So what’s happening in China right now with LTE?  Well, currently, China Mobile (CMCC) is in the pre-commercial trial stage.  Its large-scale trial (LST) has been going on for a few years and they plan to deploy 200,000 base stations this year for the trial.  This infrastructure is expected to support the operator’s eventual commercial service, so this is not your run-of-the-mill trial.  At the same time, things are – for now – up in the air. There is a lot of uncertainty on when the trial will be completed.

China Mobile (CMCC) is the largest carrier in the world, with more than 500 million subscribers.  Two other Chinese carriers, China Telecom and China Unicom had the opportunity to upgrade to GSM.  Thus, two types of “western” 3G operating systems, WCDMA and EVDO, were introduced into the mix.  What that means is that China Mobile began to come back to the pack a bit on the technology side.  But not to worry.  I am sure they will recover quickly, as is expected, given the competitive Chinese culture.

China was, until recently, the leader in TD-LTE.  They were the force behind standardizing and driving the ecosystem in the development of TD-LTE products.  But then they were bypassed because other counties began deploying TD-LTE and China was left behind.  I would argue that Japan, Brazil and India have arguably surpassed them in deployment.

What is, of course, always there is that everyone would love to have a seat at the table in the world of Chinese telecom just due to the mere market size.  Keeping in mind that the Chinese vendors will have a significant advantage, I am still hopeful that companies like Altair will be able to get a piece of the pie.

If I could sum up the Chinese market into one word it would be “dynamic.”  China Telecom is definitely one to watch.  Word has it that it will be receiving an FD-LTE license in mid-2013.  Competition is in the air in China and we will be watching closely.

-Eran Eshed

For example, if you are having trouble with your business, there is the macro: What are the larger economic dynamics at play at the time you are reviewing the situation; and there is the micro: How are you running your business?

Another example: Your children are not doing well in school. The macro: Are they in the correct school? Do they belong where they are? And the micro: Are they doing their homework? Studying for exams? Etc.

So I’d like to mention a bit of a macro and micro scenario playing out in the mobile space, as illustrated by what took  place in Barcelona at this year’s Mobile World Congress.

First, the micro …

MWC was moved this year from the somewhat cozy confines of this place to a much more expansive location. And the message of that move is pretty straight-forward: The mobile world is exploding to the point where the prime-time trade show needs a much larger venue.

But let’s look at something fascinating that took place around MWC this year that points to something that I think is worth keeping an eye on in our industry.

Here is a sampling of the announcements that took place in advance of the show:

Intel

Qualcomm

Marvell

All solid announcements, but all related to the smartphone market. Now, today, the smartphone market is huge – up to one billion devices per year are being sold.

If we can think back to the classic business book, “Who Moved My Cheese,” the industry is now at the point of “The More Important Your Cheese Is To You, The More You Want To Hold On To It.”

And that would be fine, except that it’s not sustainable, at least not for most of the players.

In fact, perhaps only one player really stands to gain by hyper-focusing on the smartphone space, and that’s a company that starts with a Q and ends with an M that just happens to hold an unprecedented share of the market right now.

For the rest of the players, the operative page of “Who Moved…” might be this one:

“Smell The Cheese Often So You Know When It Is Getting Old.”

That’s what we are doing at Altair. We believe there is a significant market out there beyond smartphones, focused on “The Internet of Things,” and the chatter we heard at MWC backed up our belief.

So we will see what happens, but for now, we are excited about moving in this manner, because, once again in “Who Moved…” we see a valuable lesson:

“The Quicker You Let Go Of Old Cheese, The Sooner You Find New Cheese.”

-Eran Eshed

They’re noisy both literally and figuratively. Vendors are trying as hard as they can to lure show-goers into their booths by making literal noise. And industry players are hoping to achieve a bit of mindshare at the events by announcing exciting things … or at least by announcing things in an exciting fashion.

As a result, to stand out from everyone else, a company either has to make a tremendous amount of literal noise, or announce something so major, that the sound of such an announcement reverberates – figuratively – off the convention center walls.

