Skip 3G for 4G?

Analyst Blog

Feb. 5, 2013, 1:06 a.m.

"If 3G will only be here for a short while, we would rather skip the generation and put our money where the future is," the country manager of Essar Telecom, Kenya, Madhur Taneja said. Operating under the brand "yu," the telco is the only one out of the four tier-one mobile carriers which has yet to offer 3G services.

There are some general implications of skipping 3G. Handset availability will be a key factor for consideration. Launching 4G without 3G services before affordable LTE-enabled handsets in developing countries become widely available means that the operator will have to experience losing revenue-generating mobile broadband customers to rivals and possibly endure a period of lower subscription growth in the near term.

Spectrum fragmentation may pose another challenge. With operators around the world deploying LTE in over 40 frequency bands, roaming could be problematic. Even when operators use the same spectrum band, complications may still arise. The difference in the way uplink and downlink blocks are arranged between the U.S. and Asia-Pacific Telecommunity (APT) plan which results in device incompatibility provides a case in point. An operator which does not allow a roaming mobile broadband user to fall back on 3G will most probably lose out.

Of course, the second problem will feed into the first as handset manufacturers need to customize their devices for markets utilizing different spectrum bands.

Our recently published ABI Insight takes a look at the business case for Essar Telecom to jump straight to 4G by means of a simple cost-benefit analysis.