Upping the pace

TeliaSonera gained headlines in 2009 for being one of the first to deploy LTE in its home regions of Sweden and Norway. Ahead of the LTE North America 2011 conference, taking place on the 8-9 November 2011 at the Fairmont Dallas Hotel in Dallas, Texas, USA, we see what advice Tommy Ljunggren, SVP and head of system development, mobility services at TeliaSonera has for his US counterparts – and also get his views of how important Apple is to the LTE industry.

Some analysts have said that the industry moved to LTE too quickly. What do you think?

I would say we moved too slowly. One of the reasons why we moved so quickly was to make a statement that the industry has to move, otherwise there would be a problem. And I would say that I participate in news articles more or less everyday now because we have a capacity problem in Sweden – and the reason for that is that we don’t have enough capacity in 3G. We need something new and we need it now.

So I’m very happy that we have a 4G network that we can migrate the customers onto, as we simply don’t have enough capacity in 3G today.

What about the large investments that were made in 3G. Have they been adequately reaped?

I would say so yes. Of course it depends on what business model you have, but the major mistake that large portions of the industry made was to have too much of all-you-can-eat. The fierce competition to offer all-you-can-eat is what we’re all now suffering from.

Can you give me a snapshot of where TeliaSonera is and how many LTE subscribers you have?

We now have 153 cities in Sweden covered, four in Norway,  50 per cent of the population in Denmark and six cities in Estonia and five in Lithuania. We had 10,000 LTE subscribers one year after the first launch in the world. You can say it’s a low figure but we didn’t expect it to fly quicker than that. But we made a statement to get the industry moving and I think we managed to do that.

How has 4G changed the customer experience?

What we’ve seen from the first movers in 4G are some applications that we didn’t see before, and that’s really the media industry. I’ve given this example several times but a TV company can use the 4G as a replacement of their outdoor broadcasting buffers – the ones with satellite dishes on the roof – that cost a few million euros. They can replace that now with a HandyCam, a laptop and a 4G dongle – and they do that actually. The important part is the tremendous capacity that they get on the uplink, and the response times. They have said several times that they could not do this on 3G, because the uplink wasn’t good enough and not stable enough. But with 4G they use it during live transmissions.

Are you happy to call LTE 4G when the ITU says differently?

We strongly believe that it is the next generation. We have a totally new radio system. We have a totally new core system, so what’s that if not a new generation? Even the ITU actually changed their minds and agree to call LTE 4G.

Will LTE alone be able to solve this data crunch? Has it done that for TeliaSonera?

It will be a very important part but it’s not replacing 3G. It’s a combination of LTE, 3G, and in our case offload to wireless LAN. It’s really about the total capacity that you can deliver via the network. The extreme example there is that while the 3G coverage has increased so has the 2G data traffic – the increase in mobile data has affected the whole network. But I think that it will really help to ensure we survive. It’s not replacing anything else, it’s complementing it.

You mentioned 2G data traffic. Who is still using data on 2G?

Actually it’s all those smartphones, because if you look at them they’re still quite dependant on 2G in Sweden and certainly in the UK. If you look at the US market, the good integration between 2G and 3G isn’t really there because you have CMDA operators. But we really have that so our smartphones bounce back and forth between 2G and 3G. So that’s why the traffic has increased. And it’s about the user’s behaviour. The mobile data explosion on 3G has really taught people to use it in a different way. So when they go out to rural areas where there’s only 2G they will continue to use it in a similar way even though we can only deliver low speeds.

Why is VoLTE l taking so long to materialise?

I think the reason why there is no strong push for it is that the business benefit of VoLTE is quite vague if you’re running a 2G and 3G network because VoLTE will not save any money, at least initially, for the operator. Therefore, there isn’t a cost saving. It’s a new network and we don’t really have any capacity problems with voice on 2G and 3G. It’s very cost effective to run voice over 2G, for instance.

There is some business sense in it [VoLTE], and that will be for those 4G operators that don’t have a voice service, such as the former WIMAX operators. For them it’s very important to get VoLTE to be able to compete by offering a voice service, and that will drive the [VoLTE] market. There is also a quality benefit of VoLTE, but it’s not so much that it will fly on its own. There are some countries where the voice quality is bad, but not in the Nordics. My expectation is that we will have support in the 2013/14 timeframe.

When we have it in place we will have new services based on IMS services in general. When it’s integrated with something else – it won’t fly on its own. IMS is also a lesser component but when you offer IMS, VoLTE and some fancy rich communication services together it will be a lot easier to sell.

What’s your situation with LTE enabled smartphones on TeliaSonera?

There aren’t any yet and the prediction is that they will come early next year. They will be true LTE smartphones – not the ones that the US has right now with two radios. These drain the batteries flat very quickly as they have one LTE terminal for data and a CDMA voice terminal. It’s basically a dongle and phone that they glue together. They work – just not for long! We’ll see mature LTE smartphones and tablets but the volumes will probably not be there for a number of years.

Will the LTE iPhone, when it arrives, be the tipping point for LTE?

That’s a big question in the industry – what’s the importance of Apple moving forward. I think if you asked me two years ago I would have said it would be very important. But now it will be a bad mistake not to include LTE in the iPhone 5 as otherwise they will really be run over by the others. I think the others are catching up really quickly so the importance of Apple is going down. They are not unique enough and there is disappointment over the 4S – it was too small step for them. So I don’t think Apple will decide if LTE will fly or not. My expectation is that in 2013/14 we will really see low-end smartphones having LTE as well. The big question is what frequency bands they will put in for smartphones.

What frequencies does TeliaSonera employ?

We will not buy terminals that don’t support, 800, 1800 and 2.6 as we need that to ensure that we can have roaming within our own group. In Lithuania it will take a while till we have 800 and 2.6 – and we have 1800. In Finland we have 2.6 and 1800 but won’t have 800 for a while. In Sweden we expect to have all three bands, and so on – but we really need all three. I guess Apple will target the US first and if they miss out any of these they will limit their ability to sell here.

It’s an important consideration for the industry to make – what do we consider roaming bands? For a lot of people falling back to HSPA will be enough, but if you get used to LTE, it won’t be. One of the customers that we have now that uses LTE is a big logistics company that are active in the whole of Europe (Schenker) and they have actually replaced all of their mobile broadband with 4G. Their lorries go across borders and they have put their applications into the cloud so it’s important that their lorries have good connections.

And roaming charges will go down. For us there is a maximum figure per day, which is 69 Swedish Kronas (US$10.38) – the maximum you pay if you roam in the EU/EFTA on TeliaSonera.

How would you encapsulate the lessons learnt in deploying LTE to your US counterparts?

I would say to the operators that are still doing tests to stop and launch. Because it is stable enough and it works – don’t be afraid. The other thing is to be careful about the business model. You can make a very good business case out it this, but avoid this all-you-can-eat thing. I mean, it’s worth something, so why should you give it away? Customers come to us and say, as long as you promise this (speed), we will actually pay a lot more. And of course they will negotiate, but they are willing to pay more as they see with 4G that they will be able to do business better and they will gain out of it.

The LTE North America 2011 conference takes place on the 8-9 November 2011 at the Fairmont Dallas Hotel in Dallas, Texas, USA.

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