GPP has been primarily oriented around LTE fallback to existing,
[primarily 3GPP-based] technologies."
This is one of the reasons why the market for LTE-WiMax combo devices is relatively small. In
fact, some vendors that are leaving or have left WiMax for LTE do not see enough market
potential to re-use their WiMax designs and relationships for a combo play. "It's just not
interesting," one says. A rival agrees: "We aren't seeing market demand for LTE-WiMax
solutions."
Even so, WiMax vendors often are not completely abandoning their past. Instead, they are reusing elements of their WiMax transceiver designs that are applicable to LTE. "LTE-TDD devices
are not particularly challenging to implement because you can re-use an awful lot of stuff that has
been developed for WiMax in terms of the OFDM base technology," one vendor says. "The TDDLTE community has a leg up in terms of development cycle. There's an awful lot of stuff out there
that can be subtly changed to make it TDD-LTE-compatible."
Some vendors that were not successful in WiMax have put on a spin on their track records as
they leave for LTE: Success would have left fewer resources for developing LTE solutions, so by
bailing early as in 2008 they had more time and money for LTE, they say.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

11

III.

Key Findings

LTE is a major market opportunity by any measurement, simply because most GSM and many
CDMA operators are planning to take that migration path to 4G. The GSM family of technologies
has roughly 90 percent of the global wireless market, and with the addition of the defecting CDMA
operators, LTE eventually will become as dominant as GSM. Add in the possibility, if not
likelihood, of many WiMax operators defecting to LTE, and the market becomes even larger.
The catch is that this opportunity is not easy for vendors to capture, because the expectations
and requirements are so high. For example, end users expect LTE to deliver data rates that are
noticeably higher than 3G, especially if they are paying a premium for service. And some carriers
are already requiring devices that support a dozen bands for LTE and other technologies.
This report's other key findings include:
LTE handsets are coming sooner rather than later. Although it is easier, cheaper, and faster
for carriers and vendors to offer only dongle-style LTE modems rather than handsets, too,
MetroPCS and Samsung are two examples of how some are taking a contrarian strategy. That
said, handsets will remain the minority of LTE products through 2012 as the ecosystem focuses
on data-only devices, such as dongle modems, and embedded devices, such as tablets.
Early reports of LTE power consumption are promising. For example, MetroPCS says its
Samsung Craft does not have to be charged for at least two days, even after heavy use.
Meanwhile, one semiconductor vendor says its LTE power measurements so far are comparable
to those of HSPA/HSPA+. If these examples are indications of the norm, then at least from a
radio perspective the No. 2 power drain after the display LTE handsets can avoid the stigma
of being battery hogs. The ability to get a full eight hours of heavy usage between charges is
particularly advantageous for selling into the enterprise market.
Spectrum fragmentation is both a problem and an opportunity for LTE device vendors.
Although it aspires to be GSM-like in terms of global availability, this goal is harder to achieve
than with other 3GPP-based technologies. Some bands are emerging as must-haves, which
helps, but it is hard to see LTE eventually being like GSM in the sense that a "world" device
would have to support at most four bands.
Carriers with less-popular spectrum could find it difficult to get a good device selection.
"Operators with Band 12 here in the US are going to have a real challenge getting smartphones
to support their band," one vendor says privately. A competitor agrees and adds: "A lot of Band
12 operators are joining together to try to get volume and stimulate the ecosystem to try to get
devices for their bands."
LTE will remain heavily dependent on 3G for at least the next two years, while carriers
build out coverage. This dependence increases the cost and RF complexity of LTE devices
because besides one or more LTE bands, they also must support one or more 3G bands.
But LTE eventually will become a viable option for price-sensitive markets, such as India
and Latin America. For example, a vendor could minimize the complexity and cost of its LTE
device by supporting a single LTE band and no fallback technologies. This design is viable for
applications, such as fixed broadband, for consumers and small businesses in markets where
wired technologies are cost-prohibitive or unavailable. That said, it still will take LTE a few more
years to ride down the cost curve to the point that its hardware is competitive with 3G gear.
LTE still has not found its voice. Although VoLTE seems to have an edge in terms of industry
support, nothing is a done deal. This is another reason why LTE will be heavily dependent on 3G
through at least 2012.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

12

The market for LTE-WiMax combo devices is limited. Just how limited depends on how many
carriers particularly the India BWA auction winners commit to LTE over the next several
months. In the meantime, a growing number of WiMax vendors are stepping up their LTE efforts,
sometimes abandoning WiMax altogether because they are not convinced that the LTE-WiMax
combo market is big enough to pursue.
HSPA/HSPA+ will both help and hinder LTE. They will help because they offer speeds high
enough to maintain a good user experience when broadband-intensive applications, such as
streaming video, fall back from LTE. But they also will hinder because the growing device
selection for HSPA/HSPA+, along with its high speeds, could prompt some carriers to focus on
those technologies rather than aggressively move into LTE.
The selection and sales of LTE devices will depend partly on how quickly fabs and other
component manufacturers are able to ramp production back up to meet demand. No
vendor or carrier wants to see parts and production shortages stymie the market for a popular
LTE device. Yet that is exactly what is happened with some hot 3G and WiMax devices. On the
bright side, unless there is a double-dip recession, fabs probably will be back up to full speed by
the time LTE has significant volumes.

