Embracing the 1800MHz opportunity: Driving mobile forward with LTE in the 1800MHz band

www.gsacom.com

Prepared for the GSA by:

Innovation Observatory Silvaco Technology Centre, Compass Point Business Park St Ives, Cambridgeshire, PE27 5JL, UK Tel: +44 (0)1480 309341 Email: sales@innovationobservatory.com

November 2011

Sponsored by: CSL Ltd, Deutsche Telekom, Elisa, Qualcomm, StarHub, and Telstra

Copyright GSA Global mobile Suppliers Association 2011 The contents of this document are the property of GSA and are protected by copyright and other intellectual property rights. All rights reserved. Reproduction of this publication in part for noncommercial use is allowed if the source is stated. For other use, and any other enquiries, please contact: GSA Secretariat Email: info@gsacom.com Tel: +44 (0)1279 439 667 GSA cannot and does not warrant the accuracy, completeness, currentness, non-infringement, merchantability or suitability for a particular purpose of the contents herein.

Acknowledgements: This report benefits enormously from the insights and experiences kindly contributed by LTE1800 operator pioneers including CSL Limited, Deutsche Telekom, Elisa, StarHub, TeliaSonera and Telstra, and leading vendors Ericsson, Nokia Siemens Networks and Qualcomm . We would like to thank these companies for their help.

Foreword
Broadband access to the Internet is an essential requirement for a modern, productive and progressive society. Adding mobility to broadband connectivity and enabling access to all that the Internet offers today is a compelling proposition. Delivering high quality mobile broadband services to a demanding public and to enterprises is the main business growth driver for the telecommunications industry in all parts of the world, and demands huge investments. A new report from Ericsson forecasts mobile data traffic will grow 10-fold between 2011 and 2016, mainly driven by video. The efficiencies and performance capabilities of the latest system technologies, particularly HSPA/HSPA+ and LTE, are attracting serious attention not only from the traditional telecoms players but also from new sectors, like aviation, automotive, energy, retail, the travel industry, transportation, content providers, and media. Mobile communications systems need spectrum, in the right bands, at the right cost and plenty of it, if the full potential of mobile broadband on a truly ubiquitous scale is to be fulfilled. The mobile market success achieved over recent years has been enabled by networks designed for voice but which are experiencing increasing data usage. Operators therefore need a clear roadmap that efficiently supports growth and delivers the best user experience of the services they offer. While HSPA+ technology for the most part is supporting operator needs today, many are committed to adding LTE to their networks, or plan to do so in the near term. In the medium term, internationally harmonized spectrum in the 2.6GHz band, which is most suited for LTE systems delivering high capacity in urban areas, should become available over time in most parts of the world. While some operators have commercially deployed LTE on their networks in 2.6GHz, allocations in this band have not yet been completed in most of the largest economies. Access to lower spectrum arising from the analogue to digital TV transition, the digital dividend, has been identified in the 700 or 800MHz bands according to regional requirements. The current position is similar to 2.6GHz, i.e., while some operators have deployed in this band and benefit from its excellent coverage advantages, the spectrum is not yet generally available in all regions with the notable exception of the United States where 700MHz is the main band for commercial LTE network deployments. The possibility to refarm 1800MHz spectrum for mobile broadband deployments is very appealing from costcoverage and time to market viewpoints. This spectrum was originally assigned for GSM voice and is available in substantial bandwidths across most of the world. This report shows and explains from practical, economic and business perspectives why 1800MHz will emerge as a prime band for LTE deployments in virtually all regions of the world, and be important for international roaming. We trust that this report will provide the clearest signals to investors, policy-makers and all stakeholders about the expanding opportunities being driven by the global interest in LTE1800, backed by at least 23 firm deployment commitments, according to research by GSA. This momentum already existing today, together with the reports conclusions, will further boost development of the supporting ecosystem of user devices and chipsets for LTE operation in the 1800MHz band. Alan Hadden, President GSA Global mobile Suppliers Association

Table of contents

Embracing the 1800MHz opportunity: Driving mobile forward with LTE in the 1800MHz band ........... 1 Foreword............................................................................................................................................. 3 Table of contents ................................................................................................................................ 4 Executive summary ............................................................................................................................. 5 Introduction ........................................................................................................................................ 6 LTE 1800 is a market reality ................................................................................................................ 7 Barriers to deployment are being removed ....................................................................................... 9 Spectrum liberalisation ................................................................................................................... 9 Availability of devices.................................................................................................................... 10 LTE device requirements ............................................................................................................... 13 Ability to run GSM and LTE side-by-side ....................................................................................... 15 Drivers for deployment of LTE are becoming more urgent .............................................................. 15 Imperative to create more capacity.............................................................................................. 15 The need to get to market faster .................................................................................................. 16 Benefits of deploying LTE in the 1800MHz band .............................................................................. 17 Theoretical operator case study the financial benefits of launching early in LTE1800 ................. 22 Cost and capacity analysis............................................................................................................. 24 Revenue analysis ........................................................................................................................... 29 Conclusions ....................................................................................................................................... 30 Bibliography ...................................................................................................................................... 31

Executive summary
The momentum behind deployment of LTE in the 1800MHz band is growing operators in all regions except North America are trialling LTE in this band. Operators in Europe, the Middle East, and the Asia-Pacific region have now launched LTE services in the 1800MHz band. More companies will deploy LTE in the 1800MHz band to take advantage of frequency availability (often 1800MHz frequency has already been allocated, has been sanctioned for use for LTE services, and it is sometimes underused). Providing initial widespread coverage with LTE in the 1800MHz band can be as much as 60% cheaper than covering the same area with LTE using higher frequency bands largely as a result of not having to deploy new sites for coverage when those sites are not needed for capacity. LTE in the 2600MHz band (or other high bands) can then be used to add capacity in selected geographic areas. Deployment of LTE 1800MHz can mean a faster time to market both because spectrum is already available for refarming and because deployment of an LTE 1800 MHz network requires fewer sites than an LTE deployment in a higher frequency band, so it takes less time to roll it out. Where spectrum availability has meant that it has been sensible to deploy LTE in another band in the first instance for instance in the 2600MHz band subsequent deployment using spectrum in the 1800MHz band can mean improved geographic or indoor coverage at lower cost. LTE 1800MHz will not typically be deployed on its own. LTE deployed in the 1800MHz band alone is unlikely to deliver sufficient capacity or coverage in the medium term. LTE1800 will need to be complemented by LTE deployment in one or more other spectrum bands for instance the 2600MHz band (for capacity) and in digital dividend spectrum (for rural and inbuilding reach). It is evident that operators will deploy LTE across a range of spectrum bands in order to maximise their capacity, and optimise their cost structures. LTE will also typically be deployed as an addition to existing mobile broadband infrastructure (such as HSPA / HSPA+ or EV-DO). Whilst there is today a choice of LTE user devices working in 1800MHz spectrum, device vendors need to accelerate the availability of LTE devices of all types to avoid limiting the development of the market particularly outside the US. Device vendors need to support multi-mode, multiband handsets, with LTE supported across three or four frequency ranges (depending upon the region being targeted). 1800MHz is a prime band for LTE deployment in virtually all regions of the world, and is likely to be an important enabler for international roaming.

