The Late Terminal Effect

Ever since the days of “God Send Mobiles”—and that was a long time ago—the handset sector has lagged behind the development of new network technologies. As a result it has often been pilloried as the principal drag on the commercial deployment of new services. While much has been made of the development of an all-embracing LTE ecosystem designed to keep the various sectors in sync with one another, this familiar dynamic has resurfaced, according to TDC’s Bernd Reul.

“We’re trying to launch the LTE network at the moment. We’ve built it but we’re waiting to get dongles with quality and in quantity,” he says. “That’s the main stumbling block right now, otherwise we would already have launched. We can’t get any volume commitments from vendors for a dongle which works without major errors.”

But perhaps the device vendors should finally be cut some slack. New technology is necessarily complex, after all. Not so, says Reul, who argues that the provision of LTE dongles should be a comparatively simple exercise. There’s no roaming, no voice, no circuit switched connections required; these products should be easy to deliver because they are data only, he argues.

In any case, the problem with the products supplied to TDC is not the performance of their LTE element. “It’s more the 2G and 3G parts of the dongles that are giving us issues,” he says. “Because LTE coverage from us and other operators will be limited to start with, it’s important that the LTE modems perform equally as well as other modems on the 3G network.

“This is one of the reasons we haven’t launched because, although the LTE performance was actually good, when you leave LTE coverage it takes a long time to get onto the 3G network and the 3G performance is not as good as we have on dedicated 3G modems.”

These kinds of delays can have serious knock-on effects in terms of overall investment in LTE, says Reul. Until paying subscribers can be brought onto the networks in sufficient numbers to generate meaningful revenues, question marks will hang over further deployments of the technology, he says.  “If you only have a few per cent of your customers on LTE then you have to be careful with your investment.”

For a company like TDC, which operates a variety of communications platforms, this is a more nuanced issue than for a pure mobile carrier—and it is this topic that Reul will be addressing during his presentation at the LTE World Summit. If TDC has a million dollars to invest, he says, the firm has to decide whether to channel that into more LTE sites, or to roll out fibre, or ADSL speed boosting technology like DSLAM.

“This is our biggest challenge,” Reul says, “to find the right mix and make sure we have the best overall customer experience from the total network, not just the mobile network. We know that most of the data is and will continue to be consumed indoors, at home or at work. Very little data is being consumed in a truly mobile environment. Even with dongles it’s totally nomadic so you could even say there’s not really a need for 3G and LTE if you have wifi in the right places. But obviously the mobile data consumption will come with smartphones.”

With competitor Telia aggressively rolling out LTE, Reul says, it might be better for TDC to compete by offering 50Mbits/s on the domestic broadband line plus LTE on the move—a total communications solution—rather than trying to match Telia site for site on LTE deployment.

Reul suggests that the delays in the availability of dongles is attributable in part to the different frequency bands in which operators in different regions and markets are deploying LTE. In the US it’s 700MHz, for example, while the first deployments in Germany are in the 800MHz digital dividend band. “At 2.6GHz, where we’ve launched, there’s just us, Telia and a deployment from Telekom Austria,” Reul says. “If it had been like it was with 3G, where everyone was in the same 2.1GHz frequency band, then I think we would be further ahead than we are now. But there is fragmentation and we have to wait for the big markets like Germany, France, the UK and Italy to deploy; then the volumes will go up.”

The 2.6GHz spectrum that TDC is currently using is not suitable for a nationwide rollout, he says. Denmark is expected to auction the rights to 800MHz spectrum towards the end of 2011 and he says that Danish operators will be able to use that spectrum from January 2013 onwards. Reul is not overly concerned about the delay in access to this spectrum, revealing that TDC is currently investigating whether it will be able to use its 1800MHz spectrum for LTE services, something that is increasingly being seen as a favourable option by operators.

Overall Reul says TDC is pleased by the performance it has derived from its LTE network so far. He says that the technology has been “quite easy” to deploy, although he points out that the burden of that deployment rested on the shoulders of Ericsson, to which TDC has outsourced its entire mobile network.  Speeds and latency have been at the expected levels, he says.

But, he says, TDC has to have the utmost confidence in the product and the technology before it takes LTE to market on a wider basis. “We only have one shot with this,” he says, “and it had better be right.”