LTE development, rollout to boost employment, GDP

Canada is set to follow in the United States' LTE footsteps within the next 24 to 30 months, boosting employment and GDP, analysts say. According to a report released Aug. 22 by U.S. research firm Deloitte LLP, wireless providers south of the border are expected to invest $25 billion US to $53 billion US in fourth-generation LTE networks between 2012 and 2016. The investment could trigger the growth of 371,000 to 771,000 jobs as well as $51 billion US to $73 billion US in GDP, Deloitte said in the report. The report, entitled “The Impact of 4G Technology on Commercial Interactions, Economic Growth, and U.S. Competitiveness,” said American leadership on 4G is far from sealed because more than 150 carriers in 60 countries are committed to various 4G deployments and trials. Industry analysts told The Wire Report in interviews that wireless network investments could also benefit Canada by paving the way for LTE expansion and employment opportunities. Duncan Stewart, director of research for technology, media and telecom at Deloitte Canada, said in an interview that Canada is moving quickly. “Here in Canada, we’re moving a little faster towards LTE than I would have thought,” he said. “The U.S. report is not talking about HSPA+, but about the move to LTE, and as we have discussed in the past, it costs more to go towards LTE than to go to HSPA+.” Canada will be moving to LTE over the next 24 to 30 months, Stewart said. Rogers Communications Inc. launched Canada’s first LTE network in Ottawa this summer and plans to deploy the service in Toronto, Montreal and Vancouver this fall. BCE Inc. has said it intends to deploy LTE in some markets this year and Telus Corp. is planning a launch for early 2012. Stewart noted that the growth of LTE in Canada and in the U.S. will depend on the amount of available spectrum. “Spectrum may be America’s Achilles heel,” the Deloitte report said. Deloitte researchers noted a coming spectrum crunch as a result of data-heavy smartphones and tablets. According to the report, the Federal Communications Commission (FCC) has said the U.S. only has 50 MHz of spectrum in inventory. The report cites Julius Genachowski, chairman of the FCC, in his warning of a “looming spectrum crisis” and that the country’s spectrum inventory is only a fraction of the amount that will be needed to meet growing demand. “Their problems are our problems,” Stewart said of the U.S. need for spectrum. “It takes time. It takes years to release spectrum, and of course, because we share a physical border, we harmonize our spectrum with theirs. What they do, we do, and vice versa.” Canada's experience will be delayed, but it will face the same dilemma, he said. “As always, it will probably take 12 to 24 months for our networks to fill up, but it’s going to happen everywhere,” he said. Dvai Ghose, an analyst with Canaccord Genuity, said in an interview that although Canada is not that far behind the U.S., he expects the financing of 700 MHz spectrum licences and LTE upgrades to be difficult for Canadian companies. “Unlike in the U.S., we’ve only just deployed HSPA,” Ghose said. “Their ability to finance 700 MHz spectrum as well as LTE upgrades will be challenging.” Ghose said it will also be a challenge to make LTE available to a wide range of customers. “LTE is a progression of timing,” he said. “Quite frankly, there are very few devices that work on LTE at the moment.” Although Rogers announced this week the release of some LTE-compatible handsets in the fall, including the Samsung Galaxy S II, there remains a shortage of LTE-enabled devices in Canada. Ghose said Canada’s rush toward LTE is somewhat unexpected. “It’s a little surprising that Canadians have gone so quickly towards LTE,” he said. “That’s because they deployed HSPA, in general, much more aggressively than in the U.S. and they deployed dual cell. At 42 Mbps , I thought they would sweat out HSPA a little longer before doing LTE.” Still, Ghose said incumbent Canadian carriers might find a leading edge and profits in new LTE technologies. “To an extent, the incumbents are saying: ‘We have the money to deploy LTE and the new entrants are going to find it more challenging—so let’s do it,’” he said. “So I’m surprised as to how early it’s being done, but I can understand why.” Michael Hennessy, Telus’ senior vice-president of regulatory affairs, noted that the successful rollout of LTE this year and next depends on how soon carriers gain access to the coveted 700 MHz spectrum. “Some of that is dependent, of course, on whether or not the carriers get access to 700 MHz spectrum,” Hennessy said in an interview. “Because that’s critical for actually rolling out LTE outside of urban areas.” The 700 MHz and 800 MHz bands are needed for rural rollouts because it is the most economic to deploy, Hennessy said. Canada will experience the same need for spectrum as the U.S. because demands are strong in both countries for urban and rural mobile services, he said. “We are seeing exponential growth because of mobile broadband—where there is a magnitude of 16 to 20 times what old feature phone customers were using,” he said. “We face those same capacity crunches. The interesting thing that we are finding in our studies is that it’s not just an urban phenomena –it’s rural as well.” Deloitte wrote in its report that the positive effects of LTE go beyond new goods and services by improving communications for various businesses. “4G networks combined with cloud computing and other advanced technologies have the potential to facilitate interactions among all components of the ecosystem, and thereby accelerate the process through which supply and demand interact and create new economic activity,” the report said. It said that, in 2009, U.S. cloud computing revenues totaled $35 billion US and made up 60 per cent of the world’s usage. By 2014, Deloitte predicts that American cloud revenues could “more than double,” reaching $76 billion US. The combined usage of 4G and cloud computing will continue to expand in the U.S. as consumers and a variety of end-user industries seek devices and services that will better serve their customers, patients, clients and students, the report said. Hennessy said new LTE networks will have a positive outcome for GDP and jobs. “Actually, we’re tracking ahead of the U.S. right now in network rollout and coverage,” he said. Stewart agreed that 4G expansion will stimulate the Canadian economy, but it is still difficult to tell by how much. “If you took the American numbers and divided them by 10 for example, you’d probably be pretty close for Canada,” Stewart said. “When people buy the LTE and 4G equipment—not only do new towers go up and not only does this new gear need to be installed— sometimes some of the components and some of the boxes are manufactured in Canada.” dgrenier@thewirereport.ca

LTE development, rollout to boost employment, GDP

News | 08/30/2011 5:51 pm EDT

To keep reading, get a free trial.

Already a Subscriber?

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us