This post is by Leslie Shannon from the Nokia Siemens Networks Solutions & Regions Marketing team.
LTE was first launched in December 2009 – just about three years ago now – and we’re starting to get enough data from the real world to show what it takes to succeed with LTE and what all of the most successful operators have in common. This is vital information for operators who are just now beginning to plan their LTE strategy – should we focus on dongles or smartphones? Should we roll out in city centers or more widely? Is LTE a premium product or will it be taken up by the mass market?
Overall, looking at the market shows that the most successful LTE implementations in the world – as measured by number of users – are those in the USA, Korea, and Japan. What magic secret have the operators there discovered? All of the most successful operators have these rollout traits in common:
• High population penetration – Quickly rolling out to cover 50% of the population or more. All three Korean operators (SK Telecom, Korea Telecom and LG U+) covered 100% of their population in less than a year after LTE launch, and KDDI in Japan has pledged to cover 96% of its population within months. If people want to use LTE, it’s easy to find.
• Focusing on handsets, not dongles – DoCoMo’s takeup in Japan increased sharply when they rolled out smartphones and dongles in September 2011, and Korean operators report that “hardly anyone buys dongles anymore.” If you want a lot of data in Korea, you buy a smartphone – the largest monthly dongle package is only 10 GB, but you can get up to 25 GB on a smartphone (which you can then use as a dongle-like modem if you want). Because people are more likely to discover new apps and services on a smartphone than on a dongle, promoting handsets as the primary LTE device for all users is a clever way to get subscribers to find new ways to use LTE on their own. And a smartphone can act like a dongle, but a dongle can’t act like a smartphone.
• Pricing LTE at or near the same level as 3G – For the most part, the most successful LTE operators sell “mobile broadband” rather than “3G” or “LTE”. That is, users buy access to a data network, and they get service from whatever the best network is for where they are at any given time. This can be LTE, 3G, or even Wi-Fi, depending on the operator. LTE is therefore not priced at a premium, but instead is used to attract and retain customers with superior network quality and user experience. And Korean operators report that including Wi-Fi in the mix does not cannibalize LTE usage, “because the quality of the managed LTE network is so much better than the quality of the unmanaged Wi-Fi network.” Nice.
• Avoiding unlimited data plans – All of the most successful LTE operators sell handset data plans that have many options at lower tiers (around 5 tiers below 10 GB/month from Verizon, AT&T, SKT, KT, and LG U+, for example) and no unlimited data offerings, even though all of these operators did have unlimited data offerings in 3G. This helps improve LTE monetization by more rigorously increasing revenues as data use increases. However, since subscribers do tend to use far more data on LTE than they do on 3G, it’s equally important that those data tiers scale up to accommodate higher-volume users without the fear of running into limits. The operators in Hong Kong achieve this by offering “unlimited” LTE data plans that reduce the end user’s network priority after a certain amount of data has been used (usually 5 GB), so that these subscribers then have a slower data speed only during network congestion. The operators are thus able to offer an “unlimited” experience while simultaneously protecting their networks.
While these success factors work well for operators in mature markets where a wide variety of handsets are available and the majority of subscribers are on post-paid plans, ultimately there will be as many individual flavors of LTE as there are countries and markets. But even if an operator’s market is very different from Korea, Japan, or the USA, it’s still helpful for them to know what’s working there as a starting point for their own LTE positioning.
How is LTE being rolled out in your market? What do you expect from LTE?
Learn about Nokia Siemens Networks LTE offering here.