LTE handset in 2010 a longshot despite 4G iPhone hopes

That baseband chipset will ship to customers in the fourth quarter, and a handset maker like Apple could feasibly have it embedded in a handset along with a CDMA chip, RF components and a standalone baseband processor as early as the first quarter of 2010. But Eshed finds that scenario unlikely for any vendor. New wireless technologies follow an orderly progression from modems to handsets as networks deploy and the potential for volumes increase, Eshed said. No single vendor, no matter how aggressive, is interested in upending that system.

"In the first quarter of next year, Apple or anyone else will be able to get a chipset small enough and low-power enough to go in any device," Eshed said. "The challenge won't be availability. LTE will take time to mature. Why would Apple be the first to take the beating?"

DO WE REALLY NEED LTE 'PHONES'?

Speaking at Ericsson's Capital Markets Day analyst event in Boston last week, Ericsson Chief Technology Officer Håkan Eriksson said he's puzzled by the intensifying interest in LTE phones. "We often get the question 'When will phones be ready for LTE?'" he said. "Phones are not the target for LTE."

Phones are primarily voice-centric devices, which are supported quite efficiently on today's 2G and 3G networks, Eriksson said. While smartphones do have powerful data capabilities, their small form factor makes 3G networks perfectly adequate to support most mobile applications. LTE, Eriksson said, is much better suited for devices that traditionally run on the wireline broadband network: laptops, MIDs, multimedia streaming devices, etc.

Bandwidth, however, isn't the only justification for LTE. 4G technologies don't just deliver data faster; they deliver it far more efficiently than 3G networks. Eventually operators will want to use LTE for any data application because operationally it's much cheaper to deliver a kilobyte of data over an LTE network than a 3G one, said ST-Ericsson's Lantto. Before that can happen, the LTE ecosystem has to reach a balance, he said. The cost of putting an LTE phone into the hands of every subscriber would far outweigh the cost savings of shipping all data through a 4G network. Once that balance shifts, the market will shift to LTE handsets, Lantto said.

Some operators, though, might see the advantage of shifting to all-LTE sooner rather than later. As LTE chipset prices drop, they'll become cheaper than EV-DO chipsets, Lantto said. When that happens, a CDMA operator with an extensive LTE footprint could procure LTE phones cheaper than it could EV-DO phones, allowing it take advantage of both equipment and operational savings. Verizon Wireless is certainly entertaining the possibility: VZW chief technology officer Tony Melone said last week Verizon's 3G network may not make it another 10 years once LTE is launched.

"I could imagine a CDMA operator really aggressively moving its smartphones toward LTE because they can take advantage of LTE's global economies of scale," Lantto said.

Operators, however, can't simply wait for scale to magically appear before they start deploying handsets, said Marty Smuin, Americas president for wireless business consultancy Aircom. Data cards and embedded consumer electronics will be sizable niche markets, but ultimately handsets are the only devices that can drive mass adoption of a new wireless technology.

"The biggest roadblock to the commercial adoption of LTE is not building out the radio network or core, although they are major factors, but rather the availability of LTE-enabled handsets," Smuin said.  "Until handsets support LTE, are the same size or smaller than the current generation of handsets, offer a similar level of battery consumption and are price-protected, mass market adoption of LTE will not occur."