The 3G Americas analyst event wrapped up last week in Texas, and Tom Elliott, Director of our Emerging Markets Communications Strategies service, and I had the opportunity to speak with a number of operators and vendors about key trends and challenges for 2010. We have summarized below some of the trends and issues identified by operators: HSPA+ off to a strong start in the Americas, but won’t delay LTE:

• Rogers of Canada was the first to launch HSPA+ in the Americas, with an August ’09  launch of 21 Mbps downlink, and plans to have 80% of PoPs covered in Canada by mid-2010.
• T-Mobile USA plans to go after its larger rivals with 21 Mbps HSPA+, launching a trial commercial network in Philadelphia this month with plans to have the fastest network