Introduction
There is increasing global momentum behind LTE, with operators worldwide moving towards deployment. In some cases they are already rolling out commercial services. However, there are many countries in which operators have yet to introduce LTE. Even in countries where there is widespread adoption of WCDMA, HSPA and HSPA+ services, and where mobile data networks are groaning under the volume of data that smart phones and tablet computers are pulling from and pushing to the network, many operators have yet to make the step. They will have to take that step at some point in order to remain competitive, and in order to take advantage of the technological improvements that LTE can provide. If they dont, they will run short of capacity, consumer experience will degrade and customers will move elsewhere. Whats more, whilst the revenue per bit derived from delivering data services is much lower than the revenue per bit that can be earned from delivering voice, in the most advanced mobile markets it is the provision of data services (including the provision of content and applications) that is driving revenue growth. Ensuring its ability to keep driving the data services market forward has to be a priority in any mobile operators business plan. One of the main barriers to entry for the launch of LTE services is the availability of suitable spectrum. Operators do not all have access to all the spectrum they want and need for LTE. This is slowing their ability to launch new services and drive new mobile technology out to their customers. Regulatory bodies and governments around the world have been looking for blocks of frequency that can be freed up, and are planning auctions of chunks of spectrum particularly in the 2.6GHz band, and digital dividend frequency in the 700MHz and 800MHz bands. This can all be used for LTE, and in some countries these auctions have already happened. However, even where the 700MHz, 800MHz and 2600MHz frequency bands can already be used, it does not make sense for operators to use them in isolation. And where auctions have not been completed (or even scheduled), operators are prevented from launching LTE services unless they can free up spectrum they already have. Experience shows that spectrum refarming and particularly refarming of spectrum in the 1800MHz frequency range to support LTE has the potential to: Help operators accelerate the launch of LTE services Significantly lower the overall cost of LTE deployment Contribute to the bank of capacity needed so that operators can provide their mobile broadband customers with a high quality of service Generate extra near-term revenue Deliver a better customer experience Provide early movers with a potential head start on competitors.

The experiences of the operators that have already refarmed 1800MHz spectrum for LTE show quite clearly that refarming 1800MHz spectrum will be beneficial to all operators, regulators and device vendors, and the opportunity should be grabbed. This paper reviews the state of launch of LTE in the 1800MHz band, and considers the pros and cons of refarming spectrum in the 1800MHz band for LTE. It demonstrates there is a significant

opportunity cost to delaying the introduction of LTE and waiting for bandwidth in other frequency ranges, rather than launching sooner using the 1800MHz frequency band.

LTE 1800 is a market reality

LTE services have now been launched as commercial services in 1800MHz spectrum on ten networks: Aero2/ Mobyland in Poland, CSL Ltd in Hong Kong (for indoor coverage), TeliaSonera/ Omnitel in Lithuania, M1 in Singapore, Deutsche Telekom in Germany, TeliaSonera/ LMT in Latvia, Teliasonera/ Telia in Denmark, TeliaSonera in Finland, Telstra in Australia, and Zain in Saudi Arabia. This is almost one-third of all commercial LTE launches so far (see the GSAs latest report Evolution to LTE rev 2 at http://www.gsacom.com/downloads/pdf/gsa_evolution_to_lte_report_121011.php4). Beyond these early adopters deployments, trials, studies and consultations related to LTE in the 1800MHz band are underway in many more countries: Belgium, Brazil, Croatia, Estonia, France, Georgia, Greece, Indonesia, Malaysia, Namibia, Philippines, Russia, Slovenia, South Africa, South Korea, Spain, Sweden, Thailand, United Arab Emirates, and the UK. Furthermore, in those markets where one or more LTE 1800MHz networks have already been launched (for instance Australia), additional operators are also testing services.

Trials and deployments of LTE in the 1800MHz band worldwide

By mid-October 2011 185 network operators in 66 countries had committed to deploy LTE, and 103 were expected to be offering commercial services by the end of 2012. These operators, as well as additional service providers involved in pre-commitment trials, and those yet to have started testing

LTE, should all look to the potential of LTE 1800MHz where spectrum in this frequency band is accessible. Early deployments have largely been LTE FDD deployments but there has been significant interest in LTE TDD too. Operators in Australia, China, Denmark, France, Germany, India, Ireland, Japan, Malaysia, Oman, Poland, Russia, Sweden, Taiwan and the US have been testing and are in most cases deploying or planning to deploy LTE TDD. Two operators in Saudi Arabia Etisalat and STC have already launched LTE TDD networks commercially. Patterns of LTE 1800MHz deployment are emerging. Where 700800MHz frequency is available some operators, for example in Germany, are using that to reach remote white spots (unserved areas) in some cases because this is a regulatory mandate. Others are using it to drive in-building urban coverage, as lower-frequency signals penetrate buildings better than signals at higher frequencies. LTE 1800MHz is being used to increase bandwidth in high-demand areas, with fall back to HSPA+ or Dual Carrier HSPA+ for widespread data coverage, possibly in addition to LTE in digital dividend spectrum bands. In areas where 2.6GHz frequency is available, this is also used to add capacity in urban areas.

Emerging patterns of frequency usage

Operators are also using LTE in the 1800MHz band to enable them to introduce initial LTE services whilst waiting for governments to make additional spectrum available in the 700800MHz and 2600MHz ranges. We will see many multiband deployments; LTE deployments in different frequency bands are complementary. LTE 1800MHz offers a mid-point compromise technology, with better geographic coverage per cell site than LTE 2600MHz (but less system capacity), and greater network capacity than LTE in the 700MHz or 800MHz frequency band (but inferior geographic coverage per cell site). The comparison between LTE1800 and LTE2600 is explored in a hypothetical case study later in this paper.

