A blow to HSPA+?

When Kris Rinne, senior vice president for AT&T, confirmed last week that HSPA+ was off of AT&T’s road map, some minor shock waves reverberated through the industry. AT&T (NYSE:T), after all, was one of the earlier champions of the evolved high-speed packet access architecture and for it to step back from its commitment came as a surprise. But I would argue that the writing had been on the wall. As AT&T became more aggressive with its 4G plans, some aspect of its myriad expansion plans had to give way. There are only so many new networks or network upgrades an operator can build or implement in the space of two years.

Dan Warren, director of technology for the GSM Association, said he got his first inkling AT&T might sidestep HSPA+ at Mobile World Congress earlier this year when AT&T CEO Ralph de la Vega and other AT&T execs started talking up much more aggressive rollout plans for long-term evolution (LTE). Instead of putting LTE on the backburner while it went up the 3G’s evolutionary ladder, AT&T would launch LTE shortly after arch-competitor Verizon, building its first networks in 2010 and launching commercially in 2011.

With two upgrades in the works — one that would double current HSPA capacity to 7.2 Mb/s and HSPA+, which would raise it to 21 Mb/s — AT&T had a very short timeline to complete its network enhancements before it had a full-fledged, operational 4G network. While HSPA+ is a software upgrade to the existing network, it still takes an enormous amount of planning, engineering and manpower — resources probably needed for the new LTE network. Money was almost certainly a factor, too. Calling HSPA+ a mere software upgrade minimizes what would have certainly been a billion-dollar-plus investment.

“The subtlety of adding a ‘+’ to end of HSPA is lost on a lot of people,” Warren said. “I think AT&T made a pragmatic decision about where to put its money.”

So does this represent a huge blow for HSPA+? Is it being bypassed the way most CDMA operators are overlooking EV-DO Rev. B? A major operator committing to technology and backing away from it from it in the space of year isn’t very good PR, but Chris Pearson, president of 3G Americas — and a former AT&T executive — believes it will have little real effect on the industry. Admittedly as head of the Americas GSM and HSPA advocacy group, Pearson’s job is to paint both AT&T and the HSPA technology in the best possible light, but Pearson made the very valid point that practically no other HSPA operator in the world is in the same position as AT&T. It holds recently acquired spectrum at 700 MHz over which it has to launch mobile broadband services. It faces the prospect of not one, but two 4G competitors emerging in the next year. And it has a relatively old 3G infrastructure, which could make HSPA+ a more costly upgrade — AT&T may have been late launching 3G but it was the first global operator to launch HSPA.

“AT&T knows what’s going on its network — we don’t,” Pearson said. “They know best how to capture the best efficiencies for their mobile broadband service.”

Meanwhile, 4G spectrum hasn’t even come up for auction in many regions of the world. Many global operators are sitting on newer base stations that can more easily incorporate the HSPA+ software. And none of them face the competitive threat of both Clearwire (NASDAQ:CLWR) and Verizon Wireless (NYSE:VZ, NYSE:VOD). Those operators can not only afford to wait for LTE, many of them have to wait, at least until 4G spectrum becomes available, Pearson said. And in the interim, they’ll boost their network capacities by progressing through the iterations of HSPA, including HSPA+, he added.

“I think carriers worldwide have open ears and open arms to any solution that will allow them to get the cost down of their bandwidth,” Pearson said.
As the GSMA’s Warren expounded on earlier in a feature on the economics of 3G and 4G, there is no exact formula globally for picking LTE now versus LTE later. The different spectrum, competitive, financial and infrastructure situations of carriers are leaving them all over the map in their technology choices. What would be a logical decision to pursue LTE now in the U.S. or Japan might make little sense in Europe or other parts of Asia.

Clearly, AT&T’s situation has changed in the last year, and it is adjusting its technology migration plans accordingly.

E-mail me at kevin.fitchard@penton.com.