MARKET ANALYSIS

U.S. LTE Subscriber 20132017 Forecast

John Byrne John Weber

IDC OPINION
The demand for fast and dependable data coupled with the demand for connected
devices has driven the adoption of LTE services in the United States. Operators have
raced to deploy LTE networks to offer the best possible data service to their users.
www.idc.com

Consumer and business users alike understand the value of LTE data, and operators
recognize that leveraging this demand will be critical to driving mobile data revenue in
2013 and beyond. With 100% market penetration approaching within the next few
years IDC expects this to occur in late 2016 or early 2017 operators must find
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new methods of driving revenue. As more operators begin to offer services leveraging
LTE and users begin to realize the value of increased data speeds, the number of
LTE subscribers will proliferate. Highlights from IDC's analysis include the following:

Approximately 78 million, or 25.5% of, total wireless subscribers in the United

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States will be LTE subscribers at the close of 2013. In 2012, LTE subscribers
totaled 34.4 million, thus the number of subscribers will more than double in
2013, growing at approximately 127%. By 2017, LTE subs will surpass 230
million, a 46.4% CAGR from 2012.

LTE coverage reach as a differentiator will be a much less viable strategy toward
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the end of 2014 as tier 1 operators will have a majority of their existing footprints
covered with LTE. However, once the initial coverage buildouts are complete,
operators will look to increase capacity and improve network performance in
urban and heavily trafficked locations.

LTE handsets have driven LTE subscriber growth to date and will continue to
make up a majority of subscriber additions throughout the forecast period.
However, due in part to shared data plans at the two largest providers of LTE
coverage and devices, more subscribers are choosing to connect tablets and
mobile broadband devices in hopes of achieving true mobility. Incentivizing the
addition of a tablet on a two-year commitment via a subsidy has contributed to
the growth in cellular connected tablets.

Filing Information: March 2013, IDC #240197, Volume: 1

United States Mobile Consumer Services: Market Analysis
IN THIS STUDY

Methodology

Who Is Considered an LTE Subscriber?

While HSPA+ subscribers are now considered "4G" by multiple wireless service
providers, this forecast covers exclusively total LTE subscribers in the United States,
not total 4G subscribers. LTE network technology and which specific spectrum assets
operators are using to operate their LTE networks are detailed in the LTE: The U.S.
Standard for Data (Now) and Voice (Eventually) section. Sprint's and Clearwire's 4G
WiMAX customers are not included in the LTE subscriber count. Subscribers on LTE-
capable devices outside LTE coverage areas will revert back to HSPA+, CDMA EV-
DO, or other networks but will not be considered LTE subscribers in this forecast. In
addition, circuit-switched voice using non-LTE 2G and 3G technologies, including
CDMA 1xRTT and GSM, will continue to be used for voice services on the vast
majority of LTE devices for several years as voice over LTE (VoLTE), while planned,
is only offered by MetroPCS on one device and will see slow uptake on operator
networks.

IDC has used several sources to arrive at its LTE subscriber forecast:

Mobile operator quarterly and annual reports. Mobile operators that have
begun offering, or plan to soon offer, LTE often report metrics including total
number of subscribers and POPs covered. Relevant metrics that were reported
were taken into account for the forecast.

Conversations with mobile operators, telecom equipment companies, and

other market players. Exclusive IDC conversations were used as guidance for
current and forecast data estimates.

Related IDC forecasts. Relevant forecast data was leveraged to provide a view
of the overall wireless market.

The methodology for IDC's mobile services forecast adheres to how U.S. mobile
operators count subscribers and subscriptions. In more detail:

Counting subscriptions rather than subscribers. IDC's mobile services

forecasts count subscriptions rather than subscribers. For instance, a customer
who uses mobile services over both a handset and a mobile broadband USB
dongle or 3G/4G-enabled tablet (technically one subscriber with two subscriptions)
is counted by IDC, and carriers, as two subscriptions. This approach explains the
fact that we are approaching a 100% saturation level of subscriptions compared
with the population. Individual customers have the potential to hold multiple
subscriptions, which will lead to more than 100% saturation in the future, as is
currently the case in many Western European and Asian countries. IDC expects
this crossover to take place in late 2016 or early 2017 in the United States.
Throughout this study, subscriber and subscription are referred to interchangeably,
but the definition remains that this forecast counts actual subscriptions.

2013 IDC #240197 1

Note: All numbers in this document may not be exact due to rounding.

SITUATION OVERVIEW

LTE: The U.S. Standard for Data (Now) and

Voice (Eventually)

LTE has been deployed at all four tier 1 operators, several tier 2 and prepaid
operators, and multiple rural carriers as of 1Q13. Verizon is the market leader in
terms of coverage, currently nearing completion of its near-ubiquitous build. By mid-
2013, Verizon will cover over 300 million POPs, or nearly its entire CDMA EV-DO
footprint. While AT&T has made great progress in deploying LTE, there remains a
significant coverage gap between Verizon and its closest competitor in LTE buildout.
Despite this progress, Verizon will still enjoy an advantage in terms of coverage over
AT&T until the end of 2014, when AT&T plans to cover 300 million POPs with LTE,
essentially matching its current HSPA+ coverage area.

