Reaping the dividend

Deployment of LTE in the German 800MHz Digital Dividend band carries with it some unusual requirements. The winners in the May 2010 spectrum auction had to pledge to provide coverage to remote and rural communities before addressing the more densely populated and therefore financially attractive urban areas. It was a neat innovation by the German regulator and one that will bring much-needed internet connectivity to citizens who have hitherto been forced to live without it.

While it was not a deployment strategy that the operators footing the bill would have been likely to choose for themselves, they had little choice but to embrace it. And, says Denis Gautheret, vice president for NGMN introduction at Deutsche Telekom’s German operation, his firm’s imminent launch (Gautheret says as we speak in late March that the switch-on is “weeks away”) is generating excitement.

“This is about real customers finally being able to get internet, where before they had none—and no ability co communicate through a technology such as LTE, with such low response times. It’s enlightening their lives, and they’re reacting in a very positive way.”

Taking a brand new communications technology to rural-dwelling consumers with little previous experience of the internet is not the accepted way of doing things in this industry. But it chimes with DT’s desire to shift the focus away from the technology and onto the customer benefits and experience—because only if that experience is truly valuable, will people pay the premium that DT, like call carriers, hope and require that LTE will command.

“What we say in DT is that 4G is all about customer experience; we want to be able to offer quality to the customers who want it,” he says. “We saw it with the iPhone in 2009; the price people were paying wasn’t important. What was important was that they wanted to have the iPhone—the experience was the most important factor. 4G is a new experience, so they will be ready to pay a bit more than they would do to other operators.”

Denis Gautheret is participating in a Keynote Panel Discussion on day two of the LTE World Summit in Amsterdam.

Gautheret prefers to talk about NGMN, or 4G, rather than referencing LTE as a technology. This, which is reflected in his executive title, is part of a wider movement within DT, to distance the fourth generation from the third, when more than €50bn was spent on spectrum licences by German carriers and when the technology was slow to evolve into a service. Focusing on the NGMN alliance allows DT to participate in LTE deployment as part of a far larger community. There is safety in numbers, it seems.

Gautheret was involved in DT’s UMTS deployment as well, although not as the lead. It was the lack of cohesion across the ecosystem that was the biggest problem a decade ago, he says.

“With UMTS we had a network available for two years without any devices working on it,” he says, by way of example. “This time we were really careful to make sure that what we were doing with the network manufacturers was based on a similar roadmap to the one we were following with the device suppliers.”

A similar approach to spectrum has also paid dividends: “I can tell you that for this 800MHz spectrum it would not have been possible to get so far without a real concerted effort from the industry, all the operators, device suppliers and network suppliers. It worked because it was on the roadmap two years ago.”

Despite this spectrum allocation actually coming later than DT had anticipated, Gautheret says DT has been able to bring LTE to market in half the time it took to deploy UMTS. This has been aided by a cross-functional internal programme that has kept all areas of the DT business involved in the preparations for launch. What would once have been left to the technical departments for much of the project has had input from senior management across the board, he says.

And DT has worked closely with its competitors to get the technology ready for market, which has enabled them to drive their suppliers harder than they were able last time around. “For the first time we said to the suppliers, in a concerted, non-competitive way, that what they gave us for UMTS was not only very expensive, it was very much proprietary. We have to stop this, because we need to save cost. Traffic is up and revenue is down, this is what regulated the message from the operators to the suppliers and without this working together, we couldn’t have got LTE up so fast,” he says.

It has cost less, too. While he doesn’t want to share numbers, he says the cost of deploying LTE has been “cheaper by far than the cost of deploying 3G ten years ago.”

Time to market is crucial for operators that are looking to position LTE as a competitive differentiator, but undue haste can be counterproductive, Gautheret argues. Collaborative and exhaustive testing of LTE, across a range of configurations, has been essential—although not every player, by his assessment, has paid heed.

Gautheret asserts that LTE pioneer Telia Sonera rushed LTE to market at the expense of thorough testing. This is not how DT wanted to approach it, he says. “Through the testing work that was done we gained a lot of knowledge about where to improve which parameters, and the speed at which 800MHz was to be rolled out and how the network will function. So the customer satisfaction, for us, will come faster than it did for Telia Sonera back in 2009.”

And this is the theme to which Gautheret returns most frequently; LTE as a customer experience first and foremost.  “We want to go away from the technology and towards the experience because, in a few years time, all of the technologies will be together in one box and the devices will be intelligent enough to choose the right spectrum for wherever you are.”

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