A different league
CSL is Hong Kong’s leading mobile operator and was the first of the market’s five players to launch LTE. Ahead of his apperance at the LTE Asia 2012 event in September, CTO Christian Daigneault talks to Telecoms.com about the unique demands of the Hong Kong market and how the firm is using LTE at 1800MHz and 2600MHz to meet its customers’ needs.
Hong Kong is a fiercely competitive market, with five operators battling for the custom of a population of just 7.15 million. Mobile penetration had exceeded 181 per cent at the midpoint of 2012, according to Informa’s WCIS Plus, giving Hong Kong the second highest penetration in Asia Pacific, behind Macau. Average income is high, and Hong Kong is one of the world’s leading markets for smartphone and tablet usage.
Demand for data services is growing at a rate that is challenging to manage. The leading operator, CSL, has seen traffic growing by a factor of three year on year, says CTO Christian Daigneault, and the firm expects this to drop to a more “resolvable” doubling of traffic in “the next few years”.
High demand coupled with intense competition led CSL to pioneer LTE in the Hong Kong market, launching at the end of 2010. Hutchison, China Mobile and PCCW followed suit in the spring of 2012, leaving Smartone Vodafone as the only carrier yet to have deployed the latest generation of network technology.
Adoption is expected to ramp up fast, from 17,470 subscriptions at the end of June 2012 to 181,000 by the end of the year, according to WCIS. By the end of 2016, Informa expects LTE subscriptions in Hong Kong to have reached almost three million, or 19 per cent of the overall market.
When CSL launched its LTE network, its 3G network was groaning under the weight of data traffic, Daigneault says. The firm wanted to steal a march on its competitors and led off with a partial deployment of LTE at 2600MHz. More recently the firm has been adding 1800MHz into the mix, giving it better in-building penetration in a market where this type of coverage is key.
Hong Kong’s operators deploy indoor coverage in major hotels, skyscrapers and office blocks and, given the limits on real estate in these environments, the carriers share the infrastructure. This is as far as network sharing extends for CSL, says Daigneault, and accounts for roughly one quarter of the firm’s cell sites.
At the LTE World Summit in Barcelona in May there was much discussion of the need for network sharing to begin at the point of deployment for LTE. Operators voiced concerns that the new network technology might not be financially viable if they were required to deploy a network apiece. Daigneault argues that there is a growing gap between Europe and the more advanced regions of Asia and the US.
For him the need for operators to roll out networks individually should drive deployment, rather than delay it. “In Europe there is not enough competition. Here in Hong Kong there are five operators in a small market and the competition forces us not to stop. Customers are very demanding, so as soon as one operator [makes a move] then everybody else has to follow.”
Recent visits to Western Europe revealed the disparity in network performance, he says. “In the UK and France I was on EDGE very often, and you don’t see that in Hong Kong. We are now in a different league. We’re on 4G and already thinking about dual band and LTE Advanced, so the lag in Europe is becoming pretty large. It seems to me that, in some countries because of the economic situation, there are sort of agreements between operators not to deploy. And if nobody does it then there’s no pressure to deploy LTE.”
For CSL, Daigneault explains, the deployment of LTE has been cast as a cost saving measure, given the technology’s lower cost per bit.
Given the density of population in Hong Kong and the high demand for in-building services, it might be seen as the ideal market for the deployment of small cell solutions. But small cell technology, Daigneault says, is not yet mature enough for a market like Hong Kong, despite it being characterised by the kind of challenges the small cell community has been established to solve.
“The problem with small cells is that they will need to be very mature to be used in Hong Kong properly. We think that between 2014 and 2016 we should be thinking about using small cell technology. By then it will be mature, and by then we will need it.”
But, he explains, technology is not the only issue. “The big challenge with small cells in Hong Kong is the real estate. Even if you move to small cells you have to pay somebody to install them, so we have to be aware of that additional cost.”
In any case, even parts of CSL’s macro network operate with a small cell architecture, he says. Some LTE cells cover less than 200 metres, as the operator has focused its attention on beefing out macro capacity to cope with demand. Daigneault reckons CSL has enough capacity in its LTE network to meet that demand for “the next few years” and, until that point, femtocells and wifi offload will not be part of the picture.
