Perspective Peter Weichsel

Ashish Sharma
Ashish Bhatia
Niels Rosenhäger

Long-Term Evolution
Another Option
for Indian Telecom
Operators
Contact Information

Delhi
Ashish Sharma
Principal
+91-124-4998705
ashish.sharma2@booz.com

Ashish Bhatia
Senior Associate
+91-124-4998720
ashish.bhatia@booz.com

Düsseldorf
Peter Weichsel
Partner
+49-211-3890-231
peter.weichsel@booz.com

Niels Rosenhäger
Senior Associate
+49-211-3890-167
niels.rosenhaeger@booz.com

Nandini Maheshwari also contributed to this Perspective.

Booz & Company

EXECUTIVE For a country aspiring to be a global economic power, India
has abysmally low broadband penetration. Though mobile
SUMMARY
broadband offers an attractive platform for substantially
expanding broadband access, it has been bogged down in
supply-side economics. However, the situation is expected
to improve as technologies mature and additional spectrum
is made available. Operators are currently debating two
technology options—3G and WiMAX—to support mobile
broadband. Long-Term Evolution (LTE) technology is a
third option worth considering, as it may provide operators
with better performance at a lower cost than either 3G
or WiMAX.

LTE is a superior technology that offers much higher data

throughput and lower latency than 3G. Moreover, the
promise of a well-developed 3G/LTE ecosystem in the US
and Europe may result in more new devices that support
both, opening opportunities for Indian operators to
explore new business models and potentially new sources
of revenue.

However, operators need to weigh their options before

jumping onto the LTE bandwagon. Though LTE is designed
to work on a range of frequencies, it is still unclear what
frequency band operators could potentially use in India.
LTE commercial installations have only just begun, which
means operators need to be realistic about their deployment
time lines. Commercial success will also depend on the
availability of devices at attractive prices, and operators will
need to ensure backward compatibility with 3G and 2G
needs to support roaming. Finally, LTE is not an immediate
solution to current voice network congestion; voice
handsets on LTE are still a few years away.

Booz & Company 1

 High broadband penetration
MOBILE accelerates economic growth and
BROADBAND: social development. As such, the
Indian government has set a target
AN ATTRACTIVE of 20 million broadband subscribers
ALTERNATIVE by the end of 2010, up from 7
million today. From the perspective
of industry players, the Indian
market presents tantalizing
growth potential.
However, India is unlikely to meet
that target with fixed broadband
alone. Currently, fixed-line
broadband penetration in India is
less than 3.5 percent.1 Scaling up
fixed broadband in the short term
would be difficult due to myriad
regulatory and market barriers. For
instance, cable operators are not
currently allowed to offer voice,
data, and video together. In the
absence of regulatory changes, they
will have little incentive to expand
their broadband business. Moreover,
the cable TV market today is highly
2 Booz & Company
fragmented and the industry needs
to attain a certain level of maturity
before broadband targets can
piggyback on it.
Mobile broadband technologies
offer an attractive alternative
which can drive mass broadband.
Operators can deploy mobile
broadband technologies at lower
cost and more quickly than fixed-
line broadband in low-density
urban and rural areas. In addition,
mobile broadband provides
operators with a source of non-
voice revenues.
Mobile broadband usage in India
to date has been fairly limited
due to supply-side constraints.
Lack of spectrum has hampered
growth. Coverage in rural and
semi-urban areas is poor. And price
points currently do not support a
sustainable business case
for operators.

EXPANDING
TECHNOLOGY
OPTIONS
In the context of 3G and broadband
wireless access (BWA) auctions,
operators are considering
deployment of mobile broadband
through two primary technology
options—3G and WiMAX. As
a result of delays in spectrum
auctions, India is one of only a
few large countries in the world
that have yet to see wide-scale
3G deployment. Most developed
countries deployed 3G between
2000 and 2005. On the WiMAX
front, four ISPs2 in India already
provide fixed wireless access
through WiMAX version 802.16d
in the 3.3 GHz band. Operators
are using BWA auctions as an
opportunity to provide broadband
through WiMAX.
Meanwhile, the delay in the 3G/
BWA auctions in India has allowed
time for the incubation of LTE
as the technology of choice (see
Exhibit 1). This technology has
been gaining traction in the Western
world as a credible alternative to
3G and WiMAX. It offers superior
performance at lower cost per
megabyte of data compared to 3G.
And unlike WiMAX, it promises
a more evolved ecosystem and
backward compatibility with 2G and
3G. Given its potential, and in light of
auction delays and revised deployment
time lines, operators in India may wish
to consider LTE as a viable mobile
broadband technology option.

