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Top carriers face high costs migrating to LTE

Upgrading to LTE could be a costly business for carriers

Mobile operators around the world face high costs to migrate to LTE, with a tier one US operator looking at expenditure of up to $1.78bn in the first year.

The figures come from network planning and optimisation firm Aircom, which this week launched an LTE cost calculator and published estimated capex investments facing a tier one mobile operator in the first year of rollout in each of four regions. But these figures will vary by region, the legacy equipment operators have in place and the spectrum they have available.

Region Estimated CAPEX investment
US $1.78bn
Europe $880m
Middle East $337m
Asia Pacific $232m
Source: Aircom

With the economic crisis putting pressure on credit markets and mobile operators seeking to limit significant CAPEX commitments, Aircom expects operators to take more innovative approaches to LTE network roll out, with network sharing cited as an example alongside the automation of key optimisation processes through the roll out of self-organising networks (SON) and the deployment of femtocells to cost effectively provide macro network offload capabilities as well as indoor coverage.

“LTE represents a major undertaking for mobile operators,” said Margaret Rice-Jones, CEO of Aircom, “Very few operators have the available resources or shareholder freedom to meet these costs. This means that innovation within the mobile industry needs to be redefined.

“With an all IP-based network infrastructure, LTE requires completely new thinking compared to previous mobile technologies.  Mobile operators around the world face very different challenges in embracing LTE, which will have serious implications on the levels of finance they need to raise,” Rice-Jones said.

Aircom’s predictions come in the wake of a similar warning by Mike Roberts, principal analyst at Informa Telecoms & Media, and author of the Future Mobile Broadband: 3rd Edition report, in which he stated that the effects of the global downturn have boosted HSPA+ deployments but slowed LTE.

Roberts said that virtually all major mobile operators vocal in their support of LTE have also quietly admitted that the downturn and other factors have delayed their LTE rollout schedules by several years. “WCDMA/HSPA operators are now focusing more on HSPA+ upgrades, which will bring major improvements in capacity and data speeds, at a much lower cost than deploying LTE,” Roberts says.

Informa Telecoms & Media forecasts that by the end of 2013 3GPP systems will account for 72 per cent of global mobile broadband subscribers, 3GPP2 systems for 22 per cent and WiMAX 6 per cent.

Is the estimated CAPEX investment for LTE likely to delay rollout?

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One comment

  1. George 30/09/2009 @ 3:04 pm

    The Capex figures are not accurate for Asia Pac portion.

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