Sprint and T-Mobile USA are both embarked on aggressive LTE buildout plans. Thus
far, Sprint's buildout has proceeded somewhat more slowly than expected.
Deployment delays have been attributed to a number of factors, but the lack of
deployment crews has been a major factor and will likely affect 2013 plans as well. T-
Mobile USA has also embarked on an aggressive buildout plan but is likely to
encounter similar challenges to its buildout plans in 2013 as well.

The popularity of LTE service is clearly indicated by the results being reported by
Verizon thus far. The company reported that as of the end of 2012, approximately half
of its wireless data usage was coming on the LTE network, up from 35% at the end of
3Q12. Most LTE operators, both domestic and international, report significantly higher
data consumption on LTE devices than they do on comparable 3G devices. The
popularity of LTE is also being boosted by the introduction of two high-profile LTE
devices, the iPhone and the Samsung Galaxy S series, both of which support LTE on
their most recent devices. Tablets with cellular connectivity are now being offered with
LTE, as are connected laptops and mobile broadband devices. While these LTE-
capable devices revert back to CDMA and HSPA+ where LTE coverage is
unavailable, the ability to connect to LTE provides the true value of the LTE devices.

As the major operators complete their initial builds, they will by no means be done
with their LTE deployments. After completing their initial coverage-based builds
utilizing 700MHz, both Verizon and AT&T will look to higher-band deployments to
provide additional capacity in urban corridors seeing the most LTE usage. Verizon will
utilize the AWS spectrum (1.7GHz/2.1GHz) it obtained from cable operators last year,
while AT&T will use AWS as well as the WCS spectrum in the 2.3GHz range on
which it received approval (in late 2012) for cellular operation.

Sprint will initially offer LTE in the PCS band (1.9GHz), with the goal of eventually
offering it on refarmed 800MHz by 2014. By contrast, T-Mobile USA will deploy LTE
within the AWS band but, unlike other national operators, does not have spectrum in
the sub-1GHz range to deploy LTE broadly. It will be limited to the AWS and PCS
(1.9GHz) bands unless it can obtain low-band spectrum. Because of the lack of low-

2 #240197 2013 IDC

band spectrum, T-Mobile USA will not be able to match its national competitors on the
breadth of its network deployment.

The ability to provide VoLTE continues to be the long-term goal of many LTE
operators. In August 2012, MetroPCS became the first operator to launch VoLTE;
however, both Verizon and AT&T continue to proceed slowly into VoLTE. Verizon has
stated that it will launch VoLTE in early 2014, while AT&T continues to indicate an
initial commercial launch of VoLTE will occur by the end of 2013. Regardless of the
actual launch date, both AT&T and Verizon appear likely to move slowly on VoLTE in
order to ensure the same level of quality can be maintained in VoLTE as with circuit-
switched voice. In IDC's view, a lack of handsets, short battery life with initial VoLTE
handsets, and a variety of other technical and business model challenges (see Pieces
of the Puzzle Coming Together Slowly for IMS, VoLTE, and RCS, IDC #237748,
November 2012) will limit initial uptake of VoLTE.

Operator-Specific Strategies

Mobile operators have developed unique strategies related to LTE in terms of

coverage plans, device availability, and several other related areas. The following
analysis details the strategies of several top operators:

AT&T. AT&T made its LTE network available in September 2011 in five markets,
at first selling only LTE dongles and a single tablet. It now offers 24 LTE
smartphones, including the BlackBerry Z10; six tablets; and four mobile
broadband devices that connect to LTE. The company is seeing the vast majority
of its new smartphone sales on LTE devices.

AT&T's LTE coverage area grew from 74 million POPs at year-end 2011 to
approximately 170 million at year-end 2012, exceeding internal plans to cover
150 million by that time. Future LTE deployments are being accelerated by
Project Velocity IP, a $14 billion investment focused on wireless, specifically LTE,
and wireline networks. AT&T expects to provide coverage to 250 million by the
end of 2013 and 300 million covered LTE POPs by the end of 2014.

As it completes its initial buildout, AT&T will increasingly turn to deployments in

its AWS spectrum to provide additional capacity. These deployments will begin to
be seen in 2013 and accelerate in 2014. AT&T also has spectrum in the WCS
that it will need to deploy to comply with FCC requirements; however, these
deployments will not likely occur until 2015+.

C Spire Wireless (formerly Cellular South). C Spire, after launch delays, lit up
its first LTE networks in late 3Q12. C Spire LTE covers 1.2 million POPs in 35
markets. The company began offering LTE devices prior to launch and offers the
Samsung Galaxy S III as its premier LTE device. An LTE USB modem and an
LTE hotspot are also available.

