The Impact of 3G & 4G Wireless Technology on Carriers' Network Development Strategies

SUMMARY

The evolution of 2G, 3G, and 4G mobile telecommunications technologies has been researched and written about ad infinitum. More recently, the topic of WiMAX, a particular 4G technology which promises to deliver 70 Mb/s data speeds over a 50 km radius, has been the focus of much attention and hype.

Many telecom analysts had come to the conclusion that 4G was just a distraction from making 3G work until the IEEE approved the 802.16e standard for mobile WiMAX in December 2005. Subsequently, the WiMAX Forum announced the first certified fixed WiMAX (802.16d or 802.16-2004) equipment in January 2006.

With this new found credibility, manufacturers and network operators are looking again at the benefits promised by 4G technologies and they are starting to invest serious time and effort in developing fixed and mobile products which should be commercialized within the next three years.

The report addresses the following key issues:

• What are the dynamics between 3G & 4G - competing or complimentary?
• What are the standards and regulatory issues in 4G?
• Which manufacturers are leading 4G development?
• How are carriers approaching the 4G issue at a strategic level?
• What would be the impact of 4G on networks, in terms of bandwidth requirements, under different penetration scenarios?

Thus, the overall purpose of this report is to give the reader some fresh perspectives on the issue of 4G by looking at this technology, not as an isolated phenomenon, but as part of an ongoing technological evolution and to provide some ground-breaking analysis in terms of average user bandwidth demand, as well as the usual measurements of subscribers, penetration rates, installations, and equipment sales.

This report should be of interest to:

• Fixed network operators
• Wireless network operators
• Wireless Internet Service Providers
• Equipment suppliers
• Component suppliers
• Venture Capital funds

TABLE OF CONTENTS

Chapter 1 -- Executive Summary.................................................................................................. 1-1

• 1.1 Technological Comparison .............................................................................................. 1-1
• 1.2 Comparative Technology Costs....................................................................................... 1-2
• 1.3 3G Market Overview ....................................................................................................... 1-3
  • 1.3.1 Lack of Demand ..................................................................................................... 1-3
  • 1.3.2 Other Challenges .................................................................................................... 1-3
• 1.4 4G Market Overview ....................................................................................................... 1-4
• 1.4.1 Demand for High-Speed Multimedia Services....................................................... 1-4
  • 1.4.2 Fixed-Mobile Convergence.................................................................................... 1-4
  • 1.4.3 Spectrum Issues...................................................................................................... 1-4
  • 1.4.4 Standards & Certification Issues ............................................................................ 1-5
  • 1.4.5 Technological Challenges ...................................................................................... 1-5
  • 1.4.6 Alternative Applications for 4G ............................................................................. 1-6
• 1.5 Prospects for Future Deployment of 3G and 4G.............................................................. 1-6
  • 1.5.1 Market Share Forecasts .......................................................................................... 1-6
  • 1.5.2 Manufacturer Strategies ......................................................................................... 1-7
  • 1.5.3 Network Operator Strategies .................................................................................. 1-8
  • 1.5.4 Global Spectrum Harmonisation ............................................................................ 1-8
• 1.6 Forecasts .......................................................................................................................... 1-9
  • 1.6.1 Mobile Markets ...................................................................................................... 1-9
  • 1.6.2 Demand for 2G, 3G, & 4G (Fixed & Mobile)...................................................... 1-11

Chapter 2 -- Introduction & Methodology .................................................................................... 2-1

• 2.1 Purpose of the Report....................................................................................................... 2-1
• 2.2 Report Scope.................................................................................................................... 2-2
  • 2.2.1 Technologies Covered............................................................................................ 2-2
  • 2.2.2 Geographic Coverage ............................................................................................. 2-2
  • 2.2.3 Companies Mentioned in this Report ..................................................................... 2-4
  • 2.2.4 Report Structure ..................................................................................................... 2-5
• 2.3 Methodology.................................................................................................................... 2-6
  • 2.3.1 Data Sources........................................................................................................... 2-6
  • 2.3.2 Analysis.................................................................................................................. 2-7
  • 2.3.4 Presentation of Results ........................................................................................... 2-8