At CES 2013, which took place recently in Las Vegas, Verizon Wireless made such an announcement.

The company announced that family plan customers can now add consumer devices, like the new Samsung Galaxy camera, and in the near-term future gaming devices, for just $5 per month.

And, by the way, Verizon Wireless also announced that almost half its current network traffic is now LTE, and that it expects its LTE network to have the same coverage as its 3G network by mid-2013.

In other words, the LTE era is here.

Back in the day – like 1-2 years ago! – when 3G ruled,  it would cost in the neighborhood of $40/month to be able to add a gaming device onto your mobile account. Simply put, it was cost-prohibitive. Who is going to pay $40/month to play games against people they don’t know?

But LTE, as we’ve said all along, has such efficiency built into it, and such a large amount of bandwidth available for the operators to offer their customer base, that a $5/month scenario is not a losing proposition for them the way it would have been with 3G.

And hey, playing games against someone you don’t know for $5/month is pretty darn reasonable, wouldn’t you say?

Of course, from the operator perspective – in this case, Verizon Wireless – $5/month isn’t a risk either, because LTE gives the company the necessary network capacity to handle all the data that customers will be transmitting by playing these games, posting these photos on social media, and doing other data-heavy things.

And I expect lots of other consumer devices to be launched over the course of this year that will really make the LTE vision a reality.

So Verizon’s announcement at CES might not have seemed like the noisiest, but to me – and to the LTE industry – it absolutely was.

-Eran Eshed

That kind of pragmatic approach may sound ridiculous, but if emotions were not part of the picture, it’s actually a highly practical solution.  The newlyweds get a nicer gift. You don’t have to deal with the headaches and expenses of travel. And the whole process is just so much simpler.

Of course, emotions are part of the picture, so such an approach is, at best, impractical and, at worst, highly offensive.

In the world of LTE, we don’t have to worry about offending a mother-in-law or cousin, which makes life easier. But we do have to be sure that our products will perform well in a mix of conditions.

In other words, we always have to ask ourselves if we are being practical.

So, when I saw that Ericsson recently completed such an “extreme condition” test, I had two reactions:

1. Must be nice to be a big enough company that you can spend hundreds of thousands of dollars on a PR stunt; and
2. As impractical as this stunt seems, the whole industry should appreciate that such a test was conducted, because we really do need to know what LTE’s speed-related capabilities are.

You see, given that there are already high-speed trains in Europe and the Far East that travel at speeds up to 500+ kilometers per hour, the idea of running a test with a jet traveling at 700 km/h is not so out of the realm of practicality.

In fact, one could argue that this test was even necessary, for the purpose of planning deployments, especially given the results of cell-to-cell handoffs.

3G was well-tested. Everyone was clear on its capabilities and limitations.

But no one has ever tested LTE for this before. And it’s not something the regulatory bodies or academic institutions would ever commit the resources to doing.  It would have to be a company like Ericsson that would have the ability to make this happen.

Of course, when you are commercializing a technology, there is always the bread-and-butter testing, which is the operator testing, interoperability testing and the field trials. Those are what will allow you to sell your product.

But it’s always nice to see what the technology is capable of doing, and while I would not refer to Ericsson’s jet test as a giant leap for LTE, it’s certainly a nice step in the right direction.

-Eran Eshed

First, it’s a huge market, and anyone who is going to be involved there will be involved in a BIG way.

Second, pricing is a major issue. The pressure to keep costs/prices low is based on necessity. Simply put, if LTE is priced too high, the Indian people will not go for it.

Third, there’s even  a mega-billionaire involved.

Gotta love that …

Today, India has more than 600 million unique mobile users of more than 900 million mobile accounts (Some people have multiple mobile accounts.). In addition, 600 million people in India are below the age of 25, so technology is not a scary thing to a very large percentage of the population.

At the same time, ARPU (average revenue per user) is very much on the low side, at just $3 per month. Compare that with $46.50 per month in the United States, and you start to get an idea for how much pricing pressure there is/needs to be in India.