Clearwire. Though its deployment time frame has been pushed back by funding
difficulties and a lack of resolution of who will ultimately own it, Clearwire
continues to plan to deploy TDD LTE beginning in 2013. Sprint announced plans
in December 2012 to acquire Clearwire outright, which would solve the

2013 IDC #240197 3

 company's funding woes. However, DISH Network entered a competitive bid for
Clearwire. Clearwire plans to deploy TDD LTE to 5,000 of its busiest cell sites by
mid-2013 and eventually to an additional 3,000 of its cell sites. The company will
focus initially on its largest markets, including New York, Los Angeles, San
Francisco, Chicago, and Seattle. Assuming the deployment moves forward, it
would mark a significant breakthrough for Huawei, which was named as one of
Clearwire's LTE vendors along with Samsung. It is not clear yet whether Sprint's
acquisition of the entirety of Clearwire would affect the vendor selection process,
as Sprint famously backed away from selecting Huawei as a vendor for its
Network Vision project in the wake of considerable political opposition.

Clearwire's list of wholesale partners for TDD LTE capacity includes Sprint and
Leap Wireless; however, the company is clearly interested in adding new retail
operator partners as well as MVNOs, retail chains, and consumer electronics
manufacturers. It is not clear at this juncture whether the new ownership
structure will affect the company's wholesale strategy.

Moreover, it is not entirely clear how Sprint's proposed acquisition of Clearwire

will be received by regulators. Other operators voicing opposition to the deal
suggest that the Clearwire spectrum should be included in considerations over
the spectrum gap that generally limits how much spectrum any single operator
can hold in a market. Currently, Clearwire's 2.5GHz spectrum is not considered
in determining whether the spectrum cap should apply.

Leap Wireless. Leap, through Cricket Wireless, currently offers three LTE
devices, with the goal of launching six more in 2013. Cricket offers the Samsung
Galaxy S III and iPhone 5, though the devices and LTE coverage are only
available in select markets.

Leap covered 21 million POPs with LTE at the close of 2012 and is exploring its
options on exactly how to add additional coverage of 10 million POPs in 2013. It
recently partnered with an unknown operator on an LTE roaming agreement and
will elect to increase its POPs covered via additional build of its own network or
as part of the roaming agreement. More specifically, the operator noted that
decisions to add 10 million new POPs through its roaming agreement or its own
network will be determined on a market-by-market basis.

MetroPCS. In 2010, MetroPCS became the first pure-play prepaid operator to

make LTE available to its customers. At the end of 2012, the operator had 2.2
million LTE subscribers, representing approximately 25% of the operator's total
wireless subscriber base. By the end of February 2013, MetroPCS' LTE subs
surpassed 3 million. MetroPCS added several LTE smartphones to its portfolio in
2012, notably the Samsung Galaxy S III, and offers 10 LTE-ready devices as of
March 2013.

MetroPCS became the first operator to launch VoLTE and RCS (see The VoLTE
Era Begins: MetroPCS Introduces IP Voice Service (IDC #lcUS23642712,
August 2012). While it will take the launch of VoLTE at several other operators
before the service can truly expand, MetroPCS can begin to educate its
customers on the value-add of VoLTE as well as offer customers VoLTE-enabled

4 #240197 2013 IDC

 devices. At the close of 2012, MetroPCS LTE networks covered 103 million
POPs. Samsung and Ericsson are MetroPCS' primary LTE radio suppliers as the
company looks to eventually overlay LTE across its entire network of 11,000 cell
sites.

Sprint. Sprint began seeding the markets in the first half of 2012 with five
smartphones and a mobile hotspot before activating LTE in five markets in July
2012. Since January 2012, Sprint has announced the availability of 17 LTE
capable smartphones, tablets, and mobile broadband devices, though two, the
Kyocera Torque and the BlackBerry Q10, are not yet available.

Sprint intends to close the gap on Verizon and AT&T quickly, though it
experienced several delays in 2012. The company expected to provide LTE in
markets covering 123 million POPs by the end of 2012, though IDC estimates
that that number only reached 60 million by the end of 4Q12. When Sprint's
deployment is complete, a total coverage area of 277+ million POPs will include
a complete overbuild in territories where Sprint currently provides WiMAX service
via its wholesale arrangement with Clearwire. Leveraging its proposed
acquisition of the outstanding shares of Clearwire that it does not already own,
Sprint will gain access to TDD LTE capacity from Clearwire. Sprint is using LTE
radio gear from three suppliers Ericsson, Alcatel-Lucent, and Samsung as
part of its Network Vision upgrade.

Once the acquisition of 70% of Sprint by Japanese operator SoftBank is

complete, Sprint will be in a strong position to purchase additional spectrum in
order to provide additional LTE capacity. That acquisition is currently under
review by the U.S. Department of Justice but appears likely to move forward to
completion.

T-Mobile USA. T-Mobile has built out LTE in two markets, Las Vegas, Nevada,
and Kansas City, Missouri, and plans to introduce LTE to cover 100 million POPs
by the first half of 2013 and 200 million by the end of the year. T-Mobile will
deploy LTE to its entire HSPA+ network, 37,000 cell sites in total, with the bulk of
the deployment happening in 20132014. T-Mobile plans to have LTE deployed
to 75% of the 25 largest U.S. markets by the end of 2013.

T-Mobile is benefiting greatly from the spectrum it obtained from AT&T as part of
the dissolution of the proposed merger of the two operators at the end of 2011. In
late June 2012, Verizon and T-Mobile announced a spectrum swap that, if
approved, will also enhance T-Mobile's LTE bandwidth. The company is
refarming underutilized 2G spectrum and applying these channels for LTE. It
announced agreements with Ericsson and Nokia Siemens Networks to build out
its LTE network.

