21 April 2010

Developments regarding LTE

There have been a few interesting things related to LTE that have emerged in the last month or so. I have been rather distracted by other things (IEEE DySPAN among them), so I have not blogged about them. On the other hand, it may be interesting to consider these developments on the whole rather than individually.

First up, this article in the NY Times notes the following:
But the superior efficiency of L.T.E. networks will tend to minimize the overall cost of transmitting voice calls, as conversations are converted into tiny packets of 1s and 0s in a process similar to that used by Internet voice services like Skype that give away some Internet voice service free.

Operators, which generate about 80 percent of their revenue from voice services, want to hinder a new downward price spiral. Revenue from termination fees makes up 15 percent of an operator’s sales and profit, said Jacques de Greling, an analyst at Natixis, a Paris bank.

Many smaller operators would rather adopt the billing regime used by Internet service providers and mobile operators in the United States, called “bill and keep,” which splits the costs of interconnection between the caller and person being called, eliminating additional costs for callers. The U.S. system has enabled flat-rate mobile plans and has promoted cellphone use.

Despite the push by large operators for an L.T.E. standard that would preserve their lucrative billing status quo, it is uncertain whether they will be able to extend the European system of termination rates into the L.T.E. era.

But last year, the European Commission, seeking to encourage the greater use of mobile technology, raised pressure on the operators by adopting rules that would require countries to develop a uniform method of calculating an operator’s costs for delivering voice service when determining the termination rates charged in a country. The new rules are expected to reduce E.U. termination rates from a current average of 7 cents a minute to less than 2 cents by 2012.

In Brussels, an advisory council made up of European national telecom regulators is scheduled to consider a plan in May to switch the European regime from termination rates to one akin to the U.S. system. Most operators remain opposed to the change. But given the rapid decline in mobile termination rates, such a changeover may be superfluous.

Then there is this item about the private equity firm Harbinger, who plans on building a nationwide LTE network in the US. The cited article (from GigaOm) does a bit of analysis of the announcement. Such a network that is not affiliated with a major carrier could serve as a "wholesaler" to MVNOs, which could provide an interesting challenge to the competitive landscape of mobile in the US. It could also serve as "overflow" capacity for the existing carriers, enabling them to roll out a footprint more quickly than if they relied exclusively on their own investment and deployment resources. On the other hand, it has been pointed out that this might be a "smoke and mirrors" strategy to boost the value of the spectrum controlled by Harbinger in advance of a potential sale.

No comments: