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Analysis: 4G race hots up in the US

Legacy networks phased out as 4G-LTE migration accelerates

US operators are looking at freeing up capacity on older networks and spectrum refarming as they Media
ramp up migration to 4G-LTE.
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According to the latest Wireless Intelligence data, LTE connections in the US totalled 13.7 million in
policy.
Q2 2012, maintaining the country’s status as the world’s largest LTE market ahead of South Korea
(7.1 million) and Japan (3.7 million).
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LTE represented 4 percent of total US connections in Q2 and is forecast to account for 6 percent
(20 million) by year-end. When all technologies under the 4G classification are included (adding
WiMAX as well as LTE), 4G accounted for 7 percent of the US total in Q2 (see table). Discuss this analysis

US market-leader Verizon Wireless is comfortably the world’s single largest LTE operator, Contact us regarding any of the topics or
surpassing 10 million LTE connections in Q2 and accounting for almost four in every five US LTE data in our analysis.

connections. Verizon’s LTE network is currently live in 371 regional markets, covering an estimated
75 percent of the population. It is planning to extend coverage to 400 markets by year-end.
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Two-thirds of Verizon’s connections base still relates to its 3G-CDMA network, though numbers
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are falling as subscriber migration to LTE accelerates. While it has been speculated that the
operator could soon start repurposing CDMA bandwidth for LTE use, executives have been quoted
as saying that the older networks will remain as they are for "a very, very long time” – possibly in
order to support emerging M2M markets.

AT&T’s LTE network is now live in 72 regional markets and accounted for 2 percent of the US
number-two’s total connections in Q2. Unlike Verizon, AT&T has positioned LTE as an evolution of
its current high-speed 3G networks, going as far as to classify HSPA+ as ‘4G’ in its marketing
(allowing it to claim 3,000 more 4G-connected towns and cities than Verizon). AT&T plans to
double LTE coverage by year-end 2012 (compared to a year earlier) and will “largely complete”
deployment by the end of next year.

With the vast majority (85 percent) of its connections base already on 3G, AT&T is planning to shut
down its legacy 2G-GSM networks by 2017, allowing it to refarm spectrum in the 1900 MHz band
for next-generation services.

Third-placed Sprint Nextel switched on its first 1900 MHz LTE networks in July, lighting up 15
markets across three US states (Georgia, Texas and Missouri); it plans to complete the nationwide
rollout by 2013. The launches form part of the operator’s ‘Network Vision’ initiative aimed at
consolidating its network around 3G-CDMA and 4G-LTE by offering multi-mode devices. Under
the initiative, Sprint plans to wind down its iDEN push-to-talk network by Q2 2013, allowing it to
free up spectrum in the valuable 800 MHz band.

Sprint has been offering a 4G-branded service since 2008 via a wholesale deal with Clearwire’s
WiMAX network, but as its strategic focus switched to LTE, Sprint gave up its majority equity stake
in Clearwire and is no longer launching new WiMAX devices. It has been suggested that it could
reposition WiMAX services for its prepaid brands, Virgin Mobile and Boost Mobile.

Deutsche Telekom-owned T-Mobile USA, the country’s fourth national operator, does not plan to
launch LTE until next year, and is continuing to invest in HSPA+ using refarmed 1900 MHz 2G-
GSM spectrum in the meantime (like AT&T, T-Mobile markets HSPA+ as ‘4G’). The operator’s LTE
network is to be deployed at 1700/2100 MHz using the advanced wireless services (AWS)
spectrum acquired from AT&T and Verizon Wireless.

The most aggressive LTE player among the tier-two US operators is MetroPCS. It reached 700,000
LTE connections in Q2 2012, on the back of an unlimited US$55 data plan and the introduction of
more affordable LTE smartphones. It also claimed a "world first” by introducing VoLTE in August,
though the LTE voice service is currently only supported on one device, the LG Connect.

MetroPCS has built-out 1700/1900/2100 MHz LTE to around 90 percent of its total footprint - and
expects to reach 97 percent in early Q4 2012. It hopes to eventually move its entire subscriber
base to LTE, and plans to start refarming spectrum that it is currently using for CDMA traffic by the
middle of next year.

Rival Cricket Communications (Leap Wireless) expects its LTE network to cover 21 million people
by year-end, and is aiming to upgrade two thirds of its network footprint over the next two to three
years. C Spire Wireless launched LTE in four Mississippi markets this month, and plans to be live in
37 markets by year-end.

Joss Gillet, Senior Analyst, Wireless Intelligence:

LTE adoption is accelerating in the US and operators are aggressively reshaping their
technology roadmaps based on spectrum capacity. Though spectrum remains a major concern
for both tier-one and tier-two operators – and most are still hankering after additional bandwidth
- the US market is benefitting from a certain degree of LTE spectrum harmonisation. The 700
MHz digital dividend band has been widely used by top players to deploy LTE services to the
wider territory, while spectrum refarming in the 1900 MHz and 1700/2100 MHz bands is
allowing operators to tackle coverage in high-traffic areas. Operators have also agreed to use
the AWS spectrum for LTE roaming, a move that further harmonises the US LTE bands and
could even solve global roaming issues related to spectrum fragmentation if it is replicated in
other markets worldwide. But not all stakeholders in the US are overjoyed at the strong
momentum behind LTE. The automotive industry, for example, is concerned that reports of
legacy 2G networks being switched off would render 2G car modules obsolete (cars having a
10 to 15 years lifecycle). Yet, as Verizon puts it, despite a rapidly evolving technology roadmap,
legacy networks are likely to remain in the market for "a very, very long time" to support
emerging M2M applications.

Networks Connections Market Share % 2G % 3G % 4G

('000s)
Verizon Wireless CDMA, LTE 111,374 32% 23% 67% 10%
AT&T Mobility GSM, WCDMA, 105,206 30% 13% 85% 2%
LTE
Sprint Nextel CDMA, iDEN, 56,386 16% 39% 61% 0%
LTE
T-Mobile USA GSM, WCDMA 33,168 10% 65% 35% 0%
Clearwire WiMAX 10,958 3% 0% 0% 100%
MetroPCS CDMA, LTE 9,292 3% 87% 6% 7%
Leap Wireless CDMA, LTE 5,903 2% 62% 37% 1%
US Cellular CDMA, LTE 5,799 2% 56% 44% <1%
Other 7,538 2% 83% 17% <1%
TOTAL 345,624 100% 30% 63% 7%

US mobile connections, Q2 2012

Source: Wireless Intelligence, company reports

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