LTE phones in 2010? Not likely

If you want a gauge the chances of long-term evolution handsets emerging next year, you only have to ask a simple question to the right people. Handsets depend on silicon, and a query of several wireless semiconductor-makers revealed that chips simply won’t be ready in time to support the launch of any LTE phone — iPhone or otherwise.

ST-Ericsson and Qualcomm will definitely have LTE chips on the market, just not the right kind. The silicon embedded into USB dongles and PC cards is far different from the integrated, multimode platforms necessary for handsets of any kind of scale. Sure, some vendor may take separate components and piece together a concept handset, but as far as a mass-market device is concerned, it’s a pipe dream.

Verizon Wireless may not get an LTE iPhone in 2010, but that doesn’t mean it won’t be aggressive in its 4G rollout. Initially the network will be data card– and embedded device–centric, but when LTE phones do emerge, Verizon has every reason to embrace them. Last week at an Ericsson analyst event in Boston, Tony Melone, chief technology officer for VZW, said he didn’t envision Verizon’s 3G EV-DO data network lasting 10 years once LTE was deployed, though the 2G CDMA 1X network would have plenty of life left in it.

Why would Verizon shut down a perfectly functional 3G network when it could use it as a fallback for 4G? The answer is basic economics. On the operations side, it’s a lot cheaper to deliver the same byte of data over a 4G network than a 3G one. On the equipment side, it will be a lot cheaper to buy LTE phones than it will be to buy EV-DO handsets. That may not make much sense now, as the price of LTE silicon still is high. But as more operators deploy LTE networks around the world, the number of LTE devices will outpace the number of EV-DO devices. While CDMA silicon now is relatively cheap, CDMA silicon augmented with EV-DO Revision 0 and Revision A software is not. Once LTE chipset prices drop below that of EV-DO, Verizon can tap into massive economies of scale it simply can’t leverage today as a CDMA operator.

That in turn gives Verizon enormous incentive to build out a robust and far-reaching LTE network. Once the LTE silicon price shift occurs, Verizon can move all of its 3G customers onto the 4G network — after which VZW will not only enjoy operational savings and higher capacities, but also can then reuse its 3G spectrum for LTE or whatever it pleases.

Of course, this won’t happen overnight. We won’t even see the first LTE handsets until 2011 — much less cheap ones. Melone is giving Verizon 10 years, which seems reasonable. But it’s likely by that point that the vast majority of Verizon’s data traffic will be entirely on the LTE network.

E-mail me at kfitchard@telephonyonline.com.