Doubts remain over HSUPA

The trend in the mobile industry for complementing HSDPA with its uplink equivalent is gathering pace. As of November 21, two-dozen HSUPA networks were up and running worldwide, according to industry group the Global Mobile Suppliers Association (GSA), with five having been added the previous month. Eighty-one percent of WCDMA networks have boosted downlink speeds to enable HSDPA, and 15 per cent of those have also upgraded to HSPA.

At least 20 network operators are in the process of rolling out greater uplink speeds, says Alan Hadden, president of GSA. But although the GSA is confident that all WCDMA operators will roll out HSDPA, it's too early to tell whether they view HSUPA in the same way, he says.

"It is not clear if they will all deploy HSPA," he says. "Some just want to boost the downlink. Some are saying it's important to do both the uplink and downlink."

Perhaps unsurprisingly, Ericsson, which offers HSPA upgrades, says it believes operators will roll out both uplink and downlink upgrades.

Since February, it has sold a combined HSUPA/HSDPA software package, which has been bought by 75 operators, including members of Vodafone Group, according to Janet Fridberge, director and head of portfolio marketing for radio-access networks at Ericsson.

Countries as varied as Portugal and South Korea are deploying HSUPA, and the strategies being used are just as diverse. Finland's Elisa is planning a seamless HSUPA network in the 2.1GHz and 900GHz bands. Some networks are a series of very fast hot spots, with no supplementary EDGE technology. Others, such as Australia's Telstra, are countrywide networks. Some are being marketed as a fixed-DSL replacement, others as a data-business service, and many as a way to enable young people to upload videos and pictures to social-networking web sites.

Recent announcements have shown that in a few countries - such as Italy, Germany and the UK - several operators are racing to offer coverage. In late November, Vodafone said it was the first network operator in Germany to launch HSUPA with uplink speeds in excess of 1.4Mbps. It launched in more than 50 major cities, including Dusseldorf, Essen and Stuttgart. Three days later, T-Mobile Germany said that it would increase its uplink speeds from 384Kbps to as much as 1.4Mbps in Nuremberg and Hanover initially and that it planned to equip its entire UMTS network with HSUPA by mid-2008.

HSDPA markets have grown quickly in countries where fixed broadband is slow and expensive or - as is the case in less-densely populated areas - where many people live beyond the range of the average ADSL exchange, such as Austria and Sweden.

In the US, the impetus to roll out networks quickly is not necessarily a result of competition with other HSUPA networks. Rather, AT&T, the company with the world's oldest HSDPA network, wants to outpace the CDMA networks owned by Verizon Wireless and Sprint, which have been upgrading to 1xEV-DO Rev. A since last year. AT&T has promised a network upgrade for some time and has indicated that an HSUPA rollout is imminent. It plans to invest $4-5 billion a year, compared with what Per Lindberg, an analyst at investment bank Dresdner Kleinwort, calls an "astonishingly low" investment figure of $1.1 billion in the first six months of this year. But AT&T's plans reveal a lot more about vendors' ability to cope with the increasing demand for HSUPA.

The market leader is Ericsson, which says it has been responsible for the Vodafone Group's networks and that of Elisa in Finland. Alcatel-Lucent is in second place, with some high-profile customers, and in late November, it announced a five-year contract to roll out two-thirds of French operator Bouygues Telecom's HSPA networks.

Chinese manufacturer Huawei is also supplying several networks, including Vodafone, Orange subsidiaries and Telecom Italia Mobile, though analysts say the technology is about 18 months behind that offered by Ericsson.

AT&T is a huge WCDMA customer for Alcatel-Lucent. But its upgrade program looks set to be supplied primarily by Ericsson, according to Lindberg.

According to Lindberg, AT&T had wanted to upgrade with Alcatel-Lucent's new platform, but it will not be ready until next year. AT&T, in a rush to roll out an upgrade, has reportedly gone with Ericsson instead.

"Given the tight time-to-market requirements for HSUPA, Ericsson is in pole position to garner significant market share against a struggling Alcatel-Lucent," Lindberg says.

The platform is not set to be ready until next year, because Alcatel-Lucent is struggling with the myriad platforms it has ended up with through acquisition. "There are many difficulties," Lindberg says. "That means you have to decide which platform to develop software for. You cannot have many developments at the same time."

AT&T's existing WCDMA infrastructure is based on a platform developed by Lucent before the merger with Alcatel. But the radio-network controller set to be launched next year will be based on one of three platforms bought from Nortel during the acquisition of the Canadian manufacturer's UMTS-access product portfolio late last year. The Nortel platform will not be ready until 2008, however, because so little investment had gone into its development before the acquisition, and much work is needed to bring it up to scratch, according to Lindberg.

"The Nortel platform was heavily underinvested at the time," he says. "The horse they [Alcatel-Lucent] decided to ride was not the strongest," he adds, but he says it was "the strongest of the three."