Editor: Dennis Mendyk (mendyk@heavyreading.com)

Research Analyst: Tim Kridel (tim@timkridel.com)
Support: www.heavyreading.com/4glte (support@lightreading.com)

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

13

SUBSCRIBER LICENSE AGREEMENT

Any Heavy Reading 4G/LTE Insider report ("Report") and the information therein are the property
of or licensed to United Business Media LLC ("UBM") and permission to use the same is granted
to annual or single-report subscribers ("Subscribers") under the terms of this Subscriber License
Agreement ("Agreement") which may be amended from time to time without notice. When
requesting a Report, Subscriber acknowledges that it is bound by the terms and conditions of this
Agreement and any amendments thereto. UBM therefore recommends that you review this page
for amendments to this Agreement prior to requesting any additional Reports.
SUBSCRIPTION RENEWAL
For convenience, subscriptions purchased by credit card will be auto-renewed at the end of the
subscription term. Prior to that auto-renewal you will receive a notice that will include instructions
for updating your subscription or payment information and for opting out of the auto-renewal
process.
OWNERSHIP RIGHTS
All Reports are owned by UBM and protected by United States Copyright and international
copyright/intellectual property laws under applicable treaties and/or conventions. Subscriber
agrees not to export any Report into a country that does not have copyright/intellectual property
laws that will protect UBM's rights therein.
GRANT OF LICENSE RIGHTS
UBM hereby grants Subscriber a personal, non-exclusive, non-refundable, non-transferable
license to use the Report for research purposes only pursuant to the terms and conditions of this
Agreement. UBM retains exclusive and sole ownership of each Report disseminated under this
Agreement. Subscriber agrees not to permit any unauthorized use, reproduction, distribution,
publication or electronic transmission of any Report or the information/forecasts therein without
the express written permission of UBM. Subscribers purchasing site licenses may make a Report
available to other persons from their organization at the specific physical site covered by the
agreement, but are prohibited from distributing the report to people outside the organization, or to
other sites within the organization. Enterprise Level Subscribers, however, may make a Report
available for access on computer intranets or closed computer systems for internal use under
their service agreements with UBM.
DISCLAIMER OF WARRANTY AND LIABILITY
UBM has used its best efforts in collecting and preparing each Report.
UBM, ITS EMPLOYEES, AFFILIATES, AGENTS, AND LICENSORS DO NOT WARRANT THE
ACCURACY, COMPLETENESS, CURRENTNESS, NONINFRINGEMENT, MERCHANTABILITY,
OR FITNESS FOR A PARTICULAR PURPOSE OF ANY REPORTS COVERED BY THIS
AGREEMENT. UBM, ITS EMPLOYEES, AFFILIATES, AGENTS, OR LICENSORS SHALL NOT
BE LIABLE TO SUBSCRIBER OR ANY THIRD PARTY FOR LOSSES OR INJURY CAUSED IN
WHOLE OR PART BY OUR NEGLIGENCE OR CONTINGENCIES BEYOND UBM'S CONTROL
IN COMPILING, PREPARING OR DISSEMINATING ANY REPORT OR FOR ANY DECISION
MADE OR ACTION TAKEN BY SUBSCRIBER OR ANY THIRD PARTY IN RELIANCE ON
SUCH INFORMATION OR FOR ANY CONSEQUENTIAL, SPECIAL, INDIRECT OR SIMILAR
DAMAGES, EVEN IF UBM WAS ADVISED OF THE POSSIBILITY OF THE SAME.
SUBSCRIBER AGREES THAT THE LIABILITY OF UBM, ITS EMPLOYEES, AFFILIATES,
AGENTS AND LICENSORS, IF ANY, ARISING OUT OF ANY KIND OF LEGAL CLAIM
(WHETHER IN CONTRACT, TORT OR OTHERWISE) IN CONNECTION WITH ITS
GOODS/SERVICES UNDER THIS AGREEMENT SHALL NOT EXCEED THE AMOUNT YOU
PAID TO UBM FOR USE OF THE REPORT IN QUESTION.

HEAVY READING 4G/LTE INSIDER | VOL. 1, NO. 6, NOVEMBER 2010 | HEAVY READING

14