The next few years are going to be a wild ride for networks. AT&T now has HSPA 7.2, Verizon Wireless is moving to LTE, T-Mobile is pushing ahead with HSPA+ and Sprint and Clearwire are expanding their WiMAX network.
All of the country’s top operators are surging ahead to meet skyrocketing demand for mobile data, but that’s not to say they’re all taking the same approach. Each operator has a different strategy for beefing up their networks.
“Everyone chooses a different technology for a different reason,” says ABI Research analyst Phil Solis. “For Sprint, there was a good, standardized technology that fit well with the 2.5 GHz spectrum they had. For others, it made sense to go with LTE. T-Mobile is going to maximize the use of their 3G network so they can be on par with everyone else.”
AT&T’s network has been under a microscope since complaints of network congestion began to emerge. In response, the operator decided to deploy HSPA 7.2 to all of its cell towers and is in the process of beefing up its backhaul connections.
AT&T blamed its poor network performance on data-intensive devices like the iPhone, but a controversial report from ABI researcher Dan Shey suggests otherwise. Shey found that Verizon and Sprint each carried 16 billion more megabytes of data traffic than AT&T last year because of the higher proportion of laptops running over Sprint and Verizon’s cellular networks. AT&T disputes the report, saying it carries about half of the mobile data traffic in the United States.
No matter the reasons for AT&T’s network performance, measures to strengthen it are under way. Additional backhaul already has been deployed in Charlotte, N.C.; Chicago; Dallas; Houston; Los Angeles and Miami. The company says the “majority” of its mobile data traffic will be carried on fiber-based, HSPA 7.2-capable backhaul by the end of this year and will expand deployments of the technology in 2011.
AT&T says it will begin LTE trials later this year, with deployments expected to begin in 2011.
“AT&T’s certainly been criticized for their network and they’ve spent a fair bunch of money to reinforce their network at all the weak places,” says In-Stat analyst Allen Nogee. “In some ways, because AT&T has been forced to reinforce their network, they might be positioning themselves quite well to put in LTE.”
AT&T plans to spend between $18 billion and $19 billion in capital expenditures on its various wireless and wireline networks over the next year. Though the company hasn’t said how much it of that will go towards its wireless network, it did say it will increase the amount from last year’s $2 billion wireless spend.
AT&T’s efforts may be paying off. The operator came out on top in nationwide speed tests reported by PC World in February.
AT&T will be the third U.S. operator – after Verizon Wireless and smaller rival MetroPCS Communications – to deploy LTE and the fact that its deployment will lag behind Verizon’s has been the subject of much debate. But AT&T argues that 3G will be the primary form of mobile broadband connectivity for the next several years, and Nogee agrees that it’s not imperative to be the first to roll out LTE.
“I don’t think it’s a necessity [to be first] and I don’t think AT&T will be hurt,” he says of the disparate timing between AT&T’s LTE network launch and Verizon’s. “You don’t want to put out a technology too early. It’s great to say that Verizon will have their network out by the end of December, but the consumer stuff usually takes longer to start coming out.”
Verizon Wireless’ LTE network will be competing with Sprint/Clearwire’s WiMAX network by the end of this year. Verizon claims that trials of its network show speeds of 5-12 Mbps on the downlink, faster than Sprint’s claim of 3-6 Mbps.
Verizon’s network isn’t live yet – a point Clearwire likes to point out when comparing the reported speeds of the two networks – but the company has faith that its estimates will pan out when commercialized.
“We’re very confident on 5-12 Mbps. We have a real network end-to-end and this is what we’re seeing,” says Nicola Palmer, Verizon’s vice president of networks. “I don’t expect that to change when we go to market. There’s no funny business here.”
Verizon stakes its reputation on the coverage reliability of its network. (You’ll remember the ad spat with AT&T over their respective 3G coverage.)
Yankee Group analyst Chris Nicoll says Verizon’s claims have a good chance of being true. “I always think real world tests are better than lab tests, but Verizon is fairly conservative when it comes to tests,” he says. “If there’s anything that Verizon sees as its differentiator, it is its network service and quality.”
Solis isn’t so sure. “I think Sprint and Clearwire have more experience seeing what they can actually get out of the network,” he says. “It remains to be seen what Verizon can get once they launch the network.”
Verizon and Sprint like to argue about the virtues of their respective 700 MHz and 2.5 GHz spectrum holdings, but Solis says the different spectrums are more likely to influence network architecture than the actual speeds of the network.
As Solis explains it, the lower the frequency, the easier wireless signals can pass through walls and buildings. Essentially, the 700 MHz spectrum used by Verizon and AT&T is really good for doing a lot of coverage with as few base stations as possible. Because Sprint and Clearwire’s WiMAX network runs on a higher frequency, they have to build the network to compensate for propagation characteristics.