Barriers to deployment are being removed

Barriers to deployment of LTE services in the 1800MHz frequency range are steadily being removed, making the launch of services much more attractive for operators. The two principal barriers, namely legal ability of operators to re-use frequency in this band for the provision of LTE services, and the availability of attractive devices, have been substantially lowered in most markets, if not completely overcome. Spectrum liberalisation 1800MHz frequency is widely available. It is estimated that licences to deploy services at 1800MHz have been awarded to over 350 operators worldwide, in nearly 150 countries. This frequency has traditionally been awarded for the provision of GSM services. In some cases those awards were technology-specific, and did not allow use of the frequency for WCDMA or LTE service provision. In other cases the awards were technology-neutral. In any case, in many regions national regulators have removed or started to remove the regulatory barriers to refarming spectrum in the 1800MHz band for use in WCDMA and LTE networks. In Europe for instance, rules about how 900 and 1800MHz spectrum might be refarmed for LTE services have been adopted by the European Commission and are due to be implemented by Member States by the end of 2011. (That does not mean of course that the frequency is automatically free to use there may be many customers using it for GSM services but it does mean any regulatory barrier is set aside. It does not mean either that every national regulatory body will meet the deadline, but in Europe the writing is on the wall for frequency allocations tied to specific technologies.) Finland has not only mandated spectrum refarming already, but it also allocated additional frequency in the 1800MHz band. When the Minister of Communications announced in April 2009 that TeliaSonera, Elisa and DNA had been allocated extra frequency, she stated that this move would enable 4G networks to be deployed with substantially wider coverage and at a lower cost than in 2600MHz networks, and that consequently services could be provided in rural as well as built-up areas. 1 Refarming strategy options If operators hold frequency in the 1800MHz band that was allocated to support GSM services they can take three potential routes: they can continue to use it for provision of GSM services, or (assuming the regulatory environment allows) they can refarm it for HSPA services, or they can refarm it for provision of LTE services. (LTE has been standardised for multiple bands, including 3GPP E-UTRA Operating Band 3.) One key factor in favour of deployments in the 1800MHz frequency band is that this band has the potential to become one of the primary bands for provision of LTE services. There are many different frequency ranges being proposed and adopted for LTE services worldwide, but there is likely to be convergence on a few frequency bands to avoid the ecosystem becoming too fragmented, and opportunities for device economies of scale being reduced. Spectrum in the 1800MHz band is widely

http://www.lvm.fi/web/fi/tiedote/-/view/867823

available in Asia-Pacific, Europe, the Middle East and Africa and also parts of South America, and has the potential to be one of, if not the most, common bands . Whats more, frequency in the 1800MHz band is typically available in reasonably large contiguous blocks operators often have 1025MHz of frequency, which is sufficient to support LTE service launches and to deliver the full benefits afforded by LTE. It also is easier to refarm than the 900MHz frequency band, which is still much more heavily used for the provision of GSM services. In Finland and Germany for instance, where LTE using 1800MHz has been commercially introduced by operators, 900MHz was the primary band for GSM services, so the 1800MHz spectrum was relatively straightforward to refarm. It is important to note that whilst there are operators with spare capacity in the 1800MHz band for which migration is relatively straightforward, there are other operators particularly in emerging markets who are fully using their GSM allocations in dense urban areas, and many handsets are GSM-only. Migrating customers to the core WCDMA band (2100MHz), for instance, means providing a new handset in those markets an expensive proposition otherwise migration is less easy to achieve. GSM functionalities like dynamic frequency channel allocation and orthogonal sub-channel technology have emerged to help this process though, and long-term use of GSM-only phones can be expected to decline in all regions. Customers are migrating to WCDMA devices (for instance operating in the 2100MHz frequency range), meaning that where 1800MHz has been reserved for GSM it will become increasingly under-utilised, and increasingly available for LTE. This is not yet the state of affairs everywhere, but it is the case now in some Western European markets and is expected to come to pass in other regions around 2013 to 2015. Availability of devices The availability of LTE devices compatible with 1800MHz is improving. Operators will ultimately require multi-mode, multi-band devices, and a great range of form factors and options. This will be critical for driving LTE and future mobile broadband take-up and usage. Operators already tell us they will need smartphones and tablet devices that can operate in multiple modes (including LTE FDD, LTE TDD, GSM, HSPA and WiFi) and across multiple frequencies to support multi-band services in the home country, and to support roaming overseas. Backward compatibility with HSPA and / or CDMA EV-DO networks (to enable handover of services to earlier generation networks) is particularly important in the context of LTE1800 being deployed in hotspots and HSPA being used to provide national coverage. The leading chipset manufacturers already provide support for all major LTE frequency bands in their chipsets but naturally adding complexity adds cost, so ultimately operators may agree to common regional specifications. In the meantime, in the context of LTE in general, the range of devices has grown, and according to the GSA, at the end of October 2011 there were 197 LTE devices available on the market. As the figure below shows, the devices are currently predominantly orientated for data-only services (dongles, routers and modules accounted for 75% of all devices available at the end of October 2011), but LTE smartphones are already available in the US and are increasing in availability elsewhere. Operators that have launched services have indicated to us that LTE smartphones with

1800MHz capability are becoming available now, with laptop modules, tablets and other devices expected to arrive en-masse in 2012. Dongles and home routers are already available. This means that operators should not be holding back on deploying LTE 1800 because of perceived device constraints.

LTE devices available by form factor 47 30 11 10

2
27

70
Modules Smartphones Tablets Routers Notebooks Dongles
Source: GSA - Global mobile Suppliers Association

PC Cards

Source: GSA, end October 2011 Of all the LTE devices available, 41 are believed to be 1800MHz compatible about 21% of them. Only three of those devices were phones. These 1800MHz devices included: Supplier BandRich BandRich BandRich Cisco Dovado Dovado Dovado GCT
2

Device type Router Router USB modem Module Router Router Router Module

Model BandLuxe PR51 BandLuxe R501 BandLuxe C501 EHWIC-4G-LTEG 3GN 4GR TINY GDM7240

LTE operating frequencies2 800,1800,2600 800,1800,2600 1800,2600 800,1800,2600,Others 700,800,1800,2600,AWS,TDD 2300,TDD 2600,Others 700,800,1800,2600,AWS,TDD 2300,TDD 2600,Others 700,800,1800,2600,AWS, TDD 2300,TDD 2600,Others 700,800,1800,2600,AWS,Others