When all is said and done, T-Mobile USA will lack the coverage area of its
national competitors. However, having deployed slowly, T-Mobile USA believes it
will have a competitive advantage versus its competitors in terms of the quality
and throughput speeds it will be able to provide by deploying the most up-to-date
LTE gear that can more easily accommodate advances in the LTE Advanced
standard.

2013 IDC #240197 5

 U.S. Cellular. U.S. Cellular offers five different LTE smartphones, including the
Samsung Galaxy S III and the Samsung Galaxy Note II. Additionally, U.S.
Cellular offers one LTE tablet and one LTE hotspot. At the time of its 4Q12
earnings call, 61% of U.S. Cellular's customers had access to LTE networks and
approximately 75% of smartphone sales were LTE devices. All of its LTE
subscriber sales progress occurred in 2012 as the operator first launched LTE in
1Q12.

U.S. Cellular added a second LTE vendor in January 2013, Nokia Siemens,
which will join Ericsson in deploying LTE across U.S. Cellular's footprint.

IDC estimates that U.S. Cellular covered 35 million POPs at the close of 2012
and will cover an additional 15 million POPs in 2013.

Verizon. Verizon's 21.6 million LTE subscribers at the end of 2012 represent the
largest base in the U.S. market by far, due in large part to the 273 million POPs it
covered at the end of 2012. Verizon announced its first LTE smartphone in
January 2011 after covering 110 million POPs with LTE by the close of 2010.
The target data for buildout completion is mid-2013, earlier than the year-end
2013 date it initially expected. Verizon has a complete device portfolio, with over
30 LTE smartphones, tablets, and mobile broadband and other connected
devices with network access.

Verizon's 300 million POPs covered at the end of 2013 will remain an advantage
over competing operators, though the other three tier 1 operators will significantly
close the gap by the end of 2014. The operator is actively recruiting local
operator partners, offering access to Verizon's spectrum in exchange for
deploying LTE and establishing mutual roaming agreements allowing Verizon
access to the newly built networks. Verizon used Ericsson and Alcatel-Lucent as
its LTE radio vendors.

As of the end of 2012, three of Verizon's rural broadband partners had gone
online with LTE coverage and another 17 were in the planning stages. In
addition, Verizon has sold 700MHz licenses to another nine rural telcos in 13
states to encourage rural LTE deployments.

While it continues to expand coverage through its rural programs, Verizon will
look to expand capacity to address the exponential increase in LTE mobile data
volume it is currently seeing. The company is adding additional carriers on
existing LTE sites and is also in the early stages of expanding into its AWS
spectrum to address capacity needs in urban areas.

FUTURE OUTLOOK

Forecast and Assumptions

IDC emphasizes several key assumptions that affect the overall state of the LTE
subscriber market. Table 1 lists the top 3 assumptions and Table 2 lists IDC's key
forecast assumptions for the U.S. LTE subscriber market, including overall economic
conditions, the state of the telecom market, and network developments.

6 #240197 2013 IDC

 TABLE 1

Top 3 Assumptions for the U.S. LTE Subscriber Market, 20132017

Changes to This
Market Assumption That Could
Force IDC Assumption Significance Affect Current Forecast Comments

Network 4G mobile broadband By year-end 2014, all 4 A price war across the Verizon has enjoyed a
upgrades network buildouts will major U.S. operators will major operators could significant advantage in
continue to be a priority have near-ubiquitous LTE. dampen LTE data LTE deployment, which
for all major U.S. mobile This will essentially level revenue growth and it can continue to
operators over the next the playing field and could could drive "churnup." leverage through 2014.
24 months, with 2013 a lead to a new round of However, the
critical year for network price competition. competitive dynamics
buildout completion. By will change significantly
year-end 2014, all four beginning in 2015.
major U.S. operators will
have near-ubiquitous
LTE coverage across
their networks.

Subsidies Handset subsidies will Reduced or eliminated Slowed smartphone Currently, operators are
continue to drive subsidies could slow penetration would affect weighing the benefit to
postpaid smartphone growth in smartphone growth in LTE data their businesses from
sales; however, there is uptake. revenue. removing equipment
clearly momentum afoot subsidies versus the
for a move away from slowed growth that
subsidies. T-Mobile USA would likely occur.
stopped offering
subsidies as of the end
of 2012, and other
operators have shown
clear interest in moving
away from subsidies as
well. As smartphone
prices continue to fall,
operators may be in a
better position to lower
or eliminate subsidies.

Voice MetroPCS was the first Operators see combined
over LTE out of the block in data/voice over IP as a
August 2012, but large crucial weapon to fight
operators will continue OTT players in providing a
to proceed cautiously on rich communications
VoLTE introduction. experience. However,
technical issues and early
"growing pains" are likely
to occur with VoLTE, which
will slow overall growth.
While LTE adoption is An inability of VoLTE to
primarily related to provide a richer,
improved data service, improved voice
longer term, the move experience versus
toward VoLTE is traditional circuit-
important in switched voice would
encouraging the second slow adoption in the
wave of LTE adoption in latter years of the
the latter years of IDC's forecast period.
forecast period.