Exhibit 1
The 3GPP and IEEE Technology Evolution Paths

3GPP EVOLUTION

UMTS R99 HSPA REL. 5 HSPA REL. 6 HSPA+ REL. 7 HSPA+ REL. 8 LTE
(2003) (2006) (2007) (2009) (2010) (2010)

– WCDMA – HSDPA – HSUPA – 2x2 MIMO or – 2x multicarrier – OFDMA (DL)

– QPSK – 16 QAM – Receive 64 QAM or 2x2 MIMO – SC-FDMA (UL)
– PS data diversity – Interference – 64 QAM – 4x multicarrier
– 5 MHz cancellation – VoIP – 4x4 MIMO
single – Beamforming – All-IP network
carrier – Voice over HSPA

IEEE EVOLUTION

WiMAX 802.16D WiMAX 802.16E WiMAX 802.16M

(2006) (2008) (2010)

– OFDM – OFDMA – OFDMA (DL)

– 16 QAM – 64 QAM – SC-FDMA (UL)
– All-IP network – Beamforming – Scalable bandwidth of up to 20 MHz
– Fixed access – 2x2 MIMO FDD
– Up to 10 MHz bandwidth – Fixed and mobile access – 4x4 MIMO

Note: Year in parentheses is when release became (or is expected to become) commercially available.
Source: Booz & Company

Booz & Company 3

 LTE is the latest technology
LTE VERSUS 3G: from the 3GPP (3rd Generation
BETTER, FASTER, Partnership Project) stable. It offers
significantly better performance
CHEAPER with respect to throughput,
capacity, and coverage (see
Exhibit 2). LTE has the potential
to attain an average transmission
data rate of about five times that of
HSPA+ Release 6. With multiple-
input, multiple-output (MIMO)
antenna technology, LTE can
achieve peak data rates of up to
100 Mbps (potentially, 300 Mbps).
Even in the real-world environment,
LTE will be able to deliver 10 to
20 Mbps downlink and up to 5
Mbps uplink—much better than
today’s 3GPP technologies. Further,
with superior indoor penetration,
LTE is likely to deliver a far more
consistent user experience than the
current 3G technology.
LTE offers a reduced latency3 of
10 to 20 ms, which is a substantial
improvement over the latency of
40 to 60 ms offered by 3G. The
increased throughput coupled with
low latency promises a much better
customer experience with real-time
applications such as online gaming
and video conferencing.
With the use of orthogonal
frequency-division multiplexing
(OFDM) and spatial multiplexing
(MIMO), LTE will have two to four
times the spectrum efficiency of
the current 3G technology. Thus,
total cost of ownership for LTE is
expected to be a fourth that of 3G
on a per MB basis. Furthermore,
LTE is cost-effective because it has
evolved from current 3GPP-based
networks, so previously deployed
resources can be reused.

Exhibit 2
LTE Outscores 3G on Technology Performance Criteria

TECHNOLOGY RELEASE THROUGHPUT CAPACITY COVERAGE

DL: 0.384 Mbps Urban: 1.5 km

UMTS R99 82 voice users
UL: 0.128 Mbps Rural: 3.9 km

HSPA REL. 5 DL: 14.4 Mbps Urban: 1.8 km

103 voice users
UL: 0.384 Mbps Rural: 6.2 km

DL: 14.4 Mbps Urban: 2.5 km

HSPA REL. 6 136 voice users
UL: 5.7 Mbps Rural: 6.2 km

3GPP
HSPA+ REL. 7 DL: 28 Mbps Urban: 3 km
190 voice users
UL: 11 Mbps Rural: 7 km

DL: 42 Mbps Urban: 4 km

HSPA+ REL. 8 232 voice users
UL: 11 Mbps Rural: 7.5 km

DL: 82 Mbps Urban: 5 km

LTE 240 voice users
UL: 18 Mbps Rural: 30 km

Source: Booz & Company

4 Booz & Company

 LTE has emerged as “the technology
LTE: of choice for the future” for many
THE NEXT major operators worldwide and
is expected to draw on a much
GLOBAL more sophisticated ecosystem than
STANDARD WiMAX. In a greenfield scenario
for a level of data traffic, capital
investment for LTE is potentially
lower than for WiMAX 802.16m
(see Exhibit 3). Though the overall
operating expenditures for LTE
and WiMAX base stations are
estimated to be similar, the primary
driver for lower capital investment
in LTE is the potential for
reduced equipment cost due to the
economies of scale and full 3GPP
integration.
In addition to being the next mobile
broadband technology for most
operators worldwide, LTE offers