Other modes DC-HSPA+ DC-HSPA+ DC-HSPA+ DC-HSPA+ DC-HSPA+, EV-DO DC-HSPA+, EV-DO DC-HSPA+, EV-DO

Note: there are many 3GPP-defined bands that fall under the heading of 700 MHz, including: Band 12: (Lower 700 MHz) 699 MHz - 716 MHz / 729 MHz - 746 MHz Band 13: (Upper C 700 MHz) 777 MHz - 787 MHz / 746 MHz - 756 MHz Band 14: (Upper D 700 MHz) 788 MHz - 798 MHz / 758 MHz - 768 MHz Band 17: (Lower B, C 700 MHz) 704 MHz - 716 MHz / 734 MHz - 746 MHz APAC Digital Dividend (APAC700): 698 - 806 MHz If a device is shown here as operating in "700 MHz" please consider this simply as a starting point for your own investigation directly with the vendor concerned to determine exactly which band(s) are supported

chipset Huawei Huawei Huawei Huawei Huawei Huawei Huawei Huawei IP Wireless Motorola NetComm Nokia Novatel Wireless Qualcomm Module Router Router USB modem USB modem USB modem USB modem USB modem USB modem USB modem Router USB modem Module Module EM970 B593 E589 personal hotspot E392 FDD and optional TDD E397 E398 E398 T Mobile Speedstick E398 Vodafone K5005 USB-032038AL-03-EU USB-LTE 7110 Liberty LTE WiFi RD-3 Expedite E373 MDM9225 chipset MDM9625 chipset MP5225 SP2531 Galaxy Nexus Galaxy S II LTE Galaxy Tab 8.9 LTE Airprime MC7710 AirCard 313U AirCard 320u ATT USBConnect Momentum 4G Thor M700 Thor M720 Thor M7400 V5L MB91 mobile hotspot V11L 700,800,1800,2600,Others 800,1800,2600,Others 700,1800,2600,Others 800,1800,2600,Others 700,1800,AWS,Others 700,800,1800,2600,AWS 800,1800,2600,AWS 800,1800,2600 800,1800,2600 700,800,1800,2600 800,1800,2600,Others 700,800,1800,2600,Others 800,1800,2600,Others 700,800,1800,2600,AWS,TDD 2300,TDD 2600,Others 700,800,1800,2600,AWS,TDD 2300,TDD 2600,Others 800,1800,2600,TDD 2600,Others 800,1800,2600,TDD 2600,Others 700,800,1800,2600 800,1800,2600 800,1800,2600 800,1800,2600,Others 700,800,1800,2600,AWS 800,1800,2600 EV-DO, HSPA+ HSPA HSPA DC-HSPA+ DC-HSPA+ DC-HSPA+ DC-HSPA+ DC-HSPA+

Not declared DC-HSPA+ HSPA+ DC-HSPA+ DC-HSPA+, TD-SCDMA DC-HSPA+, EV-DO, TDSCDMA DC-HSPA+ DC-HSPA+ HSPA+ HSPA+ DC-HSPA+ HSPA+ DC-HSPA+ DC-HSPA+

Qualcomm Renesas Mobile Renesas Mobile Samsung Samsung Samsung Sierra Wireless Sierra Wireless Sierra Wireless

Module Module Module Phone Phone Tablet Module USB modem USB modem

Sierra Wireless ST-Ericsson ST-Ericsson ST-Ericsson ZTE ZTE ZTE

USB modem Module Module Module Phone Router Tablet

700,800,1800,2600 700,800,1800,2600,TDD 2300,TDD 2600,Others 700,800,1800,2600,Others 700,800,1800,2600,TDD 2300,TDD 2600,Others 800,1800,2600 800,1800,2600,Others 800,1800,2600

DC-HSPA+

HSPA+ DC-HSPA+ HSPA DC-HSPA+ HSPA

ZTE USB modem ZTE USB modem ZTE USB modem Source: GSA, end October 2011

AL621 MF820 MF820D

1800,2600 1800,2600,Others 800,1800,2600

HSPA+ HSPA+ HSPA+

Operators are pressing for a broader range of LTE devices in general, with some in Europe concerned that the range of devices available to them (in terms of the range of form factors, and numbers of different devices of similar form factor) is more limited than that in the US, and operators in the Asia-Pacific region are arguing that the smartphones available on LTE are not sufficiently attractive to encourage consumer demand. At least one operator is known to have refarmed its 1800MHz frequency to launch HSPA+ services one of the reasons for this was that it decided there was a better choice of low-cost devices to support its service. Although this has not become a mainstream trend, the second generation of LTE handsets must not only be 1800MHz compatible, but must also be competitive with other technologies, addressing concerns about choice and attractiveness of the devices that are made available to operators, if the full power of mobile broadband on LTE is to be unleashed.

Source: GSA, end October 2011 LTE device requirements Patterns of spectrum availability and signalled operator intentions mean that device manufacturers must make available devices capable of delivering services across a variety of network types and frequencies. These variations differ by region, as the figure on the next page shows:

Patterns of frequency usage by region

Device vendors need to support operators by introducing as soon as possible a full range of devices compatible with LTE 1800MHz. These devices must be multi-mode, multi-band devices, and the full range of form factors is required including tablets and smartphones if operators are to take advantage of their LTE network launches. Countries in the Asia-Pacific region have opted to deploy LTE on a particularly large mix of frequencies. In addition to 800MHz and 1800MHz being used in South Korea, in Japan 2.1GHz is being used by NTT Docomo, Emobile is using 1500MHz, KDDI 800MHz, and Softbank has spectrum in the 2.5GHz band it bought from PHS operator Willcom. In Australia Telstra has launched LTE using 1800MHz. In Taiwan operators have access to spectrum in the 2.3GHz and 2.5GHz bands that was originally provided for WiMAX. India has already auctioned frequency in the 2.3GHz band, with auctions of 700MHz and 2.5-2.6GHz bands planned. In China the 2.3GHz band is also available. Digital dividend frequency in the 698-806MHz bands is also likely to be used in the region. In addition to handsets capable of serving operators with FDD networks, vendors must also service the growing volume of operators planning LTE TDD networks. As discussed previously LTE TDD networks are now planned or being trialled in all regions of the world. The figure below summarises the key requirements of operators in different regions:

Main frequency bands for LTE by region

* See footnote number 2 on page 11 explaining the various 700MHz spectrum bands Ability to run GSM and LTE side-by-side There is still some lingering concern in some countries that provision of both GSM and LTE in the 1800MHz band could cause interference with voice services. Our research amongst operators with live commercial services has confirmed that they have faced no problems with interference. In some markets Europe for instance rules have been established about how GSM and LTE should co-exist in 1800MHz spectrum. These were designed to avoid interference problems with existing services. In addition industry 3GPP specifications have been established regarding the deployment of guard bands to prevent interference. Operators running LTE in the 1800MHz band confirm that these measures work, so concerns about interference are unfounded and should not be used to justify delays.

Drivers for deployment of LTE are becoming more urgent

Imperative to create more capacity One of the biggest drivers for the deployment of LTE1800 is the need to open up additional capacity for the delivery of mobile broadband services. The challenges created within mobile networks by the tremendous growth in data service usage and consequent data volumes by customers with dongles, smartphones and tablets are well documented. The figure below for instance shows Ciscos forecast for mobile data traffic to 2015.

