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Smartphones on LTE

Ajit Deshpande - - 0 Comments

Last week, Verizon announced during CTIA’s MobileCon that currently ~12% of their customer base uses LTE, and that these customers represent ~35% of the company’s mobile data traffic. As new LTE devices including the iPhone 5 come on board over the next few months, the company soon expects more than half of its mobile data traffic to go over its LTE spectrum. While Verizon is the farthest along in its LTE infrastructure build-out(~400 cities compared to less than 100 cities for AT&T and limited deployments for Sprint), even Verizon’s LTE network is less than 2 years old. Verizon’s revelation is thus an early pointer to how smart device adoption, enhanced connectivity and rich mobile data offerings will feed each other to create a strong positive feedback loop that will result in explosive growth in data traffic.

But here’s the problem: carriers only have limited spectrum capacity. Any decent additional chunk of spectrum capacity costs billions of dollars, thus at the rate mobile data is projected to grow, carriers will soon become capacity limited. As VoLTE becomes main-stream and 3G infrastructures are sunset, this spectrum crunch will get worse, and would need some combination of the following to be mitigated:

  • Localized infrastructure buildout: Small-cell and WiFi offload infrastructure providers including Opus portfolio company SpiderCloud Wireless can scale up to create localized spectrum usage in enterprises and thereby enable carriers to re-use spectrum capacity
  • Regulatory intervention: The FCC can open up new, free (or cheap) LTE-usable spectrum for carriers to enhance capacity without breaking their back with the additional capex.
  • Dynamic Spectrum Access: 5G technologies such as cognitive radio will be able to efficiently utilize unused spectrum capacity across the wireless spectrum to meet variable demand.

For enterprises, additional spectrum capacity as well as dynamic spectrum access each has significant implementation risk. Small-cell technology on the other hand seems to represent an elegant solution to a technologically complex problem – in other words it is an excellent entrepreneurship opportunity with a structural barrier to entry. Will the market adopt it soon and in a big way, we will see!

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