Although HSUPA rollouts are touted as software updates only - which makes them cheaper than other network deployments - analysts warn that there are many hidden costs, which operators might not be aware of. With such increases in data between devices and base station, there is a need for more capacity in both the transmission and the access network, they say. That means more backhaul and more base stations.

But many operators have not invested in the backhaul to support the upgrade, says Franck Chevalier, a consultant at telecoms consulting firm Mason. He says that although not as much backhaul is needed as previously thought, because users are unlikely to be accessing or sending data concurrently in a given cell, many operators are not buying extra backhaul at all.

Others have invested in backhaul but not enough in the access part of the network, industry observers say. Many say operators are waiting for enough take-up to justify such an investment. "The question is whether the backhaul is cost-efficient enough, because you can always buy more backhaul," Ericsson's Fridberge says. "It is one of the operators' top three worries today."

Ericsson says operators can either unlock an additional carrier - which means paying a license fee to unlock more capacity in the Node Bs they already have - or increase backhaul.

"There is more than enough [backhaul] today," Fridberge says. "But when we go from nine to tens of millions of mobile broadband users in the next five years, then we should discuss whether mobile backhaul is enough."

Promoting the take-up of services is crucial. For Vodafone, HSUPA is more of a business offering than a consumer offering, at least for the time being. According to Current Analysis, Vodafone UK's enterprise-product portfolio - including Vodafone Application Service, Mobile Office and Secure Remote Access Service - will benefit from faster speeds on the operator's network. The firm expects Vodafone UK to generate higher traffic and secure a higher ARPU, especially since it introduced flat-rate pricing in the summer.

Other UK operators might benefit less from HSUPA, because, as in the case of 3, they have a smaller share of the business market or, in the case of Orange, they still offer per-megabyte and per-minute pricing models, Current Analysis says.

And O2 has not given details of upgrade plans, though it is deploying HSPA. "There is a marked lack of activity on its enterprise portfolio and muted communication over its network-upgrade plans," Current Analysis stated in a research note.

Vodafone says the introduction of PC cards that enable laptops to connect to WCDMA networks brought massive increases in data usage even before its rollout of HSUPA. Sales of Vodafone Mobile Connect 3G/GPRS data cards in the six months to end-September were 78.9 per cent higher than in the six months to end-September 2006.

In an analyst conference in mid-November, Andy Halford, chief financial officer of Vodafone Group, said that revenues from data services, such as e-mail and BlackBerry devices, had grown strongly in the six months to end-September and that data revenue had increased 39.8 per cent year-on-year. "So a very, very strong performance on the data front, enabled significantly by the greater data speeds from 3G and from HSDPA," he said.

Several Vodafone Group operations have already announced the launch of data devices.

Vodafone Germany has debuted two HSUPA PC cards - the MCC UMTS Broadband Express by Option and the EasyBox III - and an HSUPA modem, the Mobile Connect USB Stick. Other operators, including T-Mobile and Bouygues Telecom, have also launched data cards.

Mobile phones with built-in support for HSUPA are not expected until later next year, but 33 device models - both mobile phones and computers - are HSUPA-enabled or can be upgraded to the technology, according to the GSA, and the figure is forecast to grow rapidly.

Research firm Gartner predicts that the market for both HSDPA-only and HSPA devices - cards and embedded modules - will grow from 8.9 million in 2008 to 13.7 million in 2011.

In the same period, the market for both HSDPA-only and HSPA mobile handsets is predicted to grow from 7 million to nearly 100 million. There is no data available specifically for HSPA phones.

Interestingly, growth in embedded HSPA computing is predicted. Laptops and notebooks with built-in HSPA capabilities are predicted to be worth $1.6 million in 2008, whereas the market for removable data cards and USB modems is set to be worth $7.3 million. But Gartner predicts that the split between revenues from removable and embedded devices will be closer to 50/50 in 2011. A few operators are already supplying laptops with embedded modules. According to the GSA, 61 HSDPA-enabled laptop and notebook models are available.

In August, Nordic operator TeliaSonera announced an agreement to offer Dell notebooks with integrated 3G/HSPA services in Sweden, Denmark, Norway and Finland. Other countries covered by the network will offer the notebooks in 2008.

Vodafone also has agreements with various laptop manufacturers, including Acer, Lenovo, Dell and HP. All of the products from the deals will come with built-in modules.

But Gartner warns against embedding such technologies in computers, because the networks are changing so fast. Most of the 154 HSDPA networks worldwide enable peak speeds of 3.6Mbps, but 29 have already upgraded to 7.2Mbps service.

"We are more pro-cards and -dongles, because the technology moves so quickly that you will retire the card faster than you retire the laptop," says Carolina Milanesi, an analyst at Gartner.

This article first appeared in 3G Wireless Broadband, a sister publication of telecoms.com

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