Annual mobile data traffic

25

TB per year (millions)

North America 20 15 10 5 Central Eastern Europe 0 Western Europe Asia Pacific Japan Latin America

2010 2011 2012 2013 2014 2015

Source: Cisco VNI Index 2011

Middle East and Africa

As more customers take up data services the challenges will only grow, with greater pressure being exerted in all areas of the network. The one area of a mobile operators network that does not have near-infinite potential capacity is the access network. There are finite limits to the amount of bandwidth that base stations with a given frequency asset can provide and those limits in WCDMA and HSPA+ networks are not sufficient to serve customers with the speeds they need and want. Once capacity has been reached within a cell, more capacity can only be added to the network by adding new cell sites. This is both tremendously expensive, takes time, and in practical terms is increasingly hard to do as there is a real lack of potential new suitable locations for cell sites in urban areas. In this context, as one contributor to this study put it: Operators need to consider the most profitable way of utilizing their total spectrum assets today and in the future. By refarming 1800MHz spectrum for use by mobile broadband radio technologies operators can gain the additional capacity offered by these later generation technologies, as well as improvements in speeds and other important aspects of performance like latency. Operators do have the alternative costly options of cell splitting, adding micro- and picocells, or waiting for new spectrum to become available, but by delaying they risk reducing customer satisfaction and increasing churn to rivals who are accelerating deployment of new generation technologies. Furthermore, in urban areas operators may still run out of capacity. The need to get to market faster For some operators, refarming spectrum is simply the only way they will get to launch LTE services soon. Where regulators are unlikely to be in a position to release digital dividend spectrum (700MHz or 800MHz) for a few years, or where auctions of frequency in other bands (such as 2.6GHz) are not

expected imminently, or indeed where operators have lost such auctions, or failed to gain sufficient bandwidth allocation in such auctions, operators have no alternative but to refarm spectrum. For instance the Indonesian regulator is not expected to release spectrum in the 2.6GHz band for two or more years. In Australia it is likely to be a couple of years before the release of new spectrum bands. And in the UK the auction of frequency for LTE services is not now anticipated to start before Q4 2012. Even once spectrum has been auctioned it does not necessarily become immediately available for use. For instance there may be a delay before it can be used because the frequency bands bought are used to provide another service such as analogue TV which will take some time to decommission and switch off. Refarming could enable operators with 1800MHz frequency to bring forward LTE deployment by two, three or even more years in some cases, and could also offer significant competitive advantage over rivals that do not own suitable 1800MHz assets that they can use.

Benefits of deploying LTE in the 1800MHz band

Assuming that operators are bought into the business case for introducing LTE services in the first place, and that they have the opportunity to refarm frequency to support them, operators can potentially reduce the cost of their LTE deployments by using frequency in the 1800MHz band. LTE1800 offers a number of advantages: Potentially, no spectrum acquisition costs (there may be annual usage fees) Potentially lower capex on LTE network deployment because fewer sites are needed, and consequently less equipment is required as compared to higher frequency bands Lower operational expenditure (ongoing opex) as a result of that reduction in the number of sites and equipment.

LTE can potentially be launched in the 1800MHz band without having to buy new spectrum Spectrum is a limited resource, and it is an expensive resource. Whilst recent auctions have shown that operators are not willing to pay for LTE spectrum the exorbitant sums they paid a decade ago for spectrum to support WCDMA services, the right bands of spectrum and sufficient quantities of spectrum can still be costly to acquire. Recent auctions of 700800MHz and 2.6GHz spectrum in various countries have shown that the cost per MHz per head of population can range from less than $0.01 to nearly $2, meaning in the latter case substantial outlay for an operator. Where an operator has existing frequency it can refarm for the launch of LTE it can save itself millions of dollars. As the figure below shows though, it is not always the case that the 1800MHz frequency comes free of charge. In Singapore in February 2009 the spectrum costs for frequency in the 1800MHz band were S$500k for a 5MHz allocation. However, a 5MHz slot auctioned in March 2011 cost S$22m. In recent auctions in South Korea, SK Telecom bid 995 billion Won (about $930 million at the spot exchange rate at that time) to win the 20MHz of frequency up for grabs in the 1800MHz band. Korea Telecom in contrast got 10MHz of frequency in the 800MHz band and paid about 260 billion Won ($240 million). In Sweden, the Swedish regulator PTS announced the results of stage one of the auction of spectrum in the 1800MHz band in October 2011. Net4Mobility HB and TeliaSonera both

won new blocks of spectrum. NetMobility acquired 2x10MHz of spectrum for $65.15 million, whilst TeliaSonera paid $139.39 million for 2x25MHz of spectrum.

Recent auction prices for spectrum price per MHz per head of population

Using LTE 1800MHz as part of the mix can help to reduce the capex of LTE deployment It is in the area of capital expenditure to deploy the physical LTE infrastructure that use of the 1800MHz band really benefits operators. LTE1800 offers a potential cell coverage area that as a rule of thumb and for the same given amount of spectrum is approximately twice as large as a 2.6GHz cell. This means that an operator needs to deploy far fewer base station sites in order to achieve the same given geographic coverage. Savings can be the order of 2054% of sites depending upon the local characteristics3. Because it is at a lower frequency, LTE1800 will also provide better in-building coverage than LTE2600. At the same time, an LTE network at 1800MHz is compatible with an existing 1800MHz infrastructure established to propagate GSM services in that frequency band. In other words the existing base station sites can be used. This means where an operator has an existing network it has the potential to side-step most of the enormous investment associated with erecting towers and fences, installing shelter, power and air-conditioning equipment, laying roads, finding suitable buildings and getting antennas on to roof tops. It is also possible for an operator to re-use other assets including feeders, antennas (though these might need retuning) and cables, and to minimize the investment in additional hardware.

According to one of the equipment vendors interviewed for this report the cell coverage improvement of the 1800MHz band compared to the 2.6GHz band is in the range of 3dB (urban environment) to 5 dB (suburban and rural environment) using antennas with the same gain. Using antennas of same physical size this difference can be reduced by about 1.5dB. The resulting difference of 1.5dB to 3.5dB will translate into a coverage difference in urban areas of about 12% and in suburban and rural areas of up to 30%. By using higher gain antennas this coverage difference can be eliminated or reduced, but of course these cost more to deploy and run.

