Data & Results | 4G READINESS ASSESSMENT

Data

The data for the different countries were collected from different, and to the extent possible, reliable resources. However in some cases the authors have used industry experts opinion, when the data was incomplete or missing.

In the first category, the mobile wireless penetration was collected and the HSPA standards status from 3G Americas report. The data for the business environment and also for the social and cultural categories were collected from the Economist's study (2008). The spectrum law effectiveness is calculated from the subscribers served per MHz of spectrum allocated. The available spectrum used for commercial use was collected from CTIA(2008) and the GSM world (2008) reports. In developed countries the available spectrum was usually over 300 MHz and in the emerging ones around 200MHz. To calculate the rate, the number of mobile wireless subscribers was divided to the available radio spectrum and then the data were normalized to the highest value. In the next category, the data on consumer spending on telecom services per household, was collected from Euromonitor database and then normalized. The active mobile wireless services were collected from Netsizeguide (2008). Finally in the last category both variables were collected from the OECD (2008) database.

Results

The results are presented in Figure 1. Most of the countries' score is in a scale between 2 and 5. The developed countries as expected are ranking in the top-10 list, with the rest of the countries, Brazil, Russia, China and India in the lower part.

	Country	Overall score	Connectivity and technology	Business environment	Social and cultural	Legal	Consumer	ICT spending
Category Weight			20%	15%	15%	15%	20%	15%
1	USA	3.619	1.86	8.53	9.00	1	1.49	1.13
2	Denmark	3.606	2.22	9.65	8.67	0.664	1.28	0.39
3	Australia	3.432	1 99	8.59	9.13	0.846	0.94	0.40
4	Finland	3.382	2.10	8.4	8.3	0.658	1.55	0.33
5	Germany	3.323	2.13	8.36	8.00	0.361	1.58	0.48
6	Netherlands	3.240	1.09	8.55	8.07	0.217	2.00	0.64
7	Sweden	3.227	1.12	8.52	8.6	0.658	1.65	0.28
8	Switzerland	3.357	1.06	8.57	8.27	0.292	1.80	1.44
9	UK	3.192	1.23	8.61	8.13	0.245	1.51	0.64
10	Japan	3.186	1.81	7.39	7.87	0.359	1.89	0.68
11	Canada	3.184	1.59	8.63	8.13	0.128	1.36	0.40
12	Hong Kong	3.176	2.22	8.64	7.47	0.188	1.18	0.34
13	Brazil	2.732	1.78	7.01	6.13	0.200	1.36	0.70
14	Russia	2.264	1.16	6.19	5.33	0.656	0.88	0.20
15	China	2.219	0.88	6.49	5.53	0.266	0.42	0.78
16	India	2.116	0.19	6.53	5.33	0.229	1.01	0.42

Figure 1: 4G-readiness ranking

The emerging markets such as China, and India, are expected to move up. Russia is surprisingly lagging behind the developing markets, revealing inefficiency to the LTE path

Categories | 4G READINESS ASSESSMENT

In this post, we are describing the 6 different category and the weights as shown in Figure 1.

Category Weight	Connectivity and technology infrastructure	Business environment	Social and cultural environment	Legal environment	Consumer and business trend	Government policy and vision
Criteria	mobile phone penetration current industry standards	Overall political environment; macroeconomic environment; market opportunities policy toward private enterprise; foreign investment policy; foreign trade and exchange regime; tax regime; financing; the labour market.	Level of education and literacy; level of Internet literacy; degree of entrepreneurship; technical skills of workforce; degree of innovation.	spectrum laws efficiency, Subscribers served per MHz of Spectrum	Consumer spending on communications services; availability of mobile wireless services for citizens and businesses	Telecom investing per GDP Total ICT national spending rate
Percentage	20%	20%	15%	10%	20%	15%

Figure 1: 4G readiness categories and weights

Using several resources and databases as listed in the Appendix, we build an index for each country and based on its value, we rank it in our list into a certain position out of the 16. The index, when calculated is expected to be on a scale 1-10

