US operators look to HSPA to bridge gap to LTE

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US mobile operators AT&T and T-Mobile USA both confirmed last week they are to upgrade to HSPA+ in a move to counter market-leader Verizon Wireless’ early migration to LTE technology. The upgrades are expected to enable the two operators to at least double the download speeds currently possible on their HSPA-enabled 3G networks.

Deutsche Telekom-owned T-Mobile USA said during its quarterly results last week that it expects to have HSPA+ deployed across its entire 3G footprint by year-end, covering more than 100 metropolitan areas and 185 million people. It has already upgraded the network in key metro areas such as Philadelphia, New York, New Jersey, Long Island and Washington. Consequently, T-Mobile has been able to claim that it currently offers the fastest mobile broadband network in the country at theoretical peak speeds of 21Mb/s.

However, T-Mobile’s plans were usurped by AT&T later in the week, which announced plans to deploy a similar upgrade across its own 3G network, aiming to deliver the new service to a population footprint of some 250 million by year-end. According to AT&T’s president and CEO of operations, John Stankey – who announced the HSPA+ rollout plans at a Reuters conference last week – the entire upgrade will cost just US$10 million. The news surprised many as AT&T had last year seemingly ruled out migrating to HSPA+ as an interim measure ahead of its planned LTE launches in 2011. One likely factor for the shift in strategy has been recent criticisms of the operator’s data network performance; AT&T has seen its networks struggle under the strain of high data usage from devices such as Apple’s iPhone, which AT&T still offers on an exclusive basis in the US.  

According to the latest Wireless Intelligence data, AT&T had 46 percent of its customer base migrated to WCDMA/HSPA by the end of the first quarter, compared to just 18 percent at T-Mobile. The German firm was the last of the major US operators to roll-out WCDMA having lacked the required spectrum to do so for some years. It went live with its first commercial WCDMA networks in 2008, and has been investing heavily over the last 12 months to roll-out 3G nationwide. But, unlike its competitors, T-Mobile does not own spectrum in the 700MHz band that is being used for the country’s LTE rollouts and therefore has no LTE migration timeframe in place. 

The most common version of HSPA+ (64QAM) offers theoretical top speeds of around 21Mb/s though some future deployments of the technology elsewhere in the world – at Australia’s Telstra, for example – are aiming for HSPA+ speeds up to four times faster using dual carrier and MIMO technology. Etisalat in Egypt and Indonesia’s Indosat both this month launched 42Mb/s HSPA+. AT&T, however, appears to have decided against such modifications. According to Stankey, AT&T’s deployment will simply double speeds from the maximum 7.2Mb/s available currently to a theoretical peak of 14.4Mb/s.

Meanwhile, Verizon Wireless is still on track to switch on LTE in 25 to 30 US markets in the fourth quarter of the year, serving a population footprint of 100 million. The network is set to become the first major commercial deployment of the technology outside of Northern Europe. As a CDMA-based operator, Verizon does have the option to move to HSPA, but it has been linked with a migration to EV-DO Rev B, the multi-carrier version of the EV-DO Rev A standard it currently uses to deliver high-speed services. Although Verizon has denied such a move, many industry analysts believe the operator will make limited deployments of the technology to support high-speed mobile services in regions that will not be initially covered by its LTE network. Major CDMA-based operators elsewhere in the world – notably China Telecom and Japan’s KDDI – are already trialling Rev B. However, the other main CDMA operator in the US – third-placed Sprint – is moving directly to WiMAX. Sprint is already in the process of rolling-out its WiMAX operation – via its Clearwire subsidiary – and is on track to achieve 120 million US population coverage by year-end.

The problem facing all US operators is the lack of compatible devices that are likely to be available when their new faster networks launch. While there are now over 1,000 HSPA devices available only a handful of these support HSPA+, and nearly all of these are dongles. T-Mobile USA is supporting its new network with its own-branded USB data stick – ‘webConnect Rocket’ (pictured) – which it claims is the first HSPA+ device from a national US operator. The lack of devices is expected to be even more of a drag on early LTE deployments. Verizon Wireless CEO Lowell McAdam said last week that it could have as many as five LTE devices running on its network by May 2011, though these early models are likely to be dual mode handsets that fall back onto its CDMA network. Fully voice and data enabled LTE devices are not expected for a few more years. Meanwhile, Sprint is due to launch its first major WiMAX smartphone – the HTC EVO – next month.

Matt Ablott, Senior Editorial Analyst:

Despite earlier hints that it would skip the upgrade, AT&T has wisely concluded that HSPA+ will allow it to double speeds across its 3G networks cheaply and easily. It should also provide sufficient extra capacity to ensure that its network remains able to continue to support bandwidth-heavy devices such as the iPhone. Apple’s new iPad – which runs on AT&T’s 3G network – and an expected new version of the iPhone due later this summer will ramp-up demand for data even further. Moreover, HSPA+ won’t simply be an interim measure; AT&T has given little detail around its LTE rollout strategy but the next-generation network is likely to soft launch in just a handful of markets next year, meaning that HSPA+ will remain the fastest network available to most AT&T customers for several years to come. Verizon Wireless’ rumoured move to Rev B will perform a similar function. Meanwhile, T-Mobile USA’s rollout of HSPA+ is a more defensive move aimed at keeping its underperforming network competitive with rivals. As the operator is not currently in a position to move to LTE – or any other ‘4G’ network – its German parent (Deutsche Telekom) looks set to strike some kind of network-sharing deal or a merger with a rival, possibly even with Sprint/Clearwire. The lack of compatible HSPA+ handsets is unlikely to be a major problem for operators in the short term as the initial focus will be on data services – via dongles, datacards and embedded-laptops. But how such services are priced in relation to current mobile broadband offerings will be interesting and is expected to trigger a return to usage-based – rather than unlimited – data plans. 

Top four US mobile operators by connections, 1Q10
Source: Wireless Intelligence, company data