2012 Will Be The Breakout Year For LTE

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Strategy Analytics LogoThis year will be the breakout year for LTE has the major carriers deploy their networks and the most popular phones all release LTE versions, including Apple’s iPhone, according to a telecommunications market analysis.

Strategy Analytics projects global LTE phone shipments will grow tenfold over 2011 to reach 67 million units in 2012 as LTE is rolled out in mature mobile markets around the world. That means not just the U.S. but western Europe, Japan and South Korea.

At the same time, the next generation of LTE chips with better battery management will hit the market in the second half of the year, which will incentivize consumers to make the move, according to Neil Shah, analyst at Strategy Analytics.

Flagship phones from major handset providers will also spur LTE adoption, such as the Nokia Lumia 900, LG Vu, Samsung Galaxy S III and yes, the next iPhone. Shah predicts Apple won’t have a choice.

“Verizon and AT&T, if they want to launch a premium device, will want it to be an LTE device. If Apple comes up with a new version of the phone, [the carriers] will want Apple to have LTE capability in there. They will want to move to 4G because that is more efficient than 3G,” he said. “Apple will have to up their game if they want to survive and compete in the LTE segment, which is going to be the next premium segment.”

LTE LogoThe firm is estimates that total global handset shipments will hit 1.8 billion this year, with Africa, Asia and Latin America becoming the fastest growing regions in terms of mobile devices while mature markets slow their 3G expansion in favor of 4G LTE.

Mature markets want to move off 3G because of its limits on data. LTE is a pure TCP/IP network and more efficient for data transfer, so the carriers want to move their customers, especially smartphone customers, to LTE, said Shah.

“Delivering data to 3G devices is getting costlier because they have limits in terms of spectrum and data they can deliver,” he said. “So they have an incentive to build an LTE network as fast as possible. It delivers data at a more efficient way.”

However, that’s expensive. All new antennas, networking equipment and back-end hardware is needed and the rollout budget is in the billions. For successful firms like Verizon and AT&T, it’s merely painful. For struggling firms like Sprint and especially T-Mobile, it might be a lot harder.

He predicts T-Mobile in particular will have to rely on its HSPA+ network, which has speeds approaching that of LTE, for the next few years, but eventually will have to migrate to LTE. “At some time, you need a complete IP network for more cost efficient data transmission, which can only be realized using LTE Advanced network,” said Shah.

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