The first of the categories is about connectivity and technology infrastructure, which is one of the most significant drivers, adding 20% to the overall score. The connectivity measures the extent to which businesses can access mobile networks, integrating the 4G path. The effective access uses the mobile-phone penetration that includes both 2G and 3G technology per country. Regarding the 4G path, most of the countries chose High Speed Download Packet Access (HSDPA) and High Speed Upload Packet Access (HSUPA) deployment before migrating to the LTE technology by. Most of the countries prefer not to deploy advanced HSPA or HSPA plus, but instead to spend the money on LTE testing as T-Mobile did in the USA. Thus in the figure if in a country both technologies are deployed, HSDPA and HSUPA the value ‘1’ is assigned otherwise if only one of the two is in-service then value ‘0.5’ is assigned. These two technologies are considered as 3.5G and 3.75G respectively.

For this category, the metrics are mobile phone penetration and industry standards in-service.

The second category is the business environment, weighing 15% in the overall score. As explained in the criteria "cover such factors as the strength of the economy, political stability, taxation, competition policy, the labour market, and openness to trade and investment."

The third category refers to the social and cultural environment, weighing a 15% in the overall score. The environment again is expected to be similar to the one defined in the Economist's study, since the 4G evolution will not at least at this point and with the current knowledge to bring any major changes into that environment different from the digital study. Thus "e-literacy and basic education" could define this category's criteria. 

The fourth category describes the legal environment, weighing a 15% in the overall score. It is very important to identify the legal and regulatory environment per country. The spectrum law policy with a combination of the spectrum's availability is considered to be the most important metric in that case, quantifying its effectiveness for each market. More specifically, the number of subscribers served per MHz is calculated. This shows the market's efficiency to adjust to the regulatory environment keeping up with growth and profits for the operators. Finally, all the values are .normalized to the US one, which is the highest, proving that the US wireless carriers are able to get so much more use of the spectrum available.

The next category to be included is the Consumer's or the demand side, weighing an overall score of 20% into the index calculation.

Except for the supply side, we need to describe the demand side and the roadmap for the adoption of technology. Consumer spending on communications services is very important on each country's trends and the amount of money the subscribers are willing to spend. Additionally the market's efficiency as the consumers are demanding more services is described from the number of services that are activated in 3 general areas, mobile games, music and TV. If all three services are offered in the market then the value "1" is assigned, if one of the three services "0.33" and two of the three "0.66". A market is more efficient and is converging faster into new services and technologies, when it offers all of the three services, showing the consumer's demand and advanced needs. The category metrics are consumer spending on telecom services per household and active mobile services.

Finally, the last category is the R&D spending, accounting for 15% of the overall score.

The Telecom investing as a rate of the overall Gross Domestic Product (GDP) index is a significant metric that should be considered as part of the country's strategy especially in the long run. The investment could include trials, new networks and R&D projects etc. Additionally a country's profile could be completed with the Information and Communications Technology national spending rate. That metric could differentiate the countries and the special weight they put on the ICT sector overall. All this spending should be expected to pay back or to bring some results to the market after a certain amount of time that could range from 4-5 years. Thus the volume spent today, could pay back by 2011 and contribute into the 4G commercial deployment.

Methodology | 4G READINESS ASSESSMENT

The need for strategic planning and new services has urged the need for new studies that could give an idea of the current 4G status of the countries and their move towards the future 4G deployment.

The new 4G readiness concept could be defined as "state of play" of a country's mobile wireless 4G preparation status, and the ability of its potential and existing consumers, businesses and governments to use in the future the mobile wireless and broadband to their benefit. Based on the 4G readiness criteria we will rank the countries as a first step in estimating how soon they will close the gap to new 4G technological environment.

To measure each country's innovation using the Motivation/Ability framework (Figure 1). In this framework, we are describing the 4 different quadrants and how they are adjusted into our problem. The Motivation means that the 4G including the digital convergence should be the "pot of gold" and the new opportunity awaiting for the winners that most likely would be the first movers. The Ability describes the resources needed to develop 4G and craft them into business models for new products and services.

