TD-LTE and the Hype Cycle: Where’s the Business Opportunity?

As a new wave of hype is building around TD-LTE, I wonder what the fuss is all about. For certain, TD-LTE is not a groundbreaking technology – it comes many years after WiMAX and quite a few after its older FD-LTE sibling. But what intrigues me most is the business model for TD-LTE and especially the dilemma of the TDD spectrum holder: what is a winning business model that maximizes the value of my operation and company? Without such a model, TD-LTE will be yet another technology toddler that never makes it to adulthood.

This question has been asked by the operators who had jumped on the WiMAX bandwagon but since saw that technology collapse after the LTE onslaught.  What this signals to me is that WiMAX was a technology looking for a problem to solve rather than a solution to a problem. Or perhaps it’s more accurate to say that WiMAX was a technology ahead of its time – after all, WiMAX was developed at a time when the iPhone and iPad were not there yet, and operators still believed that voice was the killer application. Had the real need been there, WiMAX would have had much better chances to succeed.

Today, with all the mobile internet devices (MIDs) around, the future of data services is no longer in doubt.  TD-LTE does not have to jump this hurdle. But it still faces major challenges because it operates in fundamentally different mode than traditional mobile access technologies. This means the TD-LTE ecosystem will remain unique and smaller (much smaller) than the mainstream access ecosystem.  So how could a TD-LTE operator turn a successful operation with a niche technology in disadvantaged spectrum (most licensed TDD spectrum worldwide is in 2 GHz and 3 GHz bands)?

There’s no easy answer. But from a strategic perspective, TD-LTE needs to leverage and its main and perhaps only strong point: it is a more spectrally efficient technology for data services than FD-LTE. This is because data services to date have been heavily biased in the downlink direction with traffic ratio ranging anywhere from 4:1 to 9:1. Video services are forecasted to ensure that this will remain the case for the foreseeable future.

Furthermore, based on anecdotal evidence from operators, the larger the mobile device, the more unbalance in favor in the downlink. Hence, providing high-speed data services for tablets and laptops best leverages the strength of TD-LTE. Cisco’s VNI shows that a laptop generates equivalent traffic to 14 smartphones while a tablet is equivalent to 3 smartphones.

Per Device Usage Growth, MB per Month

xSmartphone

Device Type

2010

2011

2016

2011

2016

Smartphone

55

150

2,576

1

1

Portable gaming console

244

317

1,056

2.1

0.4

Tablet

405

517

4,223

3.4

1.6

Laptop & netbook

1,460

2,131

6,942

14.2

2.7

This strategy could be further coupled with deploying small cell network architecture to maximize performance. Developing an ecosystem where TD-LTE is highly integrated into tablets and laptops will be essential as would be alliances and resale agreements with incumbent network operators who are projected to face an uphill battle in meeting forecasted data traffic demands. I view the latter as being more important than recent roaming deals between TD-LTE operators. In all, the resulting user experience will most certainly surpass anything that FD-LTE will be able to provide.

But the overriding question is would that business model sufficient market to make the business case work? For certain the proliferation of tablets and other large form-factor MIDs in the market and where they are used will be a major factor.

Wireless Networks Data Services DL/UL Traffic Ratio

DL/UL Traffic Ratio for Data Services in Wireless Networks.

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About Frank Rayal
Technology strategy, markets and M&As

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