BARCELONA – “The mobile Internet will be huge,” said Peter Liu, a prominent Beijing venture capitalist, grabbing my sleeve as we spilled out of the keynotes the first day of the Mobile World Congress.
Huge, indeed. We had just heard four top carriers say they expect Europe alone to spend $30 billion building out Long Term Evolution networks. They have already spent nearly $8 billion buying spectrum to carry 4G wireless traffic.
The big question is when. Only nine million subscribers are on LTE today out of 3.6 billion cellular users worldwide. Three-quarters of the 4G users are in North America, most on AT&T and Verizon nets built mainly with Alcatel-Lucent and Ericsson systems, starting in 2010.
Most of the rest of the LTE action is in Korea—said to be adding a whopping 250,000 subs a month--and Japan, two countries where Nokia Siemens Networks is getting traction. NSN claims it has 52 LTE contracts in 26 countries, only 22 of them now live.
China’s no slouch either. Li Yue, president of the country’s largest carrier, China Mobile, pledged to install 20,000 base stations this year using the TDD flavor of the technology. The deployments set the stage for as many as three cities to launch services in 2013, he said.
“The first LTE wave is just starting, this should be the year we see big activity,” said Thorsten Robrecht, head of product management for network systems at Nokia Siemens Networks (NSN).
Financial analysts are less bullish. A Nomura research note said it expects “global capex to be flat to down this year.”
Indeed, even a spokeswoman for the GSMA, the carrier trade group that hosts MWC, said the sluggish global economy, maturing markets and regulations are squeezing growth. Making matters worse Europe’s carriers saw average revenue per user decline from 26 euros in 2007 to 20 euros last year, even as data traffic went up.
In the tight climate, Vittorio Colao, chief executive of Vodaphone Group, renewed a call for stakeholders to jointly invest in building next-gen networks. “So far we have not succeeded in getting anyone to do it,” he said in a keynote.
The topic is likely to keep coming up as operators seek ways of sharing the big capital and operational costs of building out next-generation networks, especially as they fan out into small cells in cafes and on lamp posts.
The struggles finding business models for such investments could slow overall deployments, making the ramp of LTE a Long Term Evolution indeed.