Because they are using the same physical locations, operators also have the potential to deploy a single RAN base station infrastructure capable of operating in a mixed mode and serving both GSM and LTE (and in the case of a software-defined-radio (SDR) approach, to remotely adjust the resources applied to these services using a software upgrade). This avoids the needs to run multiple separate access network architectures. It is an option operators can consider where they need to modernise their GSM and WCDMA networks anyway. In reality operators are unlikely to achieve a 1-to-1 mapping and might in fact have a network optimised for both GSM1800 and WCDMA2100. But even where the 1800MHz coverage advantage is not fully used because the network is denser than it otherwise needs to be, other advantages manifest themselves: end users get higher data rates at the cell edge, and uplink power consumption of devices is reduced. Another network efficiency gain results from the IP transformation of the backhaul links, which is typically done at the time when a base station becomes an HSPA+ or LTE site in order to accommodate the increased traffic volumes. The IP links introduced for LTE1800 could also be used to transport the GSM traffic more efficiently. Using LTE 1800MHz as part of the mix can also help to reduce on-going opex of LTE In addition to reduced capex, deploying LTE in 1800MHz can also mean reduced opex in comparison with deployments that only use frequency in the 2600MHz band. First, the overall site rental bill is lower because fewer sites are needed, fewer backhaul connections are required, and less power, cooling, and maintenance spend is required. Moreover, where the GSM and WCDMA cell sites have been modernised at the same time as the LTE deployment (for instance through deployment of modern multi-mode base stations), they also cost less, as newer technologies require less power, less physical space etc. There is also an opportunity to combine the backhaul for the GSM, WCDMA and LTE services. Finally, although they will be available in HSPA+ networks, SON (Self-Organising Network4) techniques are expected to be introduced earlier in LTE than for HSPA and will therefore have an impact on opex, with lower costs for retuning. So, not only do operators potentially reduce their cost of LTE deployment by using LTE1800 to achieve widespread coverage, they also have the opportunity to drive down ongoing costs of running their GSM and WCDMA networks. By waiting for spectrum in new bands rather than deploying on refarmed 1800MHz spectrum now, they lose out on potential infrastructure efficiency gains and cost savings in the short term, and they also risk higher capex in the longer term even allowing for likely reductions in the cost of LTE equipment over the coming years. Accelerating LTE deployment in 1800MHz can have top-line benefit too Deployment of LTE services will help operators to drive data revenues. Many services that can be delivered over LTE can also be delivered over HSPA+, which makes it difficult to accurately assess the likely extent of extra revenue. Nonetheless, LTE does offer the opportunity to:
4

Deliver extra revenue by enabling the provision of new types of services Serve as a lever with which to charge more for mobile data subscriptions.

Covered by a variety of standards from 3GPP (http://www.3gpp.org)

New types of services might include HD mobile video-based services for emergency services, true on-demand mobile TV, video-based mobile advertising, wireless DSL, and high-quality online mobile gaming (which offers experiences that are consistent with the fixed network now). LTE data roaming will also be a new revenue stream and it is one which 1800MHz is well-placed to serve. As discussed previously it is a commonly available band, and could be important for facilitating roaming. LTE operators have the chance to charge more for LTE services they can market the improved downlink, and substantially improved uplink, capabilities LTE brings. LTE also offers an improved experience in other ways, such as lower latency. Early adopters will pay more to get such services. Appropriate service tiers and packages can be introduced from the outset to ensure very heavy users pay an appropriate price per bit getting the business models right should ensure more revenue from customers who will be creating many multiples of the traffic they currently generate. By waiting for spectrum in other frequency bands, and not deploying in 1800MHz, operators risk losing out on early ARPU uplift. Operators able to launch LTE early in 1800MHz also have the potential to win market share. The opportunity to achieve this will vary from country to country, will depend upon the amount of head start an operator can gain by frequency refarming, and will depend upon how aggressively it markets services, but single-digit share gains over the course of a couple of years might not be unreasonable. However, handset availability is absolutely critical without availability of attractive devices first-mover advantage is diminished. Even without the launch of new services, the improved customer experience for mobile Internet might be sufficient to attract customers. Delivering a better customer experience LTE in general offers the potential for substantially improved mobile broadband experience. It offers high peak rate downlink and uplink speeds, much lower latency, and advanced quality of service capabilities (in combination with other latest generation technology developments). LTE1800 also delivers a much better indoor experience compared with HSPA2100 and LTE2600. Data from operator trials has shown that in dense urban areas indoor reception for LTE1800 can deliver on average more than 17Mbps more throughput than LTE2600. Whats more, given the possible deployment of LTE1800 on a grid optimised for WCDMA at 2.1GHz, uplink power requirements will be much lower with LTE1800 than they are for LTE2600 this will make a big difference to battery life with high-end devices. Meanwhile LTEs use of OFDM techniques makes it more robust in urban areas than WCDMA as the transmission is more immune to noise. OFDM also offers a spectral efficiency gain of 2530% and LTE1800 additionally offers better indoor coverage than WCDMA2100 (about 25% better). This results in a better user experience on the LTE1800 network compared to the WCDMA2100 network. Reductions in latency will also mean a significant improvement in customer experience. When customers are downloading small amounts of data (for instance web pages), and when the download time is relatively short, latency can have as much of an impact on customer experience as peak download speed. Latency can also have a significant impact on perception of service quality for latency-sensitive applications such as VoIP, videocalling, videoconferencing and online gaming.

Latency depends upon a variety of factors (including the route and distance application data must travel), but on-net latency for mobile technologies varies considerably.

Typical latency benchmarks for different mobile technology generations

Mobile generation Latency HSDPA (R99) 60-130ms HSDPA (R6) 40-50ms HSPA+ 20-30ms LTE 10-20ms Source: Nokia Siemens Networks5, operator statements Developing a reputation for better customer experience especially if delivered earlier than rivals through refarming has the potential to be a lever for driving market share over the long term. There is also a marketing benefit to be gained from being able to offer your best customers LTE services before anyone else.

Nokia Siemens Networks: Latency The Impact of Latency on Application Performance http://www.nokiasiemensnetworks.com/system/files/document/LatencyWhitepaper.pdf

Theoretical operator case study the financial benefits of launching early in LTE1800
To illustrate the dynamics of the various investment options, this paper presents a hypothetical business case for a mid-sized mobile operator. The business case looks at the cost for that operator of deploying a national network based on various combinations of mobile broadband technology. In all cases the operator has already deployed HSPA Release 5 on a near-national basis (90% geographic coverage). The operator then adds additional capacity via one of four methods: Building out an LTE1800 network starting in hotspot areas, to reach near-national capacity by end of year five Building out an LTE2600 network starting in hotspot areas, to reach near-national capacity by end of year five Upgrading the HSPA+ network to Release 7 (64 QAM) starting in hotspot areas, and doing this on a near-nationwide basis by the end of year five. Upgrading the HSPA+ network to Release 8 (DC-HSPA and 64 QAM) starting in hotspot areas, and doing this on a near-nationwide basis by the end of year five.

