LTE iPhone: Game Changer?

Posted by Sam Churchill on

The LTE-enabled iPhone, expected to be introduced on September 12th, may be a game-changer for Verizon, says Jefferies telecom analyst Thomas Seitz. That’s because Verizon has much broader LTE coverage.

He expects the phone may sell as many as a five million units before September ends, and another 15 million in December quarter, and that it will be “the biggest consumer product launch ever.”

Seitz says AT&T trails far behind Verizon at just 30 million “POPs” covered with LTE, while Sprint is barely in the game. By the end of 2013, the differences may be moderated — but that’s a long way off.

Seitz writes:

As of the end of 2Q12, Verizon’s LTE network covered 230 million POPs, more than all the other carriers in the US combined. We believe this network advantage could lead to a share shift towards Verizon, primarily at AT&T’s expense – which we estimate could see its market share of iPhone sales decline modestly to 45% in 3Q12 from 47% in 2Q12.

AT&T has two other factors going against it in 2H12. First, the company sold (and consequently locked in) 9 million iPhones in 3Q10 and 4Q10, and many of these customers will be coming off contract. Second, AT&T raised its prices when it introduced shared data plans.

We believe T-Mobile remains the wild card. In our analysis we are assuming that T-Mobile will not get the iPhone, since there has been no credible news to indicate otherwise. However, if T-Mobile USA were to get the new iPhone, in our view the company is likely to see its postpaid net loss moderate significantly. In this scenario, we believe Sprint could be the biggest loser.

Of course there are a lot of moving parts.

FreedomPop, for example, provides free bandwidth, with $99 iPhone sleeve cases acting as traditional access points. The MVNO is planning to switch from Clearwire’s WiMAX network to Sprint’s LTE before 2012 is over.

China will overtake the United States as the world’s biggest smartphone market this year, according to research firm IDC, which expects demand to grow for lower-priced smartphones based on Google Inc’s Android software.

IDC forecast that China’s share of the smartphone market will increase to 26.5 percent this year from 18.3 percent last year, while the U.S. share of the global market is expected to decline to 17.8 percent from 21.3 percent as smartphones become more popular, worldwide. The next iPhone is expected to work on China Mobile’s network, the largest cellular provider in the world, with close to 700 million subscribers.

By 2014, TD-LTE in the United States will be a tiny sliver compared to the Chinese and Indian market, according to Yankee Group. LTE growth in Asia is expected to leave the United States trailing far behind.

Is the iPhone 5 all about TD-LTE in China – with supplemental support for Clearwire? Probably not. China’s big growth in TD-LTE (using the 2.6 GHz band) may not get underway until 2014. The iPhone 5’s support of China Mobile’s 3G standard (TD-SCDMA) is far more significant. Still, one Qualcomm MSM 8960 chip might cover all the bases, including Sprint’s 1.9 GHz FD-LTE.

Making the iPhone 5 an LTE “world phone” would be the game changer.

LTE worldwide subscriber rolls are expected to quadruple this year and increase by a factor of 70 by 2016, according iSuppli.

NTT DoCoMo, Japan’s largest mobile operator, said it has reached 5 million LTE subscribers, taking less than one month to add the latest million subscribers.

Verizon has over 10 million LTE subs in the U.S., with LTE now available to more than 75% of the U.S. in 370 markets. By the end of 2012 Verizon expects their LTE network will cover 260 million people in more than 400 markets across the United States.

Rival AT&T expects to expand its LTE network, which currently covers 80 million people, to 150 million POPs by year’s end. AT&T’s LTE sub count is less clear, but may have close to 4 million LTE subs. Sprint Nextel, which has just launched FD-LTE service, expects to cover 123 million POPs with LTE by year’s end, says Fierce Wireless.

As of last quarter, Verizon had converted only 9% of its subscriber base to LTE despite having a wide lead in LTE coverage. AT&T plans to complete its LTE roll-out and be roughly on par with Verizon’s LTE coverage by the end of 2013. LTE adoption is expected to pick up after the iPhone 5 launch and strengthen in 2013.

The United States reportedly has a cumulative base of 16 million LTE subscribers, currently. That’s close to the combined total LTE subscribers in Japan and South Korea, and the adoption rate in Asia appears to be faster. Still, the total number of 4G subs is relatively tiny, compared to the vast number of 3G subscribers, world-wide.

IHS says smartphones will overtake feature phones in 2013, 2 years earlier than expected.

A Cloud-based Radio Access Network (C-RAN), where basestations are centrally located and tiny remote radio heads are connected by fiber, is expected to have a major impact on architecture, especially at higher frequencies. Like ALU’s lightRadio, Intel’s C-RAN design splits the base station from the integrated antenna/radio at the cell site.

Cloud-based radio networks could trigger a new business model – software, not hardware, runs the show. Centralized signal processing in the cloud connects to multiple antennas through Gigabit Ethernet Passive Optical Network. “Wireless cable” could deliver 20+ Mbps to fixed and mobile devices.

Related Dailywireless articles include; Wireless 2nd Quarter: Good, Indian/Asian Telecom Growth Rates, South Korea Completes Nationwide LTE Coverage, Mary Meeker: Internet Trends 2012, China Mobile + Apple: Getting Closer?, USA: 332 Million Mobiles , 4G: One Third of All Smartphones

Posted by Sam Churchill on Thursday, August 30th, 2012 at 8:32 am .

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