Long Term Evolution (LTE) is the wireless industry's next generation of high bandwidth wireless technology. Typically billed as "4G" technology, the truth of the matter is that LTE is not really 4G - it is much too slow to meet the requirements that have been defined for true 4G, and we need to wait for LTE-Advanced - which will not become available until roughly 2018 - before the wireless industry can truly claim it is delivering on 4G. Nevertheless, LTE represents a significant step forward for wireless data access.
On average LTE speeds up downloads by at least 15x over 3G, and provides on average a 3x increase in data upload capability. Of even greater importance, LTE does this while also essentially eliminating network latency. These wireless data downlink and uplink advances are in fact hugely non-trivial - consumers see real benefits for the most part, and the carriers are far better able to optimize both bandwidth access as well as network availability (LTE allows for a much denser pools of users than 3G).
Most of us know how frustrating it has been in the past to have a five bar signal and yet have no network access. Signal strength has nothing to do with how many users a carrier can place on a given wireless region. Mid-town Manhattan, for example, has long been notorious for providing great signal strength and limited network availability due to the population density in that region. LTE has greatly alleviated this particular situation. Faster speeds and much higher levels of network availability offer a significant one-two punch.
These benefits of LTE are clearly driving wireless infrastructure investment. According to IHS iSuppli, global spending by wireless carriers on infrastructure equipment is expected to rise 8.3 percent in 2012 and will reach $45.5 billion, driven primarily by investments among carriers in developed nations on LTE technology. The spending on infrastructure continues the strong 7.7 percent expansion of last year, when carrier expenditures amounted to $42.0 billion. Growth will moderate somewhat during the next few years to the 3.0 percent range, with total carrier spending on infrastructure equipment reaching $50.6 billion by 2016.
Per a new IHS iSuppli Consumer and Communications Market Tracker Report that was just released, global 4G LTE subscribers this year are forecast to reach 73.3 million, a huge 334 percent increase from 16.9 million in 2011, another round of triple-digit growth, equivalent to 181 percent, is expected in 2013 when 4G LTE subscribers total 205.7 million. By 2016, 4G LTE subscribers will reach nearly 1.2 billion strong, as shown in the chart below.
LTE Drives Convergence
The overall combination of benefits and overall market reach detailed above makes LTE a vital emerging technology that will influence not only pure mobile wireless data usage, but perhaps even more important, will influence how electronic devices of all sorts will converge and interact in a rapidly escalating mobile world.
“The chief agent for the wireless industry’s continuing growth lies in the high-speed, low-latency performance delivered by LTE,” says Francis Sideco, senior principal analyst for wireless communications at IHS. “Providing much faster access speeds than 3G technologies, LTE makes real-time applications such as video streaming and multi-person gaming usable, not just possible. In turn, the increasing penetration of LTE is a factor in furthering the convergence of smartphones, tablets, computers and other devices. Such convergence allows manufacturers to create a market strategy in which applications can be leveraged across multiple devices through a common user interface—an increasingly important factor not just in a manufacturer’s capability to compete, but also a key element for success in the adoption of a device.”
There is nothing to argue with here - Sideco's comments are spot-on, although we'd broaden the overall view to include the many mobile apps that now rely on real time data - mapping, LBS, in-car services, and so on, as well as other devices, such as camcorders and cameras (by which we do not mean smartphone cameras, but real cameras). All sorts of possibilities open up.
One final possibility we'll touch on here involves the use of "in-app" advertising. One of the strikes against in-app advertising to date has been its intrusive nature. The issue of intrusiveness, however, has largely to do with ads being generated too slowly, causing mobile users to lose patience - no one wants to sit around and wait for ads in a 3G world. With LTE however, this changes. It opens up better possibilities not only to deliver in-app ads, but to ensure that such ads are timely, relevant and presented in a proper context that makes total sense to the mobile user. No wonder the United States - where LTE has been strongly pioneered and has already become deeply embedded - is rapidly emerging as the global leader mobile advertising.
Even though LTE is essentially a place holder and bridge to tomorrow's true 4G world, it is a placeholder with significant advantages over 3G. The wireless industry - especially in the United States - deserves credit for spending the necessary hundreds of billions of dollars necessary to make it a reality. And mobile consumers deserve credit for getting on board and making those investments pay off.
Both conditions were necessary in order for the rest of the electronics world to get on board. Now we can sit back and begin to enjoy some of the benefits.
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Edited by Brooke Neuman