The operator has the following characteristics: Network characteristic All subscribers Geographic area to be covered Urban / suburban / rural areas Population distribution in urban / suburban / rural areas Frequency available Details 10 million 350,000 km2 1% / 6% / 93% 55% / 37% / 8% 20MHz for each of LTE1800, LTE2600 and WCDMA/HSPA+*

*To make the deployment costs comparable, we assume that LTE1800, LTE2600 and HSPA+ upgrades cover the same geographic areas, and that each technology has the same frequency available. Note this is not realistic for real-world deployment scenarios, but has been chosen to enable like-for-like comparison.

The service parameters assumed are as follows: Year 1 Mobile broadband 2,400,000 adoption - Of which LTE / 48,000 HSPA+ Average WCDMA / 14.3 HSDPA / HSUPA broadband monthly ARPU ($) LTE / HSPA+ broadband 16.4 monthly ARPU ($) Average monthly usage 1.5 (GB) Year 2 2,800,000 252,000 13.5 Year 3 3,200,000 512,000 12.9 Year 4 3,600,000 828,000 12.2 Year 5 4,000,000 1,200,000 11.6

15.6 2.3

14.8 3.4

14.1 5.1

13.3 7.6

The mobile operator enjoys growth of its enhanced mobile broadband customer base (those customers using LTE / HSPA+ Release 7 or 8) over five years, rising to 30% of the operators overall mobile broadband customer base. Average ARPU from mobile broadband declines over the period, although LTE / HSPA+ services are assumed to command a 15% premium over WCDMA and lowerspeed HSDPA / HSUPA services. Average monthly usage across all mobile broadband customers is assumed to be 1GB per month in year zero (which is generous) with average consumption growing by 50% per year. (This may be conservative in comparison with growth rates witnessed recently.) The operator is assumed to have slightly more than 10,000 GSM 1800 / WCDMA base stations in its network, distributed as follows: Urban: 54% Suburban: 13% Rural: 43%

It is assumed that each cell has a maximum of three sectors. The rollout programme for the upgrades is the same for each upgrade strategy, as follows:

Cell coverage area for a deployment in the LTE2600 band is assumed to be approximately half that in the LTE1800 band. The operator therefore puts in many more LTE2600 base stations but gets much more network capacity. It is assumed that 100% of existing sites can be re-used in the LTE1800 deployment scenario, but that some reconfiguration to deploy in LTE2600 means only 95% of existing sites are re-used.

Cost and capacity analysis The figures below show the cumulative capex of the various mobile broadband upgrade strategies, as well as the cumulative capacity that each network delivers.

Cumulative capex of the technology upgrade paths

1,800 1,600 1,400 1,200 1,000 800 600 400

$ millions

200
Year 1 LTE 1800 LTE 2600 Year 2 Year 3 Year 4 Year 5

HSPA+ Upgrade to R7

HSPA+ Upgrade to R8

Source: Innovation Observatory

It is immediately apparent that the capex of the LTE deployment strategies are much higher than for the HSPA upgrade strategy; and the LTE2600 is much more expensive than LTE1800. However, the LTE2600 network has substantially higher capacity than the others. These figures exclude the cost of any new frequency that must be acquired by the operator. In the case of refarming there is no such cost. In the case of LTE2600, refarming is typically not possible, so these costs must be borne in addition. In Italys recent auction the price paid for spectrum in the 2600MHz band reached $0.16 per MHz pair per head of population. A similar cost in this scenario would equate to additional fees of $16 million (based on 100% penetration with 10 million customers). The figure below shows the cumulative network capacity delivered by these three approaches (bearing in mind that the baseline capacity provided by the non-upgraded sections of the networks is also available). It also shows the capacity available if LTE Release 8 is pushed to its limit with SUMIMO 4x4 (high-case scenarios), as opposed to simply upgrading to LTE Release 8 with 2x2 SUMIMO technology. It is quite evident that although the LTE2600 strategy costs much more, it delivers much more network capacity.

Cumulative network capacity - Gbps

2500 2000

1500
1000 500

0
Year 1 Year 2 Year 3 Year 4 Year 5

LTE 1800 (rel. 8, 2x2 SU MIMO) LTE 2600 (rel. 8, 2x2 SU MIMO) HSPA base line (rel. 5) HSPA+ 21 Mbps (rel. 7) HSPA+ 42 Mbps (rel. 8) LTE 1800 (rel. 8, 4x4 MIMO) LTE 2600 (rel. 8, 4x4 MIMO)

Source: Innovation Observatory

Given the customer growth profiles and usage assumptions we have defined, the HSPA+ upgrade strategy comes close to exhausting total network capacity during peak periods later in the scenario, as the figure below shows. The non-upgraded HSPA network runs out of capacity in urban areas around year 4.

Spare network capacity Gbps - urban area

1,400 1,200 1,000 800

600
400 200 (200) Year 1 Year 2 Year 3 Year 4 Year 5 HSPA base line (rel. 5) HSPA+ 42 Mbps (rel. 8) HSPA+ 21 Mbps (rel. 7) LTE 1800 (rel. 8, 2x2 SU MIMO)

LTE 1800 (rel. 8, 4x4 MIMO)

LTE 2600 (rel. 8, 4x4 MIMO)

LTE 2600 (rel. 8, 2x2 SU MIMO)

Source: Innovation Observatory

Of course, looking at total network capacity is too simplistic. Traffic does not average smoothly across cell sites. Some cell sites account for a much higher volume of data than other sites. If we assume that 5% of cell sites generate 20% of all traffic, that the next 20% of cell sites account for 35% of traffic, and the remaining 75% of sites generate 45% of traffic (a profile which is not inconsistent with the traffic distribution experienced in live networks) then it becomes apparent that using HSPA alone is not a viable strategy, as the figure below shows:

Spare capacity in busiest 5% of cells under various technology scenarios, with 20MHz of spectrum for LTE
Unused capacity per cell (Mbps)

200
150 100 50 0 -50 -100 -150 Year 1 Year 2 Year 3 Year 4 Year 5

HSPA base line (rel. 5) HSPA+ 21 Mbps (rel. 7)

HSPA+ 42 Mbps (rel. 8)

LTE rel. 8, 2x2 SU MIMO (20 MHz WCDMA + 20MHz LTE) LTE rel. 8, 4x4 MIMO (20 MHz WCDMA + 20 MHz LTE)

Source: Innovation Observatory

Even LTE is insufficient given a 20MHz band of spectrum unless it is upgraded to MIMO 4x4 (the high-case scenario). If an operator only initially has access to 10MHz of spectrum for LTE, the amount of capacity in the network is insufficient even if LTE is upgraded with MIMO 4x4, as the figure below demonstrates:

Spare capacity in busiest 5% of cells under various technology scenarios, with 10MHz of LTE spectrum
100 80 60 40 20 0 -20 -40 -60 -80 -100 -120

