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Debut of next-gen networks to cost U.S. carriers $1.78 billion

post #1 of 20
Thread Starter 
Implementing a Long-Term Evolution data network, as is in the plans for both AT&T and Verizon, will be a costly $1.78 billion investment for each in the first year alone, a new study has found.

AT&T is expected to begin its roll-out of 4G LTE in 2011, while Verizon may look to get a jump on its competitor. But whenever the two largest wireless carriers in the U.S. begin their adoption of the LTE standard, the first year of roll-out alone will cost an estimated $1.78 billion, according to a new study from AIRCOM International.

"LTE represents a major undertaking for mobile operators," said Margaret Rice-Jones, CEO at AIRCOM International. "With an all IP-based network infrastructure, LTE requires completely new thinking compared to previous mobile technologies. Mobile operators around the world face very different challenges in embracing LTE, which will have serious implications on the levels of finance they need to raise."

Currently, the iPhone is only available on GSM networks. While SIM card-based phones are the standard internationally, carriers such as Verizon and Sprint in the U.S. use CDMA-based networks.

But Verizon's adoption of LTE could change that. Unlike the artificial split between North America and the rest of the world today, a large number of both domestic and international carriers plan to move to LTE within the next few years, including AT&T and T-Mobile USA.

If LTE catches on, the switch could let Apple build iPhones that stay with one core technology but which could be used worldwide with no real compromise.

The new report suggested that tier-one carriers like AT&T and Verizon must use "innovative approaches" in introducing a fourth-generation network. It said that options like network sharing will be an essential part of companies remaining profitable. It also said that current business practices, like subsidizing handsets, may not be profitable options in the future.

The estimated cost of LTE is highest in the U.S., where it easily tops the billion dollar mark. In second is Europe at $880 million, followed by the Middle East ($337 million) and Asia Pacific ($232 million).



"Very few operators have the available resources or shareholder freedom to meet these costs," Rice-Jones said. "This means that innovation within the mobile industry needs to be redefined. It has been traditionally tied to finding the next "killer application". The economic reality of the mobile industry now means that true innovation is finding technology that will enable operators to deliver services more cost effectively."

AIRCOM said it made its calculations based on expertise helping carriers switch to 3G and HSPA in the past. The data was released alongside the launch of the company's LTE Cost Calculator. The U.K. company has consulted with mobile operators in 135 countries.

"Despite the financial commitment required, there can be no doubting the tremendous potential of LTE technology in taking mobile services to the next level," added Rice-Jones. "LTE represents a major evolution and mobile operators must take an intelligent approach to network migration. With careful planning however, LTE will deliver sufficient network capacity and data speeds to further enhance the delivery of high bandwidth services to consumers globally."
post #2 of 20
That is not a huge number, considering that ATT's capex plans for 2009 are $18B (and I am sure Verizon must be in a similar league).
post #3 of 20
i get a few telecom newsletters emailed to me. last week they mentioned LTE and Verizon. the guy from VZ said that for most of their LTE deployment they don't need to change towers. just lay new fiber and upgrade some of the equipment that is part of a tower.

sounds like some of the things i've seen in IT in the last few years. Sell some super powerful piece of hardware but cripple it and sell performance on a sliding scale. depending on the performance you need you have to buy a license key.

they sell a lot of fiber switches this way. a 24 port switch will have 4 ports active out of the box and most of the nice features deactivated. you have to buy the licenses to activate everything
post #4 of 20
Yeah big deal! Let's look at what AT&T is making off of 9 Million iPhone Customers; 9 million times the $30 that's mandatory for the data plan that's $270 Million Dollars a month = 3.24 Billion a year alone; average plan $120 of 9 million users = 1.08 Billion a month = 12.96 Billion Dollars a Year. This is AT&T with just 9 Million iPhone customers alone so I think that AT&T and Verizon can handle it.
post #5 of 20
I love the posts so far. You won't catch me weeping for the carriers. Upgrading the networks should be a known cost that they forecast for. If it is not, they have inept management. I am sure they could pay for this with the ridiculous profits they make from SMS alone.
post #6 of 20
So how many subscribers does AT&T have? 40 million?

Paying between $20 and $100 a month (sure, some of this covers existing mobile phone costs).

But they only need to redirect $50 a customer per year into network upgrades. Under $5 a month. Given the iPhone rates alone they can easily squirrel away $5 a month for future investment from these customers, even if part of the cost is device subsidy (~$20/m).
post #7 of 20
Quote:
Originally Posted by LE Studios View Post

Yeah big deal! Let's look at what AT&T is making off of 9 Million iPhone Customers; 9 million times the $30 that's mandatory for the data plan that's $270 Million Dollars a month = 3.24 Billion a year alone; average plan $120 of 9 million users = 1.08 Billion a month = 12.96 Billion Dollars a Year. This is AT&T with just 9 Million iPhone customers alone so I think that AT&T and Verizon can handle it.