In short, India is a tremendous market with tremendous opportunity … but pricing must be low to get anywhere.

With that as our backdrop, let’s take a look at the key players that are trying to make an impact in India.

There are two large LTE operators in the Indian market today, airtel (The company prefers the lower-case “a.”) and Reliance Industries (RIL). airtel owns a 2G network, and has also built out a small 3G network, but is now focusing its energies on overlaying an LTE network. 3G has not been a major success in India, due to the cost, so airtel has decided to basically bypass it and puts its broadband wireless hopes in LTE.

Of course, there is still a lot of market education that is necessary, so uptake of services may not happen so quickly.

RIL is a much more fascinating story, mostly due to the aggressive plans of multi-gazillionaire Mukesh Ambani, the company’s chairman and CEO. He has decided that – even though RIL is not a telecom operator – he is going to build out his own nationwide LTE network. And he’s entitled to do so, since RIL is the sole winner of the nationwide LTE license.

What is so amazing is that this is really the only major “greenfield” LTE implementation in the world. Clearwire tried to do it, and we all know what happened there. So this certainly bears watching. Of course, from a chipset vendor perspective, this is a very exciting opportunity, since whoever is selected will see its chips in literally hundreds of millions of devices almost overnight.

RIL is implementing a TD LTE network, but their devices will, of course, need to be dual-mode TD/FD, since users will need the ability to roam.

We’ve been on the ground in India since 2010, and we disagree with the cynics who talk about the delays in LTE’s rollout there. We actually see some positive signs, and are looking forward to supporting India’s ecosystem however we can.

And oh, what an ecosystem it will be …

-Eran Eshed

1. Regulatory implementation
2. Operator speed of 4G network deployment and device availability
3. Subscriber/User willingness to move to 4G

Those three issues have driven the markets.

But Japan is different. And before I discuss LTE, we need to take a look at the facts for this market:

1. There are already five million LTE subscribers in Japan, which puts the market in third place, behind the United States and Korea, in terms of raw numbers.
2. The top three players in the market – NTT DoCoMo, KDDI and Softbank (including Altair customer Willcom) all have a history of very fast roll-outs for new mobile technologies.
   1. These three players have 150 million mobile subscribers between them.
   2. The Japanese regulators have a history of not standing in the way of innovation for this market.

Okay, now let’s figure out what this all means …

Japanese users have clearly demonstrated a willingness to move ahead to 4G. Not only that, but Japanese operators have already deployed 4G networks, albeit WiMAX networks. But they also know that the future is all about LTE, so they are moving in that direction as well.

But the LTE infrastructure is very much a work in progress, so it will take a bit more time until we see what we’ve historically seen from Japan, namely explosive growth.

If I had to give an estimate of when we will see it all play out, I’d say that Japan will be lots of fun to watch in the second half of 2013 through the first half of 2014, which, when you think about it, isn’t so far away.

Next stop … India!

-Eran Eshed

The company polled 3,000 Americans on their views about 4G, and discovered that 47% of consumers don’t think they need LTE 4G. Only 15% of respondents said that LTE 4G is the best network technology to have, and 26% of respondents indicated that they think all 4G technologies are the same.

While it certainly makes sense that nearly half of Americans don’t believe they have a need for 4G, I am inclined to suggest that this can be attributed to the fact that they have no idea what 4G really is.

Let’s start with one key question: Who are the 3,000 individuals polled?  How did they come to participate in the survey?  More specifically, what is the participation breakdown of generations X and Y, the baby boomers and the silent generation ?

When it comes to technology – especially mobile technology – the generational breakdown of the sample clearly influences the survey results.  For example, if you were to ask my mom or great aunt if they need LTE, they would decline as they have virtually no need for it. They don’t regularly surf the web on their mobile devices, update Facebook, play multiplayer games, download videos or upload content. On the other hand, my son, my colleagues, and my brother/sister certainly will want LTE to support their ever-growing mobile needs.