 
Figure 1: Motivation/ability framework 

In the "Looking for a target" section, the operators are still undecided regarding the more beneficial choice or are lacking the spectrum to develop a new market. This hesitation also can derive from the "Looking for the Money" section, since the players are still expecting the 3G to pay off before they move into a new investment or wait for the LTE, in order to upgrade the GSM networks that might also include lower cost, much less than developing a WiMAX solution. "The Dilemma" is what we can quantify using our 4G readiness metrics and estimate per country, assuming basic innovation and ability. Finally "The Hotbed" is addressing all the innovative countries that feel confident and in the right path for the 4G adoption in the near future.

Other important non-market factors for 4G based on the framework development are:

• Industry standards
• Cultural norms
• State of technological development
• Government regulation
• Country's intellectual property infrastructure

We are applying non-market metrics and factors, because there are no markets structured shaped yet and the current 3G markets provide very little knowledge to support the new landscape for 10 years from today.

More specifically we will rank the following list of countries that are included in the top 20 of the referred study: Canada, Hong Kong, Netherlands, Switzerland UK, Denmark, Germany, USA, Japan, Sweden and Finland.

Also, some other countries will be added, such as China due to the China Mobile 4G activity and trials as mentioned before. Other strategic countries added in the sample: India, Russia, Brazil due to the following facts or figures:

• Almost represent half of the world's population
• Showing record in wireless adoption in the last few years

In our methodology we are using as input countries with the most efficient digital users, assuming they are more technologically innovative, demanding more advanced services than the rest of the world. The suggested categories and the data collected will be similar to the e-readiness study, adjusted more specifically when needed into the mobile wireless dataset, trying to include important non-market factors as already described. We assume in most cases that the 4G evolution can be considered as a digital subcategory developing similar categories and criteria.

4G Drivers and SCENARIOS | WIMAX VS. LTE

The rising mobile subscribers by 2011, estimating over 4 billion, in combination with converged systems and applications are the main contributors of the 4G evolution (GSM world 2009). Several services are expected to drive to the 4G converged ecosystem but the future operators revenues are data services and mainly entertainment services. Three services that exist in today's markets are expected to play a significant role in the future and into a more advanced mode. These are music, mobile games and mobile TV.

The new mobile user's lifestyle is increasing needs capacity, although the ‘walled garden’ might still be a limitation restricting the customer's experience. The users are changed from consumers to producers of content such as photos, videos etc. Several applications will drive the mobile broadband market globally, including:

• Web 2.0,
• Online blogs,
• Mobile music,
• Location Based Services (LBS),
• Multimedia messaging,
• Gambling and
• Mobile TV.

There are a few scenarios discussed including WiBro, which is expected to evolve during 2010 and 2015 and attempting to cover different markets through restructuring and transition into 4G. For the next 5 years Verizon network will evolve into a 28Mbps download speed, leading to an early 4G LTE adoption compared to Vodafone.

These scenarios could be summarized as following:

1. Independent 4G system with one standard, the 3GPP LTE
2. Transition from 3G into 4G with existing (3GPP LTE) or new service providers WiMAX and WiBro
3. Co-existence of different standards
4. Spread of open transmission

To explain the above cases, we claim that history matters and the path dependent concept can really explain the long-term outcome based on initial conditions. The 4G development depends on the initial conditions as shaped from 3G in most of the cases. Based on the ‘Increasing Returns’, and ‘Path Dependency’, where alternatives are possible, and regarding the standards, "the one selected and heavily invested is good enough' or even optimal and remains in use because it becomes established in use". This theory is matching the scenario of different standards coexistence that will interact in the ecosystem and complement each other referring to an advanced LTE or LTE+ and WiMAX that will be established and standardized as 802.16e that offers advanced mobility. This is what usually occurs in technological development scenarios.