Solis says the reach of the 700 MHz spectrum won’t really matter in high-density urban areas. “Now more than ever you have to focus on building the network for capacity as well as coverage. So in most important areas, you don’t really need the reach of 700 MHz because you have to put cells closer together anyways to handle capacity,” he says. “Sprint and Verizon are both right, they’re just arguing their strong points. The most important thing is that for Verizon, they’ll be able to penetrate into buildings very well but maybe won’t get as much benefit in urban areas versus suburban areas.”
Clearwire doesn’t seem especially threatened by Verizon’s claim that its nascent LTE network is faster than Clearwire’s WiMAX network. John Saw, Clearwire’s chief technology officer, says the company refuses to play games when it comes to reporting network speeds.
“We take great pains to be more conservative with the expectations we set for customers,” he says. “When we say 3-6 Mbps, we will deliver that. We want to make sure we never play the ‘peak speed’ games.”
Saw takes issue with Verizon’s claims for one main reason: The network is not yet commercial. Trial networks are unloaded, “and when there are no customers on them, they’re faster,” he says. “Clearwire has enough spectrum, enough density and enough backhaul to serve 3-6 Mbps no matter the number of customers on our network.”
Saw cites Clearwire’s spectrum as its key differentiator going forward. “The key raw material that you need to sustain a high network speed for a large number of customers with uncapped usage is enough spectrum to keep that promise to customers,” he says. “We’re seeing 7 Gigabytes of data per month being used by our subscribers. That would scare the pants off most other carriers, but we have the amount of spectrum to sustain it.”
As Clearwire likes to point out, it isn’t wedded to WiMAX. The company maintains that it is technology agnostic, willing to adopt whatever standard will best serve its customers with the speed and devices they need.
Already, Clearwire is looking at WiMAX 2, which promises higher speeds, lower latency and increased VoIP capacity than the previous standard.
“LTE, just like WiMAX 2, is something we’re keeping an eye on,” Saw says, citing the development of technology standards and the device ecosystem around the technologies. “If the predictions of LTE come true… then we can take a look at that. At this point, we have an ample amount of devices to offer customers from a pretty healthy WiMAX ecosystem.”
Clearwire’s WiMAX network is expected to cover 120 million people by the end of this year.
T-Mobile may seem like it’s behind the times when it comes to 4G, but the operator believes its HSPA+ strategy has a lot of potential.
“As a technology, HSPA+ offers a unique evolutionary path option for upgrading networks to even faster speeds in the future – 42Mbps or 84 Mbps – to match LTE speeds,” according to a company statement. “While LTE is a logical path for us, we’re in no hurry to get there.”
T-Mobile expects to deploy HSPA+ to its entire 3G footprint by the end of this year, covering 185 million people. It says the technology is three to five times faster than HSPA 7.2, but its theoretical peak speed of 21 Mbps is just that – theoretical. Real-life users of the technology should expect speeds to be slower.
“T-Mobile is in an interesting position because they don’t have any spectrum to roll out 4G… They chose to go to HSPA+ to maximize their 3G technology,” Solis says.
He suspects T-Mobile may end up partnering with Clearwire to get into the 4G space.
“They may have to partner with someone else to do 4G,” he says. “Clearwire has spectrum and T-Mobile doesn’t.”
T-Mobile says it is “growing into” its AWS spectrum and has “headroom for growth.”
“We’re comfortable with our current spectrum position and HSPA+ allows us to make very efficient use of it,” the company says. “Spectrum is a vital resource that will allow mobile broadband to flourish and produce new technologies, services and products that benefit consumers. It’s a resource we’re committed to using wisely.”
Back at In-Stat, Nogee suspects end users won’t care whether Verizon’s LTE network is at 5-12 Mbps and Clearwire’s is at 3-6 Mbps as long as the connection seems fast enough for the applications they’re running. “It doesn’t matter if the connection is 2 Mbps or 3,” he says. “After 2 Mbps you get diminishing returns – even on a laptop. On a phone it probably peaks out at a lower number.”
Yankee Group’s Nicoll agrees for the most part, saying that “a couple of megabytes are going to be fine.” Still, Nicoll says its worth keeping in mind that the devices of the future will be even bigger data hogs than they are today, making the speeds of operators’ networks especially relevant to consumers.
As it stands right now, Clearwire and Sprint have the fastest network on the market. That could change by the end of the year depending on how well Verizon’s network performs in its markets.
T-Mobile’s network is worth keeping an eye on. The operator could move to higher versions of HSPA+ and the technology seems to hold potential to compete with LTE.
AT&T is working to rebuild its network’s reputation. The network could get a difficult test when it starts carrying the 3G iPad, which is sure to be an even bigger data hog than the iPhone.
Whose network is fastest is sure to be a matter of heated debate but it could prove difficult to determine who has the highest speeds. “The network is a very small part of what creates the user experience,” Nicoll says. “One part is the network, one is the device itself and the other is the application itself: how well-written it is; how efficient it is at exchanging information across the network. Still another part is the backhaul. It’s difficult to compare apples to apples.”