4G LTE, Opportunities and Challenges

The LTE is a network technology and is adopted by telecom companies in order to achieve 4G speed, the term LTE stands for “Long Term Evolution”. There has been a considerable investment in accessing this technology, but in spite of huge capital investments, tech manufacturers have failed to attain the minimum speed set by the ITU-R (International Telecommunication Union-Radiocommunication) for 4G. In order to overcome this anomaly, the regulatory body decided that LTE could be labelled as 4G if it provided a substantial improvement from 3G technology.

Although LTE has been around for more than five years, the acceleration of 4G has been spectacular during the past year, 4G connections doubled in 2015 surpassing the 1 billion mark globally. The growth was mostly witnessed in developing markets, where 4G connections more than tripled in the last 5 years. In the Asia Pacific region, 4G was introduced in Japan and South Korea, and is now being widely used in China and is growing at a much faster rate than in the North America or Europe. 

The increase in LTE usage internationally has been driven by growing LTE networks and their rollouts in 2015. A total of 451 networks has been deployed in 151 countries until 2015 as compared to 16 networks in 11 countries in 2010.

The faster adoption of 4G also provides opportunities for operators in terms of increased usage of data intensive applications. LTE offers mobility with high performance and compares favourably with fixed broadband (FBB). This has a significant impact on user experience and customer satisfaction. The user behaviour is changing rapidly as they expect mobile devices to handle a huge amount of data from anywhere and at any time. The availability of LTE has increased the smartphone usage, users can now watch live videos on mobile devices, conduct both personal and business tasks such as receiving or replying to emails, reading or editing company memo or documents, etc. LTE also supports cloud-based applications, manage databases, provide seamless roaming services and multiple browser functionalities.

This high-speed data has its own limitations and puts additional strain on the existing backhaul capacity of operators. They need to upgrade their existing backhaul capacity as failure to do so might negatively impact the end-user experience and the quality of service. Additionally, the challenge with 4G is the development of voice standard as one of the intended benefits of LTE is its ability to carry all types of voice, video and data traffic. However, most of the developments in the deployment of LTE have been focused towards providing faster data access, and voice standards are still substandard. LTE deployment is further challenged by technical standard and it lacks regulatory consensus on a standard frequency band globally. This poses a real challenge and increases complexity for operators, device manufacturers, and chipset vendors in terms of factors such as roaming difficulties and multi-band support for devices and chipsets.

In spite of the challenges, data usage has continued to increase across the economies. This increased data usage reduces the cost per MB for telecom operators while increasing data revenue and resulting in better margins. The data ARPU for Verizon increased by more than 60% in the past 5 years following the adoption of the 4G. On the contrary, this increased by ~27% for Celcom Malaysia between 2013-15. Televisory does expect data ARPU of Celcom to follow a similar path as Verizon, but in a couple of years.

Moreover, telecom operators can further increase data ARPU by introducing services such as live TV, push VoD, push advertisement, video sharing, video messaging, video downloading, e-education, and e-health which will amount to an addition over the traditional services.

Therefore, the LTE usage is growing continuously and provide a much-needed improvement in the APRU of the telecom operators. The ability of operators to capitalise on the LTE opportunity will shape the future of mobile broadband communication. The prospects in LTE would depend on the type of services offered to enterprise end users and consumers, mode of delivery and a balance between cost and services rendered to the customers. Thus, mobile operators must initiate the process of monetising LTE as soon as possible. 

Also Read:- Falling ARPU, How Telecom Companies Cope

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