Updated: With Verizon (s VZ) planning to launch its first trial LTE network sometime by 2010 and the perceived threat of Apple switching allegiances to an owner of a faster network, you would think AT&T (s T) would get its LTE plans on the front burner. Well, that is not the case — Ma Bell is taking its sweet time transitioning to 4G wireless. It’s only now started trialing LTE equipment — picking Ericsson (s ERIC), Alcatel-Lucent (s ALU) and Huawei as candidates to supply gear for the radio-portion of its LTE network. After the trials, only two would get the business.
UBS Research telecom equipment analyst Nikos Theodosopoulos notes that the inclusion of Huawei in this trial is a big step up for the Chinese vendor that’s been trying to penetrate the U.S. market. It had previously signed a deal to supply equipment to a handful of smaller players, including cable company Cox Communications. According to UBS, Huawei’s share of global communications equipment sales rose to to 14 percent in 2008 from about 2 percent in 2000. In 2008, Huawei had sales of $18.3 billion, up 42 percent over 2007. Huawei, Alcatel-Lucent and Ericsson are betting on seeing a big upside from the LTE buildout. Most global carriers expect to turn on their LTE networks by 2012.
Update from Stacey: AT&T is moving more slowly with its LTE plans, due, at least in part, to the fact that it’s currently upgrading its network to HSPA in several areas of the country. The HSPA network, which requires a software upgrade at the cell towers, will have speeds of up to 7.2 Mbps down. AT&T, like some other GSM carriers, has said it’s in no hurry to move to LTE while it still has the headroom provided by the HSPA upgrade. As a CDMA carrier transitioning to a GSM technology, Verizon is in a better position to make the jump to LTE as quickly as possible.
I think the idea that Apple will switch to Verizon for LTE is kind of overblown. Apple has never been a front runner in terms of technology, as the iPhone’s revolutionary aspects aren’t its specs but its UI and ecosystem. The move to Verizon would still require CDMA dual modes for at least the next five years, so the “standard technology” argument goes out the window as well. They’d go to Verizon only if they got the volume commitments that would make it worth it to build a CDMA device, and it will likely happen within a few years.
John
Agreed. I think if Apple does switch networks, it would be for a faster/more dependable network. I think Verizon would be happy to cut them a good deal in that case 🙂
My bet is that they do some kind of deal for devices and base those on LTE/Verizon. But that is pure speculation on my part.
The reason AT&T isn’t moving more quickly to LTE is because it has more headroom with its current HSPA technology, whereas Verizon doesn’t. Verizon has to go LTE more quickly because it’s the only way it can get a significant speed boost – AT&T has the luxury of taking an intermediate step in the interim and going LTE later.
This idea that Verizon will somehow be far ahead and therefore become a compelling partner for Apple is therefore rather overblown at best. And to reiterate, to work with Verizon, Apple needs to release a CDMA device – and Verizon itself has said they don’t believe Apple will do that. Not sure what their incentive would be to say that if it wasn’t true.
it’s not “switch networks,” it’s add networks.
I’m guessing they will have a GSM/EDGE/HSDPA/LTE model and a CDMA/EVDO/LTE model. Ain’t that hard, most other phones have two versions.
This notion that they go straight to LTE only is insane. It’s going to be a LONG time before verizon or AT&T have full coverage with LTE. Look how often you still see EDGE only on AT&T. 3G is only in metro areas and is still spotty even there. Same goes for all 3G networks (Sprint, Verison, TMobile).
So my point is they will have to do a CDMA phone if they go verizon. And why not? can’t cost that much to do compared to the huge potential.
It’s not just cost with adding CDMA, it’s the fact that from then on they’ll be dealing with essentially two different devices, with different costs, different components and so on. Every time they make changes to the device they’ll have to do it twice over. Since there won’t be any significant scale on the CDMA components for the foreseeable future they might have to take lower margins or charge more for the CDMA version, etc.
I think it’s more complicated than many people suggest. It might still be worth it, but with Verizon itself pooh-poohing the idea I have to be skeptical.
The Apple Verizon rumour are occuring suspiciously during a period where Apple is re-negotiating it’s exclusive with AT&T. I wouldn’t put it past Apple to be using the communication with Verizon or the media placements as negotiating leverage.
As far as iPhones on LTE, not this upcoming (June 2009 rumoured) generation of hardware. The LTE handheld device chip sets will not be ready in mass market optimized size and power until 2011/2012.
The Apple Verizon rumour are occuring suspiciously during a period where Apple is re-negotiating it’s exclusive with AT&T. I wouldn’t put it past Apple to be using the communication with Verizon or the media placements as negotiating leverage.
As far as iPhones on LTE, not this upcoming (June 2009 rumoured) generation of hardware. The LTE handheld device chip sets will not be ready in mass market optimized size and power until 2011/2012.
As mentioned, Verizon’s margins will take a significant hit as did AT&T (Cingular) on choosing GSM. Running multiple networks and have interoperable devices that can jump between the two will be new ground for Verizon. They will now experience some of AT&T’s pain and AT&T will experience the conveniences Verizon had riding the CDMA wave. Because Rev. B is not viable as a transitional technology for Verizon, they will have to overly a LTE network over their CDMA network and take the hits AT&T has grown accustom, too. Even though AT&T is effectively running 2 networks in most of their market HSPA is matured enough and has the roadmap to all them to propel themselves far ahead of Verizon during their transitional period that will last over the next 10 years.
Verizon will require that extra avenue for capital from Vodofone to fuel the learning curve to launch LTE. There are many obsticles and hurdles that they will have to overcome to attract customers and retain them. For all intent and purposes, this could be a CDMA/iDEN experience for Verizon. They will have interoperability issues between the air interface. Handset avalability and distribution to exploit the new network. Also, should have phones that can move between CDMA and LTE as AT&T does with GSM, UMTS, and soon LTE. Engineering staff learning curve with new technology. Adjusting the business model to maximize return from LTE.
AT&T has done this already when things were managable in the technology evolution realm and now Verizon will be pressured by a maturing HSPA+ with alot of legs and a expected Federal Broadband “mandate”. All I can say is “I hope you the worst” since I am with another carrier. 🙂
Jerry, you make some really good points and I wonder what Verizon has to say about it. Although given how popular CDMA networks are, I imagine there is more equipment provider and device support for making this transition than there was for Sprint after it bought Nextel. The iDEN networks in 2005 weren’t as prevalent as the CDMA world is today. Wouldn’t that make a difference?
VZ will never do a deal with APPL.
1. they are really not hurting w/o appl – churn is low, data arpu is high….
2. their ebitda margins are ~45%..~8% higher than ATT and they cannot maintain these high margins with a APPL deal
3. dual mode lte/cdma devices are still 2 years away — 2011 1q at the earliest
4. this is appl using the media to get wt they want with att – and this time around its not the MSM media, but the mac bearing blogosphere that is being used…..
I just read that Verizon’t LTE deployment will be on their 700MHz spectrum, that it will become their primary data platform, but it will coexist with – not replace – their CDMA network which will continue to be used for voice traffic through at least 2018 and perhaps 2020.
This announcement came from their CIO, I believe, not some third-part analyst or hack.