Chapter 3 -- Technology Comparison........................................................................................... 3-1

• 3.1 Evolution of Mobile Technologies .................................................................................. 3-1
  • 3.1.1 First Generation (1G) Mobile Technologies .......................................................... 3-1
  • 3.1.2 Second Generation (2G) Mobile Technologies...................................................... 3-2
  • 3.1.3 Second Generation Enhanced (2.5G) ..................................................................... 3-3
  • 3.1.4 Third Generation (3G)............................................................................................ 3-3
  • 3.1.5 Fourth Generation (4G) .......................................................................................... 3-4
• 3.2 3G Wireless Technologies in Detail ................................................................................ 3-5
  • 3.2.1 Standards Bodies .................................................................................................... 3-5
  • 3.2.2 Universal Mobile Telecommunications System (UMTS)...................................... 3-5
  • 3.2.3 High Speed Downlink Packet Access (HSDPA).................................................... 3-8
  • 3.2.4 CDMA EV-DO..................................................................................................... 3-10
• 3.3 4G Wireless Technologies in Detail .............................................................................. 3-12
  • 3.3.1 Orthogonal Frequency Division Multiplexing (OFDM) ...................................... 3-12
  • 3.3.2 WiMAX................................................................................................................ 3-14
  • 3.3.3 WiBro ................................................................................................................... 3-15
  • 3.3.4 Wi-Fi .................................................................................................................... 3-16
  • 3.3.5 FLO Qualcomm.................................................................................................... 3-17
• 3.4 Comparison of 3G and 4G Technologies....................................................................... 3-19
  • 3.4.1 Technological Parameters .................................................................................... 3-19
  • 3.4.2 Cost Comparison .................................................................................................. 3-20

Chapter 4 -- Market Dynamics...................................................................................................... 4-1

• 4.1 3G Wireless Technology Deployment & Current Penetration ........................................ 4-1
  • 4.1.1 UMTS..................................................................................................................... 4-1
  • 4.1.2 HSDPA................................................................................................................... 4-5
  • 4.1.3 CDMA EV-DO....................................................................................................... 4-7
• 4.2 Challenges Facing 3G Wireless Technology ................................................................... 4-9
  • 4.2.1 High Costs .............................................................................................................. 4-9
  • 4.2.2 Uncertain Demand................................................................................................ 4-10
  • 4.2.3 Firmly entrenched 2G networks ........................................................................... 4-10
  • 4.2.4 Pressure from 4G / advanced networks ................................................................ 4-10
  • 4.2.5 Technological challenges ..................................................................................... 4-11
  • 4.2.6 Slow demand growth............................................................................................ 4-11
• 4.3 4G Wireless Technology Development Status .............................................................. 4-13
  • 4.3.1 4G Development Drivers...................................................................................... 4-13
  • 4.3.2 4G Development Challenges................................................................................ 4-15
  • 4.3.3 Standards Update.................................................................................................. 4-18
• 4.4 WiMAX in Broadband Wireless Systems ..................................................................... 4-22
  • 4.4.1 WiMAX in Fixed Broadband Wireless Access.................................................... 4-22
  • 4.4.2 WiMAX in Wi-Fi Backhaul ................................................................................. 4-23
• 4.5 Prospects for Future Deployment of 3G and 4G Wireless Technologies ...................... 4-24
  • 4.5.1 Quantitative Methodology & Assumptions.......................................................... 4-24
  • 4.5.2 North America...................................................................................................... 4-25
  • 4.5.3 Europe .................................................................................................................. 4-29
  • 4.5.4 Asia Pacific........................................................................................................... 4-32

Chapter 5 -- Major 4G Initiatives.................................................................................................. 5-1