CSL has taken advantage of the freedom to deploy LTE at both 2600MHz and 1800MHz, he says, with a spectrum allocation for 1800 in excess of 2 x 20MHz. While deployment began with 2600MHz because of licence requirements (there were no devices for LTE 1800 at the time, in any case) the firm expects to position the 1800MHz layer as its mainstay, using 2600MHz for capacity.
Daigneault says the firm’s equipment supplier, Chinese vendor ZTE, is currently perfecting a dual mode radio solution that will offer LTE1800 and LTE2600 in the same box. He adds that the firm believes this to be an industry first, and that it will improve the simplicity and cost management of CSL’s ongoing LTE deployment.
An important benefit of LTE 1800 for CSL, says Daigneault, is that it will be deployed more widely across the globe than 2600, opening up a better device ecosystem and improved opportunities for international roaming.
As a small market and a business hub, Hong Kong imports and exports a great deal of roaming traffic and CSL implemented its first LTE roaming agreement, with South Korea’s SK Telekom, in July of this year. The deal was hailed by CSL as a world first, and the two carriers’ common use of 1800MHz (SK also deployed LTE at 800MHz) was the enabler.
How CSL will manage roaming with other markets remains to be seen and depends, as always, on the terminal community. “We don’t yet have a device that supports American bands as well as 1800MHz and 2600MHz and there might be limitations in terms of being able to support both,” Daigneault says. But there is motivation from both sides.
“I was talking to Verizon recently and it’s becoming important for them to support roaming with LTE, so even they are asking their vendors to support 1800 and 2600 as international roaming bands and we hope that it will be coming,” he says.
Daigneault concedes that, as a relatively small operator in terms of subscriber numbers, CSL cannot exert a great deal of influence on handset vendors. It is taken as a given that the next Apple iPhone will be LTE-capable and Daigneault says that CSL did “let Apple know that LTE is our favourite technology now.” He continues: “We only hope that the next iPhone will have support for LTE as our plans for offloading from 3G are based on the premise that all our new smartphone devices will be LTE—and we think the momentum around LTE devices generally is becoming stronger.”
CSL Subscriptions by technology, June 2011 – June 2012
|June 2011||Sept 2011||Dec 2011||Mar 2012||June 2012|
Source: Informa’s World Cellular Information Service www.wcisplus.com
Shortly after Daigneault spoke to Telecoms.com in early August there were announcements from operators in both South Korea and the US about early deployments of VoLTE services. For CSL, however, there is less urgency around the LTE voice solution, with the firm’s fallback solution performing well, he says.
“We have no clear time frame for VoLTE. We are testing it in our lab and we did a demo two years ago at an event here in Hong Kong, using our LTE network. So we’re working to understand the benefits but, since we deployed our circuit-switched fallback solution the voice quality, the handover and the call set up have been so good that there’s just no pressure to deploy VoLTE,” he says.
“I think that pressure will come in a few years, as it is a more efficient technology. So when we want to increase our efficiency at some point in the future it will be good not to have to fall back to 3G and maintain the call on LTE.”
For the time being, however, it’s all about data traffic. CSL has already shifted ten per cent of its dongle traffic onto its LTE network, Daigneault says, and is working hard to up that number. Hong Kong has one of the highest penetrations of smartphones and tablets in the world, he says, so there is plenty of motivation.
Daigneault offers CSL as a case study for operators in markets that might be one or two years behind Hong Kong. “Other operators can learn from us because of the density of traffic that we have,” he says. “What is happening to us now will happen to others in one or two years’ time. We have to build very high capacity networks, which is why we decided to build a two-layer LTE network so we don’t have to go back and add more capacity every month.
“You have to build ahead of the curve, this is something that we have learned. We aren’t catching the curve, we’re preceding it.”
The LTE Asia 2012 conference is taking place on the 18-19 September 2012 at the Marina Bay Sands, Singapore. Click here to register your interest.