Advisory Report

Wireless Infrastructure: What to Watch for in 2012

December 8, 2011
Market Issue

Ed Gubbins
Current Analysis Senior Analyst, Wireless Infrastructure

This year was marked by, among other things, bold introductions by wireless infrastructure vendors of new solutions that embodied innovative departures from previous architectures: Nokia Siemens Networks Liquid solutions and Alcatel-Lucents lightRadio technologies may have been, in a sense, previews of 2012, given their commercial availability timelines (end of 2011 for the former and 2012, and beyond, for the latter), but they set forth ambitious concepts that captivated the industrys attention in 2011. In a similar fashion, many of the events and trends of this year can serve to illuminate what likely awaits in the next. The end of 2011 provides an opportunity to reflect on those trends, map out what to expect in 2012 and consider strategies on how to negotiate that near-term terrain. What follows is a guide to the forces expected to drive the mobile infrastructure sector in 2012 and how best to navigate them. Not surprisingly, many of next years most influential developments are closely related to the rise of LTE deployments, which open new doors for vendors as they lead many operators to consider broad changes to their network architecture for example, in terms of small cells, heterogenous networks and backhaul. Even trends in the WiMAX world are dictated, perhaps more than anything else, by the pace of LTEs growth. That pace will jump in 2012 as live LTE networks roughly quadruple, according to estimates from the Global Mobile Suppliers Association (GSA). In that respect, next year will carry forward the themes of 2011 but will have its own unique qualities.
Current Perspective

Expect to see the following trends dominate attention and shape the mobile infrastructure sector in 2012: Small-cell Battle: LTE deployments will sharpen the need for small cell solutions: where LTE is adding capacity into an operators network, operators and vendors are preparing for LTE small cells in order to better leverage spectrum resources and deliver solid service quality. As major RAN vendors and femtocell specialists converge on the opportunity, the former will vie to differentiate themselves with synergies resulting from integrated micro/macro management while the latter promises best-of-breed products. These positions will find common ground in the proposition of multi-vendor networks, which both camps will face technological challenges, particularly in terms of messaging around multi-vendor self-organizing network (SON) and het nets. Multi-vendor SON: SON capabilities, which allow base stations to detect nearby nodes and adjust network characteristics accordingly, will need to evolve if multi-vendor environments are a part of operator demands. This too, will be fueled to a degree by LTE, as the widespread migration of various network technologies (CDMA, WCDMA and WiMAX) to the common ground of LTE provides a new opportunity for operators to deploy multi-vendor networks in the same geographic market. To the extent operators

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demand to take advantage of this opportunity, vendors of SON-capable products cant ignore it. Integrated WiFi Offload: LTE alone will not serve as a panacea for growing mobile data demands. Requirements for further integration of WiFi into mobile networks will likely ramp up significantly in 2012 as carriers look for ways to manage quickly rising traffic levels. Vendor activity should percolate as the opportunity draws vendors from both the carrier and enterprise worlds. High-profile case studies such as Ciscos Hotspot 2.0 trial with Canadas Shaw Communications (the results of which are to be shared in next quarters 2012 Mobile World Congress) should act as a starting gun for similar efforts. At the same time, if 2012 makes carrier WiFi more commonplace, deeper integration into the mobile core will stand out as an opportunity for some operators to differentiate their efforts. Voice over LTE (VoLTE): Mobile operators deploying LTE will be pressured to offer VoLTE services to compete with over-the-top providers who find LTEs IP architecture to be a friendly environment. To that end, most of the major mobile softswitch vendors have promised to deliver releases supporting 3G-to-VoLTE interworking standards by the middle of 2012, and VoLTE-enabled smartphones should proliferate in the back half of 2012. Beyond voice, however, solutions ushering in these capabilities can also allow operators to offer multimedia and video services across a range of networks and devices (see Alcatel-Lucent First to Unveil Formal 4G Communications Solution and Roadmap). Point-to-Multipoint (P2MP) Microwave: As rising LTE deployments drive interest in small cells in 2012 to improve coverage and capacity, small-cell demand will, in turn, help drive demand for P2MP microwave backhaul. Operators will see P2MP microwave as a more flexible, cost-effective option, in many cases, than deploying fiber to a large number of micro nodes. (Telefonica O2s trial of multipoint backhaul gear from Cambridge Broadband is one recent example.) In addition, demand for microwave backhaul in general will drive the creation of solutions that use spectrum in new ways from E-band frequencies and spectra formerly used for WiMAX services to even free-space optics. Though the spectrum and technologies employed may not necessarily be new, they will gain a revived relevance as backhaul needs press into uncharted territory. LTE-Advanced: Vendors including NSN and ZTE were already demonstrating LTE-A at 2011s Mobile World Congress, though the technology wont see commercial deployment for some time. In 2012, as vendors converging on the LTE market jockey for positions of authority, they will turn up the volume on their LTE-A stories, if only to convince operators that their strong roadmap makes them a safer choice for todays LTE deployments. Key in this messaging will be which features of LTE-A take center stage: carrier aggregation vs. relaying vs. coordinated multipoint vs. high-order MIMO vs. heterogeneous networks. Carrier aggregation and het nets seem to be enjoying the most early interest, but vendor positioning will likely follow from their own R&D strengths and guesses at what operators want. WiMAXs Tipping Point: NSNs recent sale of its WiMAX business, coming at a critical stage in the decline of the WiMAX market, will prompt others to reconsider their positions and plans in the space, especially as the interest of private equity players in these assets offers vendors a potential exit. Customers will drive this soul-searching, as WiMAX providers concerned about ongoing vendor support will likely pressure suppliers to clarify their commitments to the technology. Those vendors who remain in the space, however, will benefit if they can carve out niche applications and deliver migrations to TD-LTE. TD-LTE Ecosystem: The ecosystem for TD-LTE solutions will become more robust in 2012, given a big push by China Mobiles TD-LTE trial, which ends next year, and, to a lesser extent in the U.S., the high-profile Clearwire. New chipsets and devices supporting it become commercially available and the technology gains appeal among a range of operators, including WiMAX providers that see it as path to transition away from a waning WiMAX ecosystem. In addition, vendors may introduce new solutions to address the potential for TD-LTE networks to make use of spectrum (e.g., 3.5 GHz) that is already in use by many WiMAX networks today. LTE Devices: An influx of LTE devices will help fortify the LTE ecosystem and accelerate LTE net-