Exactly...

I hate when I have to hear AT&T whine that their networks are being over taxed by the increase usage. Deal with it, upgrade or get out of town.
post #8 of 20
the article has this backwards. it's not LTE taking off that would make Apple put it in the iphone. It's Apple putting LTE in the phones that would make it take off. Every company out there wants to be able to service the phone so they are watching what Apple does. and the talk is that Apple is looking at putting in an LTE compat antenna alongside the current GSM one (given that the non US is getting ready to embrace LTE as well). So Verizon, which really really wants to be iphone ready to grab back customers from ATT will jump. ATT wants to keep customers so they have to jump. Plus they will have to come up with ways to beat each other on costs to the customers. so they will probably drop little carrots like free unlimited texting with the data plans (since it doesn't cost them much of anything for sms)

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

Reply
post #9 of 20
Not sure what it would do to network bandwidth - but what about something as simple as offering high speed home internet service to folks in areas where they cannot get cable or are too far away from the nearest CO to get DSL - or who have very slow DSL etc - on top of that the freedom to take your LTE router with you when you move etc - just think - you can sign up for high speed internet service one time - and take that box with you anywhere you go or anytime you move without having to schedule a service call etc.

Hmm - would that work in a femto-cell arrangement? Just thinking that maybe you could tie in high speed internet and better cell coverage somehow and make a more compelling package deal.


Or wait - how about this for a killer app - cell phone service that actually works.
post #10 of 20
This report is incomplete. WiMax is also a big part of the plans for this next-gen communications network, and unlike LTE, it's already being rolled out. This report should be modified or retitled, "Debut of next-gen LTE networks to cost...".

Proud AAPL stock owner.

 

GOA

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Proud AAPL stock owner.

 

GOA

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post #11 of 20
Quote:
Originally Posted by AppleInsider View Post

"LTE represents a major evolution and mobile operators must take an intelligent approach to network migration. With careful planning however, LTE will deliver sufficient network capacity and data speeds to further enhance the delivery of high bandwidth services to consumers globally."

I think of RAM & HDD storage...along with bandwidth...this statement seems shortsighted. Whatever the capacity, the consumers will soak it up. If there is excess, they will think of ways to use it up.
post #12 of 20
It should cost a few billion more just to punch them in the nuts because they don't care about the technology, only the cash. Then, when their lethargy has contributed to knocking the US out of the top ten (or twenty, in case we are already out of the top ten) tech countries, no one will use their over-priced, anemic tech. It's just a cel phone.

It's as bad as NTSC. "Let's shoehorn as much in as we can rather than evolve." That's what happens when business runs tech-two disparate mindsets with opposing goals.
post #13 of 20
While the focus here is on the radio interface, the current bottlenecks are often in the land lines connecting the base stations to the central switches.
post #14 of 20
Quote:
Originally Posted by anantksundaram View Post

That is not a huge number, considering that ATT's capex plans for 2009 are $18B (and I am sure Verizon must be in a similar league).

No, but they'll try and ram that number down your throat as to why they need to be able to throttle your connection, and why they need to increase your rates!
post #15 of 20
Quote:
Originally Posted by Jim_Perry View Post

knocking the US out of the top ten (or twenty, in case we are already out of the top ten) tech countries

What are you referring to here?
post #16 of 20
... and even after "costly" investments such as these, at&t still manages to pull through with a paltry 13 billion dollars a year in net income.

they can and should do more.
post #17 of 20
This money could be better spent... free iphones for all !!!!!
post #18 of 20
The money is insignificant compared to the carriers revenue stream.

ATT better roll out 3G in areas in need of it first ... oh ya, that's right, they can't make commitments to customers since THEY NEVER SEEM TO KEEP THEM!

I digress ... I just hope Apple does the right thing and offers ATT some competition. If they do, ATT will either get off their 20th century behinds and fix the issues, or customer's will be dropping away like flies.

Dear ATT ... customers come first, including those outside the 6 major metro areas.
post #19 of 20
Quote:
Originally Posted by Hattig View Post

So how many subscribers does AT&T have? 40 million?

If you are talking overall customers, over 70 million. Verizon is at 74 or so.
post #20 of 20
Quote:
Originally Posted by axual View Post

The money is insignificant compared to the carriers revenue stream.

ATT better roll out 3G in areas in need of it first ... oh ya, that's right, they can't make commitments to customers since THEY NEVER SEEM TO KEEP THEM!

I digress ... I just hope Apple does the right thing and offers ATT some competition. If they do, ATT will either get off their 20th century behinds and fix the issues, or customer's will be dropping away like flies.

Dear ATT ... customers come first, including those outside the 6 major metro areas.

LOL ATT has no idea what people is.
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