Long Term Evolution (LTE) is a next-generation cellular network technology,
sometimes referred to as 4G. As described in this report, LTE is the
technology of choice for most mobile operators, and with strong momentum, we
expect it to be the long-term, next-generation network technology of choice.
LTE has already overtaken WiMAX subscriptions in 2011, and the range of LTE
devices has increased elevenfold in the past year. The largest LTE device
segment will be PCs through 2014, as operators initially focus on mobile
broadband access for PCs. But after 2014, the PC segment will be replaced by
smartphones, with operators announcing more and more LTE models. The heavy
emphasis on videos will drive mobile data usage for operators, as will the
fact that LTE is well-suited for cloud-based computing thanks to its high
bandwidth. In 2016, Pyramid Research forecasts there will be 592m LTE
subscriptions, equivalent to 7.3% of all cellular subscriptions at that time.
The main findings of this report are:
- LTE is gaining strong momentum and has already overtaken mobile WiMAX
subscriptions during 2011. To date, 35 mobile operators have launched
commercial LTE networks, a range of 197 devices have become available and the
technology is maturing since the first network became live in late 2009. In
2016, Pyramid Research forecasts there will be 592m LTE subscriptions,
equivalent to 7.3% of all cellular subscriptions at that time.
- The device range is booming, having increased elevenfold between the
end of 2010 and October 2011. Three out of five device models are discrete
modems, either routers or PC add-on devices. Samsung has shown the strongest
support for LTE devices, offering a range of different devices and providing
the largest range of smartphones and tablets thus far.
- The initial focus of all operators is mobile broadband access for
PCs. These subscriptions represent around 80% of all mobile data traffic,
even though they account for fewer than 4% of mobile subscriptions.
Furthermore, they require no voice support, devices are low-cost, they are
easy to upgrade, and they target high-end users, typically in the business
market. This will remain the largest LTE device segment of subscriptions until
2014. In 2016 we forecast there will be almost 200m PC and hotspot LTE
connections, equivalent to 33% of all LTE subscriptions. This will be
equivalent to 29% of all PC mobile broadband subscriptions at this time.
Exhibit ES: LTE subscription breakdown by device, 2009-2016
Source: Pyramid Research
- The availability of LTE smartphones has been limited to a handful of
operators, but this will change in the coming months as more LTE bands are
supported. Of the 27 models announced, all but two are on the Android
platform, all but two have a screen size of 4" or more, and almost all have
front-facing cameras. There is also strong support for video with HDMI, MHL
and/or DLNA connectivity as well as a number of preloaded video applications.
As mentioned, many LTE smartphones support hotspot functionality and so can
act as a LTE modem for typically 5-10 devices. Smartphone LTE subscriptions
are expected to become the largest device segment from 2014; in 2016 we
forecast 339m LTE smartphone subscriptions, equivalent to 57% of all LTE
- The Android platform is strengthening its market position by dominating
early LTE devices. In particular, it is putting pressure on Apple at the
high end of the smartphone and tablet market with virtually all LTE products
in these segments on the platform. This is beneficial for operators in order
to increase device competition and could also enable certain applications,
such as mobile video calling, to be driven on the Android platform.
- Tablets are expected to be a sweet spot for LTE. Not only is there
strong growth in the overall tablet market, which is beginning to impact PC
sales, but also the form factor is well-suited to video services. However,
Pyramid Research believes that while tablets will be a strong driver of LTE
adoption, most users will choose to separate their tablet and mobile broadband
access purchase, as is often the case with embedded PCs. Therefore we expect
that in most cases, tablets will access LTE via Wi-Fi. This is further driven
by the fact that most LTE smartphones support Wi-Fi hotspot functionality, and
so can act as the LTE modem. However, the simplicity and subsidization of
tablets by mobile operators will be attractive also and drive the number of
LTE-embedded tablet subscriptions to 45.0m, equivalent to 7.6% of all LTE
- While we expect that machine-to-machine LTE subscriptions will be
limited during the forecast period, there are some high-value applications
already becoming available. In particular, LTE provides the requirements
to support live TV video footage, with significant cost benefits for TV
broadcasters. However, the vast majority of M2M subscriptions require very
limited bandwidth and traffic volumes are low. In 2016 we forecast that just
1.7% of LTE subscriptions will be M2M devices, equivalent to 10m.
- Video applications are the key focus for LTE. Video accounts for
around 40% of mobile data traffic, and LTE enables operators to provide the
capacity to better support such services. User-generated content and video
streaming are the key mobile video segments. Mobile video calling is also an
important focus area for LTE operators, and we expect to see growth in its
adoption but not mass market usage.
- LTE's high bandwidth and low latency make it well-suited to cloud-based
services. Several LTE operators have announced cloud-based services in
conjunction with their LTE capabilities, mostly focusing on offering
enterprise services. NTT DoCoMo has also announced the availability of its
cloud-based gaming service on the back of the launch of its first LTE tablet
Key questions answered
- What is the potential size of the LTE market?
- What different approaches are operators taking in launching LTE networks?
- What makes up the key components of the LTE value chain?
- What are the key applications for LTE?
- What are the regional differences behind the dominance of certain devices
in terms of LTE subscriptions?
- How will the strong projected adoption of tablets impact LTE subscription
- Which operators are best-positioned to lead in terms of the LTE handset
- Verizon Wireless (US)
- AT&T (US)
- NTT DoCoMo (Japan)
- SK Telecom (South Korea)
- TeliaSonera (Sweden)
- Smart Communications (Philippines) and MTS (Uzbekistan)
- Mobily (Saudi Arabia)
- Vodafone (Germany)
Companies mentioned in this report
- Deutsche Telekom
- NTT DoCoMo
- SK Telecom