Wireless Infrastructure: What to Watch for in 2012

Mobile Access Infrastructure

2011 Current Analysis Inc. All rights reserved. For more information, please call +1 703 404 9200, toll-free +1 877 787 8947 Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com

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Wireless Infrastructure: What to Watch for in 2012

Mobile Access Infrastructure

work infrastructure demand and deployments in 2012. The GSA in June estimated just 137 LTE user devices on the market and 134 planned LTE deployments. That unlikely ratio will change markedly by the end of next year, as a growing list of device types including smartphones and tablets anticipate a convergence of mobile technologies toward LTE. Verizons plan to offer LTE-only handsets in some markets by 2013 is another measure of the speed at which this ecosystem is expected to flourish, making 2012 a watershed year for its development.
Recommended Actions

Recommended Vendor Actions

RAN vendors should treat the demand for small-cell infrastructure as an opportunity not just to sell small-cell products but to differentiate their broader solutions by promising the most efficient combination of macro and small cells, for example rather than differentiating small cells merely on the product level. This will also help defend against standalone femtocell vendors vying for the smallcell market. Vendors should package their backhaul solutions for heterogeneous networks, offering a mix of fiber and microwave solutions that are greater than the sum of their parts. Those without a strong pointto-multipoint microwave component should consider adding one at this stage, most likely through partnering with or acquiring a microwave specialist. Vendors focusing more narrowly on microwave backhaul, meanwhile, must position their products as best in breed and consider partnerships with macro RAN vendors. Vendors should prepare to talk, in detail, about differentiating aspects of their LTE-A story at Mobile World Congress in 2012, including processes for migrating specific solutions to the technology and a look at the service implications. Messaging should underscore capacity growth imperatives while promising flexibility in migration as a differentiator. Where LTE-A includes a number of different components, it will be critical for any vendor to cut through the LTE-A noise by explaining why the features theyve chosen to focus on are most important ideally with studies that quantify the value. WiMAX vendors that havent yet need to clarify their future plans in the space, whether by exiting (as NSN is) or by providing a clear vision forward (e.g., including TD-LTE migration). Events such as NSNs asset sale can help other vendors establish new positions by redrawing the competitive landscape and giving stronger players the ability to capitalize on weaker members of the pack. Ericsson must steal back the spotlight given to Alcatel-Lucent and NSNs new solutions this year by introducing its own bold claims to innovation leadership and ambitious engineering. One clear opportunity to do this is in the area of small cells, which Ericsson should address in any case. Its challenge will be avoiding appearing late to the party, following 2011s news. But among its advantages will be the ability to attract attention to the next new thing without as much obligation to fill in the details that ALU and NSN are now expected to deliver. Alcatel-Lucent and NSN must back up 2011s bold pronouncements around lightRadio and Liquid Radio with detailed illustrations of their real-world benefits, in terms of both adding more specific information on the solutions themselves and providing examples of how customers are deploying them. They must use momentum to defend against rival attempts to leapfrog their product and marketing cycles.
Recommended User Actions

Operators should help drive interoperability of small-cell products by pushing vendors to participate in such efforts. Industry standards include specifications for managing traffic across cells from different vendors, but each vendors implementation of standards may differ. To buy in to the promise of het nets, customers must see multi-vendor networks operate.

2011 Current Analysis Inc. All rights reserved. For more information, please call +1 703 404 9200, toll-free +1 877 787 8947 Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com

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Wireless Infrastructure: What to Watch for in 2012

Mobile Access Infrastructure

WiMAX solution buyers should distinguish between WiMAX vendors with a strong story about the future and those that are passive or too quiet on the subject. Its time to force vendors to clearly state their plans for support or transition of WiMAX networks to TD-LTE. Buyers should understand which LTE-A features are most important to their own circumstances. In some markets, carrier aggregation will be more important, due to diverse spectrum demands. In others, coordinated multipoint and het net functionality will be more important because of high cell density. Understanding these requirements first will help buyers evaluate which vendors are best suited to meet their needs and help those vendors in understanding where they should put their R&D dollars. Operators should take a comprehensive view of backhaul in the context of heterogeneous networks to extract greater efficiencies than they expect from their macro networks not just to manage costs, but to manage rising capacity requirements. As total cost of ownership assessments in these increasingly diverse systems can entail multiple equipment vendors and real-estate owners, operators should press vendors to help them see the big picture with all its complexity, not just each suppliers portion of it.

2011 Current Analysis Inc. All rights reserved. For more information, please call +1 703 404 9200, toll-free +1 877 787 8947 Europe +33 (0) 1 41 14 83 15. Or visit our Web site: www.currentanalysis.com