Mr Operator on 4G: Don’t wind me up

This week Mr Operator is looking at 4G. Don’t get too excited though, for us here in the West, it’s years away…

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Sometimes you just can’t win.

Spend quite a few Billion to deploy 3G – It’s not fast enough. OK, spend a few hundred million and a few years, deploy 3.5G HSPA, now it’s just fast enough. Until next year, when we (according to the media) demand actual Megabit speeds and sub-20ms latency so we can play games and use VoIP apps to bypass your voice charging mechanism.

Is the customer always right? Does keeping the customer happy make business sense?

Sometimes, no.

The Return On Investment cycle for MNO’s is measured in decades.

Remember the lovely Nokia 7110? The one Keanu Reeves used in the first Matrix movie? How cool was that keypad slide? Well, a mobile site built back when that was hot has only just paid for itself now.

So, you ask your investor for 10Bn over 10 years, buy a licence, build a network, spend a fortune on marketing acquiring customers, wait for EBITDA to become positive (nervous smiles all round chaps) and then actually make some cash/pay some dividends in the last few years, before having to do it all over again, because customers now want the Next Big Thing. In this case, uber-fast low-latency pervasive mobile broadband.

So when an article like this from the FT says that 4G will be available ‘for commercial deployment’ next year, the grain of salt required arrives courtesy of one of these.

A starter on 4G: it doesn’t exist yet.

There is speculation, talk and argument, even some prototype lab stuff going on. But all we really do know is that it will use advanced radio wizardry known as OFDM. We are a few years away from standards-body agreement on exactly what 4G is. Then another year away from hardware MNO’s can test on. And then – most importantly – place a purchase order for. That’s when the rubber hits the MNO road. That’s when line managers in the RF & deployment departments budget time for deployment. Budget for increased backhaul (rather a large issue in itself).

4G has a number of thorny issues to deal with, like IPR. When you buy a 4G network, who do you pay rights to? This is currently as clear as mud, despite recent IPR pool developments. Not for nothing did Qualcomm buy Flarion, the recognised OFDM IPR leader.

Then there’s spectrum slices. Is it 20MHz? 5MHz? 1.25MHz? all of the above? customisable? When your 3G licence runs for another 10 years in clearly-defined 5MHz blocks(in the case of UMTS 3G), you have to work with what you’ve got.

Now about all of this tosh the customer cares not a jot.

What they want is to be sold something fast, that they can use anywhere, while mobile or stationary. HSPA meets this need now, although it does depend on your definition of ‘fast’. Is HSPA ‘fast enough’ for what most people want – web browsing & email/IM? I’d argue yes.

Customers don’t want to have multiple networks if they can avoid them. WiMax will not meet customer expectations of voice for quite some time, if ever, and WiMax MNO’s will still have to pay voice and IP traffic interconnection/termination fees, which will be passed onto customers. And don’t suggest that people will use dedicated VoIP clients to communicate – will you ask your mum to install a VoIP client on her PC so you can save a few quid calling her? Please. (and no, Skype is not the answer. Show me they are profitable. Go on.) So that leaves WiMax as just a mobile broadband play. Is WiMax’s lunch already eaten by the HSPA dongle bully? I’d say yes.
And if it’s ‘commercial’ next year, where are the handsets / dongles? MNO device roadmaps are 12-month affairs, so if things are going to be ‘commercial’ in 2009, we should see LTE/WiMax devices cropping up on them now.

:: cut to handset procurement team meeting ::

“So guys, where are the LTE units we wanted?”

:: crickets chirp ::
:: tumbleweed ::

Of course, none of this will prevent Intel pouring a lot of cash into the idea of WiMax now, and VC’s backing WiMax network startups. When the inevitable happens you can bet that MNO’s will be eyeing the WiMax carcasses eagerly, looking for some cheap infrastructure & licences to integrate into their LTE networks.

So long-term, things are looking good for consumers. Things are getting faster. HSPA+ promises some good speed bumps. Networks will evolve, backhaul will improve. These are inevitable, incremental improvements.

But 100MBps to your handset next year? Don’t wind me up.

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You can find out more about Mr Operator here.

By Ewan

Ewan is Founder and Editor of Mobile Industry Review. He writes about a wide variety of industry issues and is usually active on Twitter most days. You can read more about him or reach him with these details.

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