Unused capacity per cell (Mbps)

Year 1

Year 2

Year 3

Year 4

Year 5

HSPA base line (rel. 5)

HSPA+ 21 Mbps (rel. 7) HSPA+ 42 Mbps (rel. 8) LTE rel. 8, 2x2 SU MIMO (20 MHz WCDMA + 10MHz LTE) LTE rel. 8, 4x4 MIMO (20 MHz WCDMA + 10 MHz LTE)
Source: Innovation Observatory

Radio technologies are becoming available that can support two LTE bands using the same radio units and antennas. This opens up the possibility of deploying LTE in both the 1800MHz band and the 2600MHz band (with minimum incremental cost in comparison with deploying in a single band only). The figure below shows that by deploying LTE in two bands from a single base station in order to take advantage of more frequency availability (in this case the 1800MHz and 2600MHz bands) then operators can ensure sufficient capacity even in the highest loaded cells throughout the forecast period.
Spare capacity in busiest 5% of cells under various technology scenarios, with 30MHz of LTE spectrum
Unused capacity per cell (Mbps)
250 200 150 100 50 0 -50

-100
-150 Year 1 HSPA base line (rel. 5) HSPA+ 21 Mbps (rel. 7) HSPA+ 42 Mbps (rel. 8) LTE rel. 8, 2x2 SU MIMO (20MHz WCDMA + 10MHz LTE1800 + 10MHz LTE2600) LTE rel. 8, 4x4 MIMO (20MHz WCDMA + 10MHz LTE1800 + 20MHz LTE2600) Year 2 Year 3 Year 4 Year 5

Source: Innovation Observatory

It is clear that even in this scenario further capacity is likely to be needed in the future, and operators are unlikely to have access to sufficiently large blocks of frequency in the 1800MHz band alone to be able to meet their capacity requirements. They will need to use frequency in the 1800MHz band to ensure coverage, and frequency in a complementary band in many markets in the 2600MHz band to provide the necessary capacity in high-demand locations. They can deploy LTE in the 2600MHz band either at existing sites only (so it provides highly localised capacity), or additional sites can be deployed. What this cost and capacity data illustrates is the following: The ideal combination in many countries as the figure below suggests will be the combination of LTE at 1800MHz with one or more complementary bands and technologies. Many operators are likely to push their HSPA investments if not to the limit, then certainly to 42Mbps peak speeds. Operators cannot ignore LTE investments completely however, as the longterm scalability of their networks depends upon deploying LTE, and migration to LTE offers additional potential benefits such as the long-term integration of voice and data on IP. Where it is available digital dividend spectrum in the 700MHz and 800MHz bands will also be used. LTE in these spectrum bands can deliver national coverage cheaper than LTE in the 1800MHz band (because cell size is much larger, and because the in-building coverage is much better in urban areas although system capacity is much lower). So where operators have access to spectrum in the 700MHz and 800MHz bands for LTE they will use it as an enabler to deliver coverage.

Where they are able, operators will use LTE2600 (or LTE in other high frequencies), because this strategy delivers much higher capacity for any given coverage area than deploying LTE in 1800MHz or in digital dividend spectrum. This approach will be common in peak traffic areas. However, they will also want to use LTE1800 where they can because it offers an improvement on HSPA+ performance (even upgraded to Release 8), because LTE in digital dividend spectrum cannot

deliver sufficient capacity, and because launch of LTE in 1800MHz enables coverage to be achieved at a lower cost than launch of LTE only in higher frequencies. Revenue analysis If an operator refarms frequency in order to deploy LTE as soon as possible, it will accelerate some of that cost, but revenue is brought forward too. The figure below shows the cumulative total broadband revenue derived from the provision of broadband services in this scenario, based on launching services at the start of year 1 (assuming launch now on LTE1800), and based on delaying for two years (assuming launch later on LTE2600).

Under these scenarios, the operator launching earlier on LTE1800 has taken over a billion dollars more (50% extra) in revenues by the end of year five. Of course there are many other potential factors to consider, such as the potential market share to be gained by exploiting first-mover advantage, or the ability to realize that advantage if the device availability is limited. But in simple terms if operators see a potential return on investment from deploying LTE it makes sense to do it sooner rather than later as there is a cost to delaying. In simple terms, operators will never catch up on revenue lost by delaying rollout if they have the possibility to launch LTE in the 1800MHz band now.

Conclusions
Accelerating the launch of LTE through refarming of spectrum in the 1800MHz band can deliver a number of opportunities to mobile operators. First, they have the opportunity to reduce the cost of their LTE deployments in comparison with launching in the LTE 2600MHz band alone. Analysis suggests that savings of the order of 3040% on capex are achievable by using a mix of frequencies. (Note that operators will need to deploy LTE in other bands including the digital dividend and 2600MHz bands too, in order to gain sufficient capacity in hotspot areas, and to improve in-building and rural coverage. Deployment in the 1800MHz band alone will not deliver sufficient long-term capacity.) Operators can use LTE in the 1800MHz band to improve coverage where they have already deployed LTE in the 2600MHz (or other complementary) band in urban areas. They can also use it to speed time to market by refarming spectrum they already hold so they dont have to wait for spectrum auctions, and because it takes less time to deploy a network needing fewer sites than it does to deploy a network at a higher frequency needing more sites. Operators also have the potential to bring in additional revenues from the early launch of LTE. Finally, and just as importantly, by deploying LTE earlier mobile operators can significantly improve the experience of their customers, helping to lower churn, and improving the opportunity to develop new revenues streams on top of the mobile broadband network.

In order to realise the benefits of LTE 1800MHz, regulators need to accelerate efforts to enable refarming of spectrum in the 1800MHz band. This is underway, but regulators should redouble their efforts to remove barriers as swiftly as possible. Operators should note that device availability is improving rapidly. This should not be seen as a deterrent to deployment in the LTE 1800MHz band where this is practical. Notwithstanding this, vendors must improve rapidly the range of devices available for LTE and must ensure that there is a wide variety of attractive and competitive handsets capable of supporting LTE in the 1800MHz frequency band to help operators drive the market. There is clear and significant commitment from operators to deploy in this band so handset vendors must help assist them by responding rapidly. Vendors need to develop multi-mode, multi-band handsets, with capability to operate in variety of LTE frequencies including digital dividend spectrum, 1800MHz and 2600MHz, and the capability to fall back to WCDMA-HSPA, CDMA EV-DO networks and GSM/ EDGE networks. Typical requirements are likely to vary by region, but 1800MHz has emerged as one of the prime LTE bands. Even in regions where use of LTE in the 1800MHz band is not as common (for instance in North America currently), inclusion of 1800MHz capabilities will be essential to ensure roaming elsewhere.

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