Source: IDC, 2013

2013 IDC #240197 7

 TABLE 2

Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017

Accelerator/
Inhibitor/ Certainty of
IDC Assumption Impact Neutral Assumption

Macroeconomics

Economy The global economy will be Moderate. A down economy

subdued in 2013, with weak affects business and consumer
growth in mature economies. confidence, the availability of
Emerging markets will improve, credit and private investment,
with faster expansion than in and internal funding. A global
2012, driving worldwide GDP recession would cause
to real growth of 2.6% (on par businesses to delay IT
with last year's growth). upgrades and some new
Western Europe, with some projects; a rising economy
countries plunging back into does the opposite. A crisis
recession in 2012, will be the (likely triggered by events in
main drag on the global Europe or political wild cards in
economy. The eurozone will the United States) could create
see negative GDP growth, with a level of impact similar to the
Southern Europe particularly financial crisis of 2008. The
weak. Japan will also be weak, economy is still weak, which
with post-earthquake will slow the adoption of mobile
reconstruction and stimulus broadband services.
measures having waned,
giving way to weak exports and
the return of deflation. The U.S.
economy is fragile and faces
downside risks from political
volatility, but we assume that
the second half of the year will
see some improvement. The
good news is that China has
recovered its momentum after
last year's slowdown, and the
government is likely to fund
whatever stimulus measures
are necessary to ensure a
return to growth in excess of
8% (the target range). This in
turn will help drive stronger
growth in other emerging
markets such as India and
Brazil. The downside risks are
still elevated though, and
business confidence will be
tepid as a result.

8 #240197 2013 IDC

 TABLE 2

Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017

Accelerator/
Inhibitor/ Certainty of
IDC Assumption Impact Neutral Assumption

Public safety LTE Over the past four years, the
NTIA invested $4 billion in 230
projects to expand broadband
access and adoption across
the United States, including
$1.4 billion in nonfederal
matching funds. More recently,
Congress awarded the
Moderate. Public safety LTE
buildouts will occur, spurred on
by federal spending. In the
short term, however, seven
previously funded public safety
LTE projects are on hold as the
FirstNet authority determines
the best way to move forward

700MHz D-block license to consistent with larger FirstNet
public safety applications and goals.

formed the First Responder
Network Authority (FirstNet) to
build a nationwide LTE
network. Congress also
allocated $7 billion toward the
buildout; however, this will
likely fall far short of the actual
buildout costs.

Technology/
service
developments

Network upgrades 4G mobile broadband network High. Faster data networks,

buildouts will continue to be a specifically LTE, will offer a
priority for all major U.S. mobile more compelling user
operators over the next 24 experience and encourage
months, with 2013 a critical adoption of wireless data
year for network buildout services.
completion. By year-end 2014,
all four major U.S. operators
will have near-ubiquitous LTE
coverage across their
networks.

2013 IDC #240197 9

 TABLE 2
Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017
IDC Assumption
3G and LTE Data services will continue to
deployment rationale be the fastest-growing segment
for revenue growth, driving
investment in 3G for higher
data throughput and more
efficient network usage.
Decisions to deploy HSPA+
and LTE are governed by a
number of factors, including
competitive dynamics, current
and near-term bandwidth
requirements, the requirement
to scale network investments to
match the exponential increase
in data traffic, and the timing of
spectrum allocation.
New connected Many newly launched tablet
computing devices devices have options for 4G
(tablets, ereaders, LTE connectivity. However,
etc.) most customers continue to
buy tablets without cellular
connectivity due to the high
cost of cellular data access and
the wide availability of cheaper
(or free) WiFi.
Voice over LTE MetroPCS was the first out of
the block in August 2012, but
large operators will continue to
proceed cautiously on VoLTE
introduction.
Migration toward U.S. carriers will continue to
open networks open up their network to third-
party developers, unlocked
handsets, and standalone
devices from other operators.
Verizon now offers its
smartphones in unlocked mode,
while other major operators will
unlock their handsets after a
customer serves out his/her
contractual commitment.
10 #240197
Accelerator/
Inhibitor/ Certainty of
Impact Neutral Assumption
High. Mobile data ARPU
continues to rise in most
markets. To ensure this trend
continues, operators must
determine the most efficient
and cost-effective path. For
many operators, HSPA+ still
generates a better ROI than
LTE; however, LTE-related
efficiency improvements as
well as improving handset
availability and more
competitive pricing should drive
more LTE spending in Western
European markets as spectrum
becomes available.
High. Increasing availability of
new connected computing
devices will help spur growth of
mobile broadband
consumption.
Moderate. Operators see
combined data/voice over IP as
a crucial weapon to fight OTT
players in providing a rich
communications experience.
However, technical issues and
early "growing pains" are likely
to occur with VoLTE, which will
slow overall growth.
Moderate. Open networks will
encourage innovation by third-
party developers, which in turn
will help drive the creation of
new, compelling data services
that will drive continued data
services revenue growth.
2013 IDC
 TABLE 2

Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017

Accelerator/
Inhibitor/ Certainty of
IDC Assumption Impact Neutral Assumption

Spectrum The allocation of LTE spectrum High. Spectrum harmonization

management issues is a major gating factor for
deployments, especially in
Western Europe. In developing
markets, 3G spectrum is
becoming available, paving the
way for continued 2G to 3G
upgrades in many markets. In
the United States, the FCC
remains a significant area of
concern, with 700MHz and
AWS (1.7GHz/2.1GHz),
2.6GHz in Europe, and 2.3GHz
in India, China, and other
APAC markets emerging as
the first bands for wide-scale
LTE deployment.

allocated the WCS spectrum
for cellular deployment and will

also look to the 3.5GHz
spectrum to mine up to
200MHz of additional capacity.
In addition, private transactions
are helping alleviate the
congestion, with a host of
spectrum swap arrangements
helping fill in capacity gaps for
many operators.