Exhibit 3
LTE and WiMAX Capital Expenditure Comparison

ILLUSTRATIVE

Normalized Total Capex per km 2 Normalized Total Capex per km 2

to HSPA+ Dense Urban Area to HSPA+ Suburban Area
1,000 800
700
800
600

600 500
400
400 300
200
200
100
0 0
0 1,000 2,000 3,000 4,000 5,000 6,000 0 200 400 600 800 1,000 1,200

Traffic (Mbps/km 2 ) Traffic (Mbps/km 2 )

WiMAX 802.16e (10 MHz @2.5 GHz) HSPA+ (5+5 MHz @2.1 GHz)

WiMAX 802.16m (40 MHz @2.5 GHz) LTE (20+20 MHz @2.6 GHz)

– HSPA+ is more cost-effective than WiMAX 802.16e due to better coverage translating to a lower number of base stations.
– LTE is more cost-effective than WiMAX 802.16m, even when operating at the same frequency.
– LTE benefits from higher economies of scale than WiMAX 802.16m because of the forecasted wide adoption by operators and vendors
alike.
– Despite almost similar performances, lower cost of base station makes LTE more attractive than WiMAX 802.16m.

Note: Costs include end-to-end telecom equipment cost (without civil works cost). Assuming three-sector cells and 64 QAM, while HSPA+ and 802.16e run
with 2x2 MIMO, and LTE and 802.16m run with 4x4 MIMO.
Source: Booz & Company

Booz & Company 5

the opportunity to deliver voice
and compatibility with 2G/3G
networks, which allows seamless
roaming. However, voice-enabled
handsets and multimodal devices
are still a few years away for LTE.
WiMAX can potentially offer voice,
Exhibit 4
Potential Range of LTE-Enabled Devices
4G Modem - Residential/SOHO
– DSL/cable modem replacement
– Includes Wi-Fi, VoIP, videoconferencing
Fixed, high bandwidth, always-on devices
AC power/no battery required
Externally Attached PC/Other Cards
– PCMCIA Cards w/Wi-Fi
– SD/other standard cards
Fixed, high bandwidth, always-on devices
AC power/no battery required
Embedded Personal Computing Devices
(PC class OSs: XP, OS X, Linux, etc.)
– Notebook PCs
– Ultra-mobile PCs
Low processing/battery drain from host device
Large screen for multimedia content access
Source: Booz & Company
6 Booz & Company
but WiMAX devices are currently few years, we may find embedded
lagging and may not proliferate LTE chips in a variety of consumer
at the same rate as LTE devices. electronics, offering possible
With LTE already deployed in the new business models for mobile
US and Europe, the likelihood of operators (see Exhibit 4).
availability is higher for the LTE
chip than the WiMAX chip. In a
Handsets
(Mobile class OSs: Windows Mobile, Linux)
– Voice-centric handsets
– Data secondary devices (Treo, BlackBerry)
Low battery consumption and large storage requirements
Mobile-specific applications/content for smaller screen
Embedded Portable/Mobile Devices
(Windows Mobile or proprietary OSs)
– Data-centric pen or keypad devices (no voice support)
– Portable media players/multimedia tablets
– Gaming devices
Low battery consumption and large storage requirement
Data or multimedia-specific applications/content for form factor
Consumer Electronics
(VIIV, DSP chipsets)
– Camcorders/cameras
– MP3 players
– In-vehicle entertainment
Easily embedded and supported module
Ad hoc bandwidth usage requiremeSnt (à la carte)

