LTE looms on the horizon, but GSM still has a long shelf life, says Thomas Wehmeier

Posted by Thomas Wehmeier Wednesday, July 28th, 2010

Add a comment

I recently chaired the keynote session at our flagship LTE World Summit in Amsterdam. The event was packed with a who’s who of the LTE sector – more than 600 attendees from all around the world and all parts of the LTE ecosystem. Perhaps not an obvious occasion upon which to switch discussion toward the useful life of 2G. But with Seizo Onoe of NTT DoCoMo confidently outlining the Japanese operator’s aggressive plans to switch off its 2G network within two years and many other operators wondering how long they’ll have to operate multiple costly radio access networks (GSM, UMTS, LTE), the discussion was entirely valid. Would other operators join DoCoMo in moving away from their 2G networks so early? We’re not yet convinced and believe the Japanese situation is a very market-specific issue based both on the choice of a proprietary and niche technology (PDC) for 2G and on an unusually high level of 3G coverage and user migration in that market.

So I used the shift in conversation as an opportunity to repeat a question my colleague, Mike Roberts, had asked at the LTE Latin America sister event in Rio de Janeiro in April. We’ve long held the view that GSM has a long shelf life and won’t disappear as quickly as first-generation analog networks did, and to test that feeling Mike asked audience members to raise their hands if they believed GSM would still be around in 2020 in Latin America. The answer was virtually unanimously positive. But would asking the same question in Europe yield a similar show of hands? Surely the maturity of WCDMA/HSPA over here and the advent of LTE have set the clock ticking for GSM. Not so. When I posed the same question to our audience in Amsterdam, about two-thirds of attendees indicated that they believed GSM would hang around in Europe beyond 2020. Perhaps a little more surprising was that a healthy number of our delegates felt 2025 was still plausible, while a few felt it could even make it to 2030. Whatever the date, GSM won’t be going away for some time, and that’s supported by our forecasts, which suggest that even by 2015 four out of 10 subscriptions globally will still use GSM as their primary access technology.

So why is there so much backing for GSM’s long-term survival? There are a number of reasons, but first and foremost it’s simply a great technology for that most important of operator applications: voice. Nothing does voice quite like GSM, and until we see the arrival of ubiquitously deployed networks that support voice (and SMS) at the same levels of coverage, quality and reliability of GSM, it’s a fair bet operators will remain to a certain degree reluctant to migrate traffic away from those networks. Let’s not forget that even in a climate where data revenues are growing quickly, we’re expecting voice to still account for two-thirds of operators’ revenues on a global basis by 2014 (see fig. 1).

Fig. 1: Global, operator voice and data service revenues, 2014

Anyway, the key word in the discussion is “ubiquitous,” and the simple truth is that nothing is likely to match GSM’s ubiquity in terms of coverage for many years, either nationally or internationally – so important, of course, for roaming revenues. We’re approaching the 10-year anniversary of the arrival of the world’s first UMTS network, and in that time we’ve seen more than 350 networks rolled out in over 150 markets. But despite nearly a decade having passed, the global coverage of WCDMA still remains low. Just 30% of the world’s population is covered by WCDMA, compared with 85% by GSM, according to Ericsson (see fig. 2). And you can bet that the gulf in area-coverage terms is even greater. Until either UMTS or LTE is deployed more broadly in bands below 1GHz, GSM’s coverage will be unrivaled.

Fig. 2: Global, approximate population coverage by radio access technology, May-10

While we’re at it, I have a quick tip for vendors and operators: Any snazzy “2020 vision” videos showing futuristic data services such as connected head-cams on bicyclists in far-off remote mountainous locations will be met with deserved skepticism unless those services are in some way shown to be supported by GSM. Let’s face it: It’s the only technology that’s remotely got a chance of being available in such rural locations!

Of course, one way to achieve better coverage for newer technologies might be to introduce more networks based on multistandard radio (MSR) technologies in the hallowed sub-1GHz bands. Doing so would give operators the flexibility to deploy various radio technologies in a single band using software-only changes to the network and then switch on/off technologies based on localized demand for different types of applications. But we shouldn’t be fooled that these investments in next-generation MSR signal GSM’s impending downfall. It’s a sign that GSM is here to stay for now just as the continued rollout of EDGE by operators globally (Vodafone Greece being a recent example) shows that operators are willing to invest in older technologies to help improve the data experience on 2G-enabled handsets, a significant number of which are still in the market and and continue to be sold.

The whole discussion actually fits squarely within our thinking that the way to create strong networks and use them as platforms to create value is not based on a blind race to roll out new technologies, but rather on the implementation of a pragmatic and holistic access-network strategy, using multiple technologies, either fixed or mobile, 2G, 3G or 4G, to optimize data-traffic flows across a variety of access networks. In the future, value will be created not by being first to market with new technologies (be that LTE, HSPA+ or whatever) but by giving the customer an experience in terms of coverage, capacity, service and cost that delivers over and above the competition. If LTE helps achieve those goals, great. But if GSM can help out, too, for certain applications, then its useful life will extend well into the next decade and will enjoy a healthy (and profitable) coexistence with newer technologies.