Value-added Carriers will introduce more High. Consumers' desire to

services value-added services to communicate in the fastest and
leverage new LTE network most efficient manner will lead
capabilities. to new service offerings from
mobile operators.

Capitalization

Tie to strong capital The financial community is High. Advanced wireless

markets open to specific high-quality
investment opportunities
commensurate with continued
wireless growth and data
adoption. The ROI from
investment in LTE comes from
services are very capital
intensive developing market
traction will require sustained
investment.

a variety of factors, including
continual improvements in

efficiencies, technology
innovations that will help
enable small cell deployments,
substantial improvements in
latency, and far greater
efficiency than in prior
technologies.

2013 IDC #240197 11

 TABLE 2

Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017

Accelerator/
Inhibitor/ Certainty of
IDC Assumption Impact Neutral Assumption

Market
characteristics

Telecom The telecom industry in its size
and utility is somewhat
insulated from sudden
economic swings, or at least it
has significant inertia. Service
provider revenue has picked up
in the past 24 months, driven
by the adoption of
smartphones and related
mobile data charges. Mobile
data revenue will continue to
drive growth in 2013, with
overall telecom services
revenue expected to increase
by 4% this year.
High. The IT industry has
already factored telecom
industry spending into its
internal forecasts; the key is
the pace at which convergence
takes place. Mobile services
will continue to drive mobile
devices and software, and vice
versa.

Data service pricing Tiered data pricing plans, along
with shared data plans, have
been introduced by many U.S.
carriers. Tiered plans make the
purchase of data services more
Moderate. Declining prices will
help drive additional data
services adoption, which in
aggregate will outweigh data
pricing erosion.

compelling as the entry point is
more affordable than it was.

Shared plans are still in their
infancy, and user adoption
rates will depend on the
number of carriers with this
type of plan.

Subsidies Handset subsidies will continue High. Continued growth in data

to drive postpaid smartphone
sales; however, there is clearly
momentum afoot for a move
away from subsidies. T-Mobile
USA stopped offering subsidies
services, especially on LTE,
will depend on a high installed
base of LTE customers.

as of the end of 2012, and
other operators have shown

clear interest in moving away
from subsidies as well. As
smartphone prices continue to
fall, operators may be in a
better position to lower or
eliminate subsidies.

12 #240197 2013 IDC

 TABLE 2
Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017
IDC Assumption
Consumer market 4G and LTE have been at the
landscape forefront of operator marketing,
and consumer demand for
high-speed data has grown
with the increase in
smartphone adoption.
Customers are now learning
the difference between LTE
and prior technologies thanks
to the introduction of several
popular LTE handsets from
Apple, Samsung, and other
vendors.
Business market U.S. businesses are looking to
landscape wireless to improve both
efficiencies and productivity
while also looking to improve
management of wireless
spending through corporate-
liable plans, or through
individual-liable plans where
employees acquire services
themselves.
WiFi Carrier-grade WiFi has clearly
emerged as an integral part of
public carrier infrastructure
over the past few years. The
primary benefit to operators is
the ability to offload mobile
data traffic to alleviate the load
on cellular networks from
smartphone and tablet usage.
IDC expects a significant
increase in WiFi access point
deployments, which can be
provided on a wholesale basis
to mobile operators from
mobile operators as well as
from fixed and cable operators.
2013 IDC #240197
Accelerator/
Inhibitor/ Certainty of
Impact Neutral Assumption
High. Consumers' appetite for
data services will drive revenue
for and adoption of LTE-related
services.
High. As business relies more
on wireless, wireless
capabilities such as email and
ubiquitous mobile broadband
connectivity will drive data
revenue and total subscriber
growth in the business
segment.
High. Mobile operators as well
as supporting infrastructure
vendors are cooperating on an
initiative to integrate WiFi more
fully into carrier network
infrastructure. The Hotspot 2.0
initiative will lead to greater
interoperability, cross-operator
roaming, and revenue-
generating opportunities in
WiFi hotspots. IDC believes
that WiFi will need to be a
significant part of operator WiFi
solutions to keep pace with
increasing network demand.
13
 TABLE 2

Key Forecast Assumptions for the U.S. LTE Subscriber Market, 20132017

Accelerator/
Inhibitor/ Certainty of
IDC Assumption Impact Neutral Assumption

WiMAX Sprint's decision to stop selling Moderate. WiMAX will be

WiMAX handsets at the end of
2012 marks a significant
change in the overall market
for WiMAX. Sprint's wholesale
partner Clearwire is seeing a
significant decline in its WiMAX
business and will move quickly
to deploy TDD LTE as soon as
funding and ownership
questions are resolved.
utilized for fixed and nomadic
broadband Internet
connectivity, but as a purely
wireless broadband option,
WiMAX is clearly on the
decline, with nearly all major
mobile WiMAX operators
moving to TDD LTE.