Trials, Status, 4G Vendors and Players

Trials and Status

In 2008, Nokia installed a prototype base station for ongoing LTE tests at the top of the Heinrich Hertz Institut building in the center of Berlin, where interference typically degrades bandwidth. The first-of-its-kind test featured multiple users connected to the new base station, giving the 173Mbps throughput number some credibility as a real-world peak. Nokia also tested LTE throughput by putting terminals into cars and driving them up to 1km away from the base station. Verizon and AT&T are also testing it with Motorola equipment

WiMAX on the other hand is ahead of LTE as a personal broadband option. CDMA-based operator Sprint-Nextel, for its part, is banking on WiMAX as a 4G solution. The Sprint-Nextel's WiMAX-based Xohm service in Chicago indicate that the bandwidth and pings are excellent (roughly 3Mbps/1.5Mbps and 70ms, respectively), but the numbers are nowhere near the + 100Mbps/50Mbps that LTE promises in both directions.

4G Vendors and Players

A market restructuring with aggressive joint ventures and new players in broadband wireless could be a future highlight. The major 4G players in general are the current 3G players that invest in new Research and Development (R&D) projects and sources for the future of the mobile wireless. Recently, Alcatel-Lucent and Japan's NEC Corp formed a joint venture around LTE trials. Similarly, China Mobile joined Verizon Wireless and Vodafone in LTE standardization trials. China is a very interesting case, since their 3G networks is still in progress; soon the government will issue three licenses for high-speed third-generation mobile phone services and called for a merger of China Unicom and Netcom, two of its four biggest telecoms providers.

One of the WiMAX weaknesses is the lack of certification. The ITU recommendation adding WiMAX as an official 3G protocol is boosting the investment and the new spectrum auctions as in the US, for example, addressing the 700MHZ auctions. More than 100 WiMAX devices have been announced in 2008 and the fixed/portable wireless access equipment market has grown from $562 million to $ 1.2 billion in 2007. Additionally, Cisco is targeting WiMAX development as smart distributed wireless networking.

WIMAX VS. LTE

The LTE technology that Nokia and the Third Generation Partnership Project (3GPP) are pushing is an upgrade to existing GSM networks. The attraction to this technology had made even the CDMA operator, Verizon Wireless, to join the 3GPP trials. It is also a strategic decision, in order to be compatible with its European, GSM-based parent company, Vodafone. LTE looks like it can heal the GSM/CDMA rift that has divided the industry, as no major carrier has yet signed on with obvious CDMA 4G upgrade technology, Ultramobile Broadband (UMB).

LTE will have the following advantages:

• Fast, with peak data rates of 100 Mbps download and 50 Mbps upload.
• It makes CDMA and GSM debates moot.
• It offers both FDD and TDD duplexing, which means the upload and download speeds don't have to be synchronous, so operators can better optimize their networks to use more upload channels.
• LTE will have lower latency, which makes real-time interaction on high band-width applications using mobiles possible.

3GPP LTE, one of the most advanced mobile communication technologies to date, is currently undergoing 4G technology standardization by the 3GPP This is the most likely technology to become the 4G standard, as many of the world's major operators and telecommunications companies are members of LTE/SAE (Long Term Evolution/System Architecture Evolution) Trial Initiative (LSTI). These companies include operators, such as Vodafone, Orange, T-Mobile, NTT DoCoMo, China Mobile and Telecom Italia and vendors, Ericsson, Nortel, Alcatel-Lucent, Nokia Siemens and LG Electronics. These are also the companies that will be considered to have the advantage in deploying first the 4G services.

WiMAX has certain advantages mainly over the Fiber to the home (FTTH) technology. When bundled with broadband internet access and IPTV, a WiMAX triple play becomes very attractive to residential subscribers. Given the QoS, security and reliability mechanisms built into WiMAX, the users will find WiMAX VoIP as good as or even better than voice services from the telephone company. It also offers a cost effective infrastructure with efficient use of spectrum. Currently, the average cost of WiMAX 802.16-2004 baseband has decreased from $35 to almost $20 today per subscriber.

4G proponents will serve as complements or upgrades to advance the 3G limitation to deliver video/TV and high speed Internet access. For WiMAX, there is a limitation of wireless bandwidth. For use in high density areas, it is possible that the bandwidth may not be sufficient to cater to the needs of a large clientele, driving potentially the costs high. But the main competitor for WiMAX today is the fiber and the wireline network that especially in the US is a real challenge for the residential users as the operators are deploying and growing really fast.