ISSUES TO
CONSIDER
FOR LTE
DEPLOYMENT
LTE offers many advantages over
competing technologies. However, in
the Indian context there are several
questions that need to be answered
before LTE can become a credible
alternative to 3G and WiMAX.
• Spectrum availability:
Harmonization of the LTE
spectrum in India stills lack
clarity. No spectrum has yet been
marked specifically for LTE.
While the Indian government is
expected to publish a discussion
paper on 4G technologies soon,
LTE auction is not slated until
at least 2011. In the absence
of dedicated LTE spectrum,
operators may consider
deployment in BWA (20 MHz of
unpaired spectrum in 2.3 GHz)
and 3G (paired spectrum of
2x5 MHz in 2.1 GHz) spectrum
bands. Given the technology
neutrality of these bands and
the ability of LTE to work on
different channel bandwidths in
both FDD and TDD4 modes, this
should be feasible. In addition,
approximately 120 MHz of
spectrum in the 700 MHz
band—an effective and cost-
efficient frequency band for LTE
deployment—could be used for
LTE in the future.
• Device availability: Availability of
affordable devices is always a key
driver of technology uptake. LTE-
enabled dongles and USB cards are
already commercially available.
However, it may be some time
before the devices become
affordable enough to gain critical
mass in India. Compatibility of
LTE devices with 3G and 2G will
also be of utmost importance as
it will ensure seamless roaming,
and LTE data devices which
are backward-compatible with
HSPA and EDGE should start
becoming available this year. High
volumes in India may lead to
economies of scale, and we could
see a reduction in prices as well
as common availability of 2G/3G-
compatible devices sooner than
expected. However, LTE voice
handsets are perhaps still two to
three years away.
• Current voice congestion: Though
LTE has a lot of advantages as
a mobile broadband technology,
any voice solution for it will
take a few years or more to
materialize. LTE will not serve
the purpose of operators looking
at 3G spectrum options to ease
congestion on their current voice
networks. These operators would
have to incur incremental capital
expenditures in 2G base stations
to use 3G spectrum for LTE
deployment.
• Technical maturity: Many
operators worldwide have already
committed to LTE and are actively
preparing for deployments in
the near future. There is an
expectation that most Western
operators on 3G will eventually
move to LTE. However, there has
been only limited commercial
deployment of LTE to date.
Hence, Indian operators need to
be careful when considering their
LTE deployment time line, given
that LTE is still a relatively
new technology.

Indian operators need to be

careful when considering
their LTE deployment time
line, given that LTE is still a
relatively new technology.

Booz & Company 7

 In the last few years, there has
OPTIONS been considerable progress in
FOR INDIAN LTE technology and ecosystem
development. Given the momentum
TELECOM this technology has gained, and
OPERATORS its increasing momentum as a de
facto world standard for mobile
broadband access, operators should
critically examine their plans for
LTE. They may even consider
deployment of LTE in the 3G or
BWA spectrum bands they plan to
acquire in the auctions. Operators
would need to balance their
Exhibit 5
LTE as an Alternative to WiMAX and 3G
ADVANTAGES
– LTE devices expected to be backward-
compatible with 3G and 2G to allow for
easy roaming
– Option to leverage same infrastructure
LTE as an alternative to WiMAX on BWA
for voice services later
spectrum
– Ecosystem developing around LTE
promises better economies of scale
compared to WiMAX for deployment
capex as well as customer equipment
– Avoidance of capex on 3G technology
– Opportunity for operators to position
LTE as an alternative to 3G themselves as technology leaders
Source: Booz & Company
8 Booz & Company
decisions with their specific needs
(see Exhibit 5).
In summary, LTE could be an
attractive technology to launch
on 3G spectrum for operators
that can manage their voice needs
through their current 2G spectrum.
Similarly, for BWA spectrum, LTE
offers a very attractive alternative
to WiMAX, given its compatibility
with GSM/3G technology and
the promise of a more mature
ecosystem.
CHALLENGES
– Voice-enabled handsets still a few years
away
– Technology fairly new as the number of
deployments has been limited
– Availability of network and customer
equipment may be delayed due to lack
of rollout commitments in 2.3 GHz band
– Not a solution for current voice
congestion problems as LTE voice
support is still a few years away
– Operators may have to incur capex to
solve current voice congestion issue
through additional 2G base stations
Endnotes

1
As of June 2009, 3.2 percent of Indian households had fixed broadband, defined as Inter-
net speed greater than 256 kbps. Source: India Perspectives 2010 from Informa.

2
These Internet service providers are Aircel, Reliance Communications, Sify Technologies,
and Tata Communications.

3
Latency is the time required for a packet of data to travel from the sender to the receiver.

4
FDD = frequency-division duplex; TDD = time-division duplex.

About the Authors

Peter Weichsel is a partner

with Booz & Company in
Düsseldorf. He specializes in
technology and strategy in the
telecommunications industry.

Ashish Sharma is a principal

with Booz & Company
and leads the firm’s CMT
(communications, media, and
technology) practice in India.

Ashish Bhatia is a senior

associate with Booz & Company
in the Delhi office. He specializes
in technology and strategy in the
telecommunications industry.

Niels Rosenhäger is a senior

associate with Booz & Company
in Düsseldorf. He specializes in
technology and strategy in the
telecommunications industry.

Booz & Company 9

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