Consumption

Saturation The concept of saturation is a Moderate. LTE adoption will

tricky one in the context of
telecommunications. In the
United States, penetration of
cellular "connections" to the
overall population is
approaching 100%; however,
the penetration rate for people
remains well below 100%. With
enable U.S. operators to
increase penetration rates but
will not likely affect the
penetration rate for people.
Remaining groups of the
population that still do not have
a cell phone, such as the very
young and the elderly, are

a significant number of people likely to be more interested in
holding two or more cellular basic voice and/or text

devices (smartphones, tablets, connectivity.
ereaders, etc.), the concept of
penetration becomes an
increasingly irrelevant metric
except to compare with other
countries' metrics (e.g., in
Western Europe, where certain
countries' penetration rates
stand at 130% or more).

Legend: very low, low, moderate, high, very high

Source: IDC, 2013

U.S. LTE Commitments Through 2017

LTE has emerged as the nationwide standard in the United States as LTE network
buildouts have become necessary to achieve higher throughput, lower latency, and
greater efficiency to scale continued growth in mobile data traffic more efficiently.
Operators of varying size and nationwide reach have pursued LTE, and specific
strategies have emerged:

14 #240197 2013 IDC

 Tier 1. Verizon has LTE broadly deployed, AT&T is in the midst of an LTE rollout,
and Sprint is still in the early part of its deployment plan based on cities launched
to date. T-Mobile has also embarked on network buildout and completed its first
two LTE markets in early 1Q13. By year-end 2014 or early 2015, AT&T and
Sprint will come close to matching Verizon's footprint. T-Mobile USA will
complete its national buildout plans in early 2015 but will lag behind its national
competitors in terms of total LTE coverage area.

Prepaid/regional operators. Unlimited local service provider MetroPCS was the

first U.S. operator to launch LTE; a second unlimited provider, Leap, has also
introduced LTE. Clearwire will embark on a TDD LTE network launch in 2013,
assuming funding can be established and ownership issues settled. Smaller
regional operators, such as U.S. Cellular and C Spire as well as a host of rural
operators, are launching LTE as well.

Table 3 and Figure 1 highlight the likely progress of LTE buildouts through total
covered POPs from 2010 through 2017.

TABLE 3

U.S. LTE Buildout Progress by Total Covered POPs, 20102017 (M)

2010 2011 2012 2013 2014 2015 2016 2017

Verizon 110 200 273 300 305 310 313 315

AT&T 74 170 250 300 305 307 310

Sprint 60 200 265 277 283 285

T-Mobile 200 220 230 235 240

Clearwire 30 60 120 135 150 155

MetroPCS 30 70 103 115 125 135 140 142

Leap Wireless 2 21 31 40 50 55 60

U.S. Cellular 35 50 65 80 85 90

Notes:
Data was either provided by the operator or estimated by IDC.
See Table 1 for top 3 assumptions and Table 2 for key forecast assumptions
Source: IDC, 2013

2013 IDC #240197 15

FIGURE 1

U.S. LTE Buildout Progress by Total Covered POPs, 20102017

Note: Data was either provided by the operator or estimated by IDC.

Source: IDC, 2013

16 #240197 2013 IDC

LTE Subscriber Forecast

2010 was the first year LTE subscribers hit the market as both MetroPCS and Verizon
had LTE networks and announced LTE devices for purchase by year-end. There
were few LTE subscribers in the months immediately after LTE became available
approximately 75,000 by year-end 2010 because of limited footprint and minimal
device availability. However, in 2011, the number of LTE subscribers began to take
off, largely driven by Verizon's massive buildout. AT&T launched LTE in late 2011,
contributing to the growth in the number of LTE subscribers in 2012.

The first LTE subscribers in the United States emerged following the launch of LTE at
MetroPCS and later Verizon in 2010. With Verizon in the lead, 2011 was the first year
that LTE subscribers began to take off because of the launch of multiple LTE markets
and the second commercially available LTE smartphone, the HTC ThunderBolt. By
the end of 2012, more than 10% of wireless subscribers were on LTE devices
because of subscriber additions at AT&T, MetroPCS' increased LTE base, and
Verizon's nearly 17 million increase.

Based on reported results and IDC calculations, IDC estimates that there were 34.4
million LTE subscribers, or 11.5% of total wireless subscribers, at the close of 2012.
This will grow at a compound annual growth rate of 46.4% from 2012 through 2017.
Total wireless subscribers in the United States will reach 334.5 million in 2017,
climbing at a five-year CAGR of 2.3%. At the end of the forecast period, more than
230 million users will be utilizing LTE networks, 69.3% of the total wireless
subscriptions in the United States.

Table 4 shows year-by-year results along with how LTE subscribers will increase as a
percentage of total wireless subscribers through 2017.