4G TECHNOLOGIES

Technological Feasibility

There are several technologies suggested to deploy in 4G and these may include

• Software Defined Radio (SDR): is a radio communication system where components that have typically been implemented in hardware (i.e. mixers, filters, amplifiers, modulators/demodulators, detectors etc.) are instead implemented in that allows changing the radio characteristics flexibly to meet specific requirements.
• Orthogonal frequency - division multiplexing (OFDM): is a frequency-division multiplexing (FDM) scheme utilized as a digital multi-carrier modulation method.
• Multiple-input and multiple-output, or MIMO), is the use of multiple antennas at both the transmitter and receiver to improve communication performance.
• Universal Mobile Telecommunications System (UMTS), standardized by 3GPP.
• Time Division-Synchronous Code Division Multiple Access, or TD-SCDMA, is a 3G mobile telecommunications standard, being pursued in the People's Republic of China by the Chinese Academy of Telecommunications Technology.

All these technologies are typified by high rates of data transmission and packet-switched transmission protocols. 3G technologies, by contrast, are a mix of packet and circuit-switched networks.

Background of the 4G Evolution

Currently, there is no formal definition for 4G It is a term used to describe the next step in the evolution of wireless communication. Several terms are also describing the concept, such as "Super 3G" or "Next Generation Wireless". ITU has been committed to announce a 4G definition. There is general agreement among experts that 4G is a new converged system that will provide at least 100Mbps connectivity to the broadband users. 4G is expected to offer data rates of 100 Mbps for mobile applications and 1 Gbps for nomadic applications and should be achievable between the years 2010 and 2011.

The current defined objectives for 4G include

• Fully integrated IP solution
• "Anytime, Anywhere"
• Seamless connectivity- wireless and wireline
• Global access and interconnection
• Interoperability
• Data rates of at least 100Mbps
• Spectrally efficient system

There are several applications that could be supported and leveraged in the 4G due to the advanced environment. These include mobile commerce with an emphasis on mobile banking, peer-to-peer networking and full usage of the advanced Internet services in the converged cloud. This cloud be defined as a "Communications Technology Ecosystem" (Figure 1) with a plethora of different services that will give users a more convenient and easy lifestyle.

 
Figure 1: A suggested heterogeneous digital ecosystem 

Since 4G is not well defined yet, there is no defined demand or market potential as yet. Therefore, we are lacking forecasts or predictions that could help the operators to strategically plan for the expected market with a time table. An interesting approach to this ill-defined problem is to evaluate each country's readiness to deploy 4G based on a set of criteria such as technological, business, legal, and policy considerations.

Investment in 3G in most cases and countries has not paid off yet and will not for the next 5 years. Nonetheless, operators need to decide on the best standard to invest in for the long run to provide for the future needs of their customers. Many are still debating on the WiMAX and the LTE choice.

An approach to study and evaluate the 4G readiness, using a quantitative analysis applied to a sample of two different groups of countries developedand emerging. We aim to assess the 4G predictions at a national level and answer the following research questions:

"Which countries are ahead in 4G adoption?" "Since the markets are still shaping up, how could one forecast demand from the operators perspective, and rank order the markets using the operators and vendors current trials and knowledge?"

To our knowledge, this is the first study that is trying to conduct an early assessment of the 4G status of some of the most important telecom markets. The "4G readiness" is defined as an index, building upon the literature and the e-readiness concept as well as the non-market factors.

Along the same lines, we expect that a country's 4G high ranking could be more an status and indicator of innovation, supported with an advanced digital environment rather than a natural path of technological evolution.

Also, there are two categories of factors that are considered to drive the 4G readiness of each market including the technology and the consumer/business spending. We proportionally weigh each factor to the highest value (percentage of each index). We expect to observe major differences in the spectrum law from country to country, that play a role into the index's estimation but not a significant one, since the migration from HSPA to the LTE does not require any major regulatory changes but rather investment planning. The scalable bandwidth will allow the operators to migrate their networks and users from HSPA to LTE over time.