Let’s put the generations aside for a moment.  How many respondents actually tried 4G and then concluded that they didn’t need it?  Please don’t make me remind you about the resistance to other “novel” technologies of the past.

Finally, I question the terminology of the survey question itself: “Which 4G Wireless is, in your opinion, better?” Who knows or really cares about the technical definition of 4G? For the average user, the real issue should be the tangible benefits of 4G. If you simply asked “Do you need faster Internet access on your iPhone/iPad/laptop?” you’d likely get many more positive responses.

I, for one, would be curious to see a second poll asking correspondents what they think 4G really is. I have a feeling a large percentage would say that they don’t really know.

Well, soon enough, they’re going to find out …

-Eran Eshed

That is absolutely the case in Western Europe, where we see both sides of the coin playing out.

Let’s start in Germany …

Germany is quite advanced as an LTE market, with Vodafone, Deutche Telekom and Telefonica O2 each offering real LTE today, based for the most part on a government initiative.  (Quick timeout for full disclosure comment: Altair is well-entrenched in this market, so I know of what I speak!) The state push is because there are many rural areas of Germany that are in need of broadband coverage, and LTE is the fastest, most effective way to accomplish it.

In fact, the government won’t even allow the service providers to offer LTE in the cities until the operators first complete the rural roll-out.

Of course, unlike emerging regions like India and Africa, there is significant LTE money to be made in the German countryside, given the affluence of that part of the country.

Technically, there are three frequencies for LTE in Germany (and for all of western Europe, really), Band 7 (for cities), Band 20 (for rural areas) and Band 3 (a 3G global roaming band that is being retooled for LTE).  (As an aside, this multiband scenario works quite nicely for Altair, given our product’s flexibility.)

Beyond Germany, three Scandinavian countries were the first in the European Union to deploy LTE, and I have to say, the uptake of the technology has been surprisingly unimpressive. Sweden, Norway and Denmark have a total of less than one million LTE subscribers between them, a shockingly low number, given the traditional early-adopter tendencies of those markets.

Other western European countries are at what I refer to as the “regulatory debate phase,” meaning that it is only a question of when. Countries like France and the UK have been running trials for a long time, but have nothing live yet.  And they have a different challenge: 3/3.5G is pretty much ubiquitous, which isn’t exactly a recipe for fast change. So it’s kind of ironic that the technological maturity of these markets is actually holding them back a bit.

But it will certainly happen – and likely within the next 18 months, which will provide a nice boost for the industry, something we are all looking forward to.

Things are going to be heating up here on the blog now, as we move on to the more advanced LTE markets.  First up, Japan …

-Eran Eshed

What do I mean by that?

Well, let’s start with the “1.” Russia.

Russia has been at the forefront of the 4G world since its inception, when Yota (then Scartel) got into the WiMAX game.  Of course, much has changed since then, but what hasn’t is that Yota is still running the show in Russia, having won the LTE licenses for the country.

Yota already had more than 800,000 WiMAX customers, so their recent activity was to convert all of them to LTE, which they did almost overnight.  I was impressed.

So now, they are focused on adding new subscribers.

The Russian market isn’t quite as wealthy as the U.S. market and not quite as poor as India. It’s somewhere in the middle, which means that there is money to be spent on 4G, but not an endless supply.

And now that Yota is working with the country’s largest wireless carrier, Megafon, it will be interesting to see how fast the company can continue to move.

We see Russia as a huge-growth market, and I wouldn’t be surprised to see Altair announcing some things there in the future.

So that’s the “1.” What about the “more to come?”

In most of Eastern Europe, licenses have still not been awarded.  There has been some activity in Poland, such as our deal with PolSat, but it’s still a relatively small-scale market.

Of course, that doesn’t mean that Eastern Europe does not have a lot of promise.  It absolutely does! But whereas some of the markets we’ve discussed already and will be discussing soon are already rockin’ and rollin’, Eastern Europe is still very much in its early stages.

Except for Russia. But you knew that already …

Next, we will visit Western Europe, where there is certainly a lot of activity. See you there!

-Eran Eshed