TABLE 4

U.S. Wireless and LTE Subscribers, 20102017

20122017
2010 2011 2012 2013 2014 2015 2016 2017 CAGR (%)

Total wireless subscribers (M) 280.6 291.5 299.1 306.3 313.5 320.6 327.5 334.5 2.3

Growth (%) NA 3.9 2.6 2.4 2.3 2.3 2.2 2.1

Total LTE subscribers (M) 0.1 5.3 34.4 78.2 125.4 166.9 202.3 231.7 46.4

Growth (%) NA 6,944.0 551.8 127.1 60.4 33.1 21.1 14.5

Share of total wireless (%) 0.0 1.8 11.5 25.5 40.0 52.1 61.7 69.3

Notes:
See the Methodology section for the definition of LTE subscriber.
See Table 1 for top 3 assumptions and Table 2 for key forecast assumptions.
Source: IDC, 2013

2013 IDC #240197 17

Market Context

The data in this LTE subscriber forecast differs from that in our previous forecast (see
U.S. LTE Subscriber 20122016 Forecast, IDC #236502, August 2012). This
difference is primarily driven by faster-than-expected LTE adoption being reported by
a number of LTE operators, including Verizon, AT&T, and MetroPCS. The
introduction of new handsets that clearly identify LTE as a differentiator will help drive
further momentum in LTE, resulting in a modest increase in IDC's LTE subscriber
projections. The revised forecast reflects actual year-end 2012 results to the extent
they are publicly reported by operators. Table 5 and Figure 2 compare the 2012 and
2013 versions of this forecast.

TABLE 5

U.S. LTE Subscribers, 20102017: Comparison of August 2012 and March 2013
Forecasts (M)

2010 2011 2012 2013 2014 2015 2016 2017

March 2013 forecast 0.1 5.3 34.4 78.2 125.4 166.9 202.3 231.7

Growth (%) NA 6,944.0 551.8 127.1 60.4 33.1 21.1 14.5

August 2012 forecast 0.1 5.3 21.1 41.8 65.8 93.7 120.6 NA

Growth (%) NA 6,940.0 300.4 97.7 57.5 42.3 28.8 NA

Note: See U.S. LTE Subscriber 20122016 Forecast (IDC #236502, August 2012) for prior forecast.
Source: IDC, 2013

FIGURE 2

U.S. LTE Subscribers, 20102017: Comparison of August 2012

and March 2013 Forecasts

Source: IDC, 2013

18 #240197 2013 IDC

ESSENTIAL GUIDANCE
IDC offers the following suggestions for the long-term success of mobile operators:

LTE becoming a differentiator on handsets and tablets. For the first time, the
requirement to provide LTE connectivity is being driven by handset vendors in
addition to mobile network operators. Specifically, Apple's iPhone 5 was the first
to tout LTE as a key factor in driving a differentiated user experience; by January
2013, Apple was delivering LTE-equipped iPhone 5s to 60 operators worldwide.
Samsung introduced its LTE Galaxy Note 10.1 at CES in January. This in turn
puts pressure on operators to position their LTE networks as the fastest and
most expansive networks to provide the best experience on these emerging
devices.

Users embracing LTE experience. Based on early experiences from operators

deploying LTE, particularly Verizon, it is clear that LTE is providing a very
satisfactory user experience for consumers. With Verizon already driving half of
its mobile data traffic to Verizon, it is clear that customers are beginning to cut
through the confusing 3G/4G marketing hype and are recognizing the
advantages of LTE over previous generation technologies.

Verizon's advantage in LTE remaining through 2014. Mobile operators must

continue to expand POPs and markets covered as planned; however, Verizon
will maintain a significant advantage through 2014 that will put the company in an
advantageous position vis--vis sales of new LTE devices. AT&T will be far along
in closing the gap but will still have much work to do to close the gap through
2014. Sprint and T-Mobile will need to work diligently to meet aggressive 2013
buildout requirements (140 million and 200 million new LTE POPs, respectively)
and will still need to cover a significant number of additional markets in 2014.

LEARN MORE

Related Research

U.S. 4Q12 and 2012 Mobile Operator Roundup: Intensified LTE Competition and
Pricing Strategies Shape the Operator Landscape (IDC #239881, forthcoming)

Pieces of the Puzzle Coming Together Slowly for IMS, VoLTE, and RCS (IDC
#237748, November 2012)

U.S. LTE Subscriber 20122016 Forecast (IDC #236502, August 2012)

The VoLTE Era Begins: MetroPCS Introduces IP Voice Service (IDC

#lcUS23642712, August 2012)

2013 IDC #240197 19

Synopsis

This IDC study examines the U.S. LTE market and provides qualitative insights into
the LTE strategies pursued by the prominent LTE marker players. A forecast of total
LTE subscribers is provided through 2017 as is a view of total LTE commitments by
carrier. "The explosion of LTE subscribers that occurred in 2012 will continue, and
operators are positioning themselves to acquire as many of these LTE subscribers as
possible in subsequent years," says John Weber, associate research analyst, Mobile
Consumer Services. "The monetization of these data-hungry users will be critical as
traditional drivers of revenue such as voice and messaging become commodity
services."

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20 #240197 2013 IDC