Verizon Wireless on Track with LTE for 2010, Should Fixed Providers Be Worried?

Verizon (News - Alert) Wireless is on track with its plans to launch commercial Long Term Evolution (LTE) services in 2010, says Dick Lynch, EVP and CTO of Verizon Communications.

 

Verizon plans to launch LTE (News - Alert) in 25 to 30 markets across the United States in 2010, initially supporting USB dongles, not voice devices. There are a number of reasons for that move.

 

Though it is a big supporter of the 'One Voice Initiative' for voice and text messaging services delivered over LTE networks, Verizon, for reasons of simplicity, will default voice services on its LTE network to its legacy CDMA network.

 

The standards for voice over LTE still are evolving, and the entire ecosystem might not be working off the same version Verizon has selected. Roaming between LTE and CDMA, which Verizon will have to support as its entire 4G network is built out, also adds an element of complexity Verizon apparently wishes to avoid, at least for the moment.

 

The issue of global roaming is more tricky, given the broad range of frequencies used elsewhere for 4G LTE services. The same need to shift to 3G where a suitable 4G is unavailable also is necessary for global roaming.

 

Also, a standard testing capability to ensure all those sorts of roaming and handoff issues is not yet fully established.

 

Beyond all those voice issues, the arrival of LTE, as well as Clearwire's WiMAX (News - Alert) network, starts to pose new questions for providers of fixed broadband access service. Fixed networks always will have an advantage in raw bandwidth. But there is some point at which wireless mobile networks will be a suitable service for many users and many usage profiles.

 

Verizon Wireless has yet to announce commercial data rates for its commercial launch, but download speeds in the range of 5 Mbps to 12 Mbps are expected. Speeds of that sort might be quite workable for any number of users as a substitute for a fixed connection.

 

That might not be the case for a multi-person family or household, but could work for any number of single-person households, or households lived in by unrelated individuals, each with their own mobile phones and the preference and ability to use mobile broadband for their PC needs.

 

The number of U.S. households that now are 'wireless only' will provide something of a 'worst case' proxy for potential broadband cord cutting as well.

 

About 22.7 percent of U.S. homes apparently had wireless-only phone service in June 2009, according to a preliminary analysis of the most-recent survey by the Centers for Disease Control, up from about 20 percent in December of 2008.

 

The bottom line is that this represents a potential universe of more than 26 million households that could be susceptible to wireless broadband substitution at speeds of 5 Mbps to 12 Mbps downstream.

 

The likely number of switchers is dependent on several factors, including the type of application use. Heavy video consumers will quickly bump up against wireless usage caps, which are about 5 Gbytes a month for wireless, and two orders of magnitude higher than that for fixed connections.

 

That's the key advantage fixed broadband connections have: two orders of magnitude (100 times) higher effective 'reasonable use' rules.

 

Approximately 21 percent of all adults--approximately 48 million people--live in households with only wireless telephones.

 

The percentage of households that are wireless-only has been steadily increasing, and the 2.5-percentage-point increase from 2008 through the first six months of 2009 is about equal to the 2.7-percentage-point increase observed from the first six months of 2008 through the last six months of 2008.

 

The percentage of households that are wireless-only increased by about five percentage points in just 12 months, from 17.5 percent in the first six months of 2008 to 22.7 percent in the first six months of 2009.

 

There are about 113 million U.S. homes with fixed telephone lines, and about 118 million U.S. dwellings, according to the Federal Communications Commission. A five-percent increase in homes using wireless only would amount to about six million homes.

 

Should that rate of shift continue, one would expect a further attrition of about three million homes to the wireless-only category over the next six months.

 

A large majority of households using wireless-only communications (68.5 percent) were in households lived in by unrelated adult roommates. Think college students and younger workers early in their careers and you get the picture.

 

Likewise, 41 percent of adults renting their homes had only wireless telephones. About 13 percent of adults owning their home are wireless only, the CDC says.

 

Nearly half of adults aged 25 years to 29 years (45.8 percent) lived in households with only wireless telephones, the study suggests.

 

More than a third of adults aged 18 to 24 (37.6 percent) and approximately a third of adults aged 30 to 34 (33.5 percent) lived in wireless-only households.

 

Some 21.5 percent of adults aged 35 to 44 were wireless only; 12.8 percent of adults 45 to 64; and 5.4 percent of those 65 and over. However, the percentage of wireless-only adults in every age group have increased over time, the CDC says.

 

Among all wireless-only adults, the proportion of adults aged 30 years and over has steadily increased. In the first 6 months of 2009, the majority of wireless-only adults (57.2 percent) were aged 30 and over, up from 48.4 percent three years earlier.