• 5.1 Supply Side Developments -- Manufacturers' Initiatives................................................. 5-1
  • 5.1.1 Classification of WiMAX Equipment Manufacturers............................................ 5-2
  • 5.1.2 Significant Manufacturer-Led Initiatives ............................................................... 5-3
• 5.2 Demand Side Developments -- Global Trends................................................................. 5-9
  • 5.2.1 Complemetarity vs. Competitivity ......................................................................... 5-9
  • 5.2.2 Different Applications in Different Markets .......................................................... 5-9
  • 5.2.3 Pre-Commercialisation Trials................................................................................. 5-9
• 5.3 Current Developments ................................................................................................... 5-11
  • 5.3.1 WiMAX................................................................................................................ 5-11
  • 5.3.2 FLASH-OFDM & Qualcomm FLO..................................................................... 5-11
• 5.4 3G/4G Strategic Trends in North America .................................................................... 5-13
  • 5.4.1 Mobile Operators.................................................................................................. 5-13
  • 5.4.2 Wireless Internet Service Providers ..................................................................... 5-13
  • 5.4.3 Wireline Operators ............................................................................................... 5-13
  • 5.4.4 Strategic Drivers................................................................................................... 5-14
• 5.5 3G/4G Strategic Trends in Europe................................................................................. 5-16
  • 5.5.1 Mobile Operators.................................................................................................. 5-16
  • 5.5.2 WISPs & Wireline Operators ............................................................................... 5-16
  • 5.5.3 New Entrants ........................................................................................................ 5-16
  • 5.5.4 Strategic Drivers................................................................................................... 5-17
• 5.6 3G/4G Strategic Trends in Asia Pacific......................................................................... 5-19
  • 5.6.1. Regional Heterogeneity....................................................................................... 5-19
  • 5.6.2 OEM Leadership .................................................................................................. 5-19
  • 5.6.3 Market Segmentation ........................................................................................... 5-19
  • 5.6.4 Strategic Drivers................................................................................................... 5-20
• 5.7 Conclusions.................................................................................................................... 5-22
  • 5.7.1 Regional Similarities & Differences .................................................................... 5-22
  • 5.7.2 Global Spectrum Harmonisation .......................................................................... 5-22
  • 5.7.3 Market Segmentation ........................................................................................... 5-22
  • 5.7.4 Pioneer's Prediction ............................................................................................. 5-23

Chapter 6 -- Technology Penetration and Bandwidth Demand Analysis ..................................... 6-1

• 6.1 Fixed WiMAX as Backhaul Technology in Mobile Networks: Market Opportunity Forecast................................................................................................................................. 6-1
  • 6.1.1 WiMAX in Mobile Backhaul: Forecast Model Techniques................................... 6-2
  • 6.1.2 WiMAX in Mobile Backhaul: Forecast Model Methodology and Assumptions ... 6-4
  • 6.1.3 WiMAX in Mobile Backhaul: Market Opportunity............................................... 6-7
• 6.2 WiMAX in Mobile Backhaul: Scenario Analysis by Region ........................................ 6-11
  • 6.2.1 North America...................................................................................................... 6-12
  • 6.2.3 Asia Pacific........................................................................................................... 6-18
• 6.3 Bandwidth Demand Analysis: Network Requirements ................................................. 6-22
  • 6.3.1 Bandwidth Demand Forecast Model Methodology and Assumptions ................. 6-22
  • 6.3.2 Forecast Network Bandwidth Requirements in North America........................... 6-30
  • 6.3.3 Forecast Network Bandwidth Requirements in Europe ....................................... 6-38
  • 6.3.4 Forecast Network Bandwidth Requirements in Asia Pacific ............................... 6-45

Chapter 7 -- Conclusions............................................................................................................... 7-1

• 7.1 Comparative Technology Costs....................................................................................... 7-1
• 7.2 4G Network Development Drivers & Constraints........................................................... 7-2
  • 7.2.1 Drivers.................................................................................................................... 7-2
  • 7.2.2 Constraints.............................................................................................................. 7-2
• 7.3 3G Network Development Drivers & Constraints........................................................... 7-3
• 7.4 Prospects for Future Deployment of 3G and 4G.............................................................. 7-3
  • 7.4.1 Global Themes ....................................................................................................... 7-3
  • 7.4.2 Regional Themes.................................................................................................... 7-4
• 7.5 Forecasts .......................................................................................................................... 7-5

APPENDIX 1 -- Assumed Mobile Subscriber Usage Patterns .................................................... A-1