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Sweden has established itself as an early leader in the migration to Long Term Evolution (LTE) next-generation mobile technology. All four of the country’s leading mobile operators bought spectrum in the 2.6GHz band last year and the three largest have since announced aggressive LTE network rollout plans using the new licenses.
In January, market-leader TeliaSonera – which last year spent US$94 million for 2x20MHz of Frequency Division Duplex (FDD) spectrum – said it plans to commercially roll-out LTE next year, beginning in Sweden’s capital Stockholm and Norwegian capital Oslo. The operator is using Ericsson for the Swedish build-out and Huawei in Norway and described the equipment deals as the “world’s first 4G commercial contracts.” (US LTE front-runner Verizon Wireless announced its LTE equipment vendors the following month).
TeliaSonera’s Swedish competitors are not far behind. This month, Tele2 Sweden and Telenor Sweden – the country’s second- and third-largest operators, respectively – announced plans to jointly build a nationwide LTE network and share spectrum for its deployment. The deal is a 50/50 joint venture between the two operators. No announcement was made with regards to equipment suppliers but build-out is expected to begin this year with service launch scheduled before the end of 2010. By 2013, the operators expect to cover 99 percent of the Swedish population – an extremely aggressive target in a country with a small population spread across a wide geographic area. It plans to offer speeds of up to 80Mb/s in rural areas and up to 150Mb/s in urban areas.
The joint network will use swathes of the 2.6GHz spectrum that the operators bought separately last year; Tele2 paid US$91.6 million and Telenor US$89.2 million for 2x20MHz of FDD spectrum each. However, the partnership will also see the two operators share existing 900MHz GSM spectrum and part of the plan includes an extension of their GSM network by 30-50 percent to support voice services on the new network. Existing WCDMA network-sharing agreements are already in place in Sweden between Tele2 and TeliaSonera, and Telenor and Hi3G Access (aka 3 Sweden).
Tele2 and Telenor’s deal is the first of its kind to be announced for LTE network rollout; but the cost-savings made possible by network-sharing means that Wireless Intelligence expects similar deals to be made soon elsewhere in the world. Financial details of the Tele2/Telenor deal were not forthcoming but neither operator has hinted at a significant ramp-up in capex. Telenor Group, for example, said that its capex as a proportion of revenue (excluding licenses and spectrum costs) would remain at around 15-17 percent this year, in line with its earlier forecasts, and lower than in 2008.
Two other winners in last year’s 2.6GHz spectrum auction, 3 Sweden and Intel, have yet to reveal their plans. 3 Sweden won 2x10MHz of FDD spectrum for US$49.5 million, while Intel – via its investment arm, Intel Capital – paid US$26.7 million for a 50MHz block of Time Division Duplex (TDD) spectrum. The TDD spectrum is suitable for WiMAX rather than LTE services and Intel is expected to lease the spectrum to a third-party WiMAX operator rather than build and operate the network itself.
The migration to LTE is a natural progression for a country that already has almost 30 percent of its mobile subscribers migrated to higher-speed WCDMA or WCDMA-HSPA mobile networks. This has seen the market establish itself as a leader in mobile broadband. According to the Swedish regulator, the number of mobile broadband subscriptions in the country increased from about 184,000 in 1H07 to 604,000 in 1H08, corresponding to annual growth of 229 percent. The growth in mobile broadband traffic was even more impressive, growing 987 percent to 4,111 terabytes over the same period. This meant that Swedish mobile broadband subscribers were sending and receiving an average 47MB a day during 1H08. Mobile broadband accounted for SEK1 billion (US$116 million) of the SEK19.7 billion (US$2.3 billion) in total Swedish mobile revenues in 2007.
The regulator has recently agreed to allow the country’s mobile operators to use 900MHz spectrum for mobile broadband alongside existing GSM services. The move will see 3 Sweden – currently a specialist WCDMA operator – receive 900MHz GSM spectrum for the first time.
Will Croft, Analyst, Wireless Intelligence
Coupled with last week’s next-generation network sharing proposal by the French regulator Arcep, deals such as the one between Tele2 and Telenor in Sweden have the potential to shape the future network landscape. In today’s economic climate, the substantial capex investment for any network deployment is a major stumbling block. Network sharing, meanwhile, lowers both the up-front cost of spectrum and/or equipment, and reduces the risks around delivering a return on investment. In the existing model of one network per operator, achieving a sustainable ROI requires that operators can drive revenues by the proliferation of new services the upgrade delivers. But in an economic downtown, enticing users to spend more on new data services whilst the number one driver of usage – voice – remains available at a lower price point, will be a tough selling point. However, the sharing of the capital investment in a next-generation network coupled with wholesale rate usage now proposes a much healthier investment for operators across the globe – and one that has the potential to become the deployment scenario of choice as HSPA, EV-DO and later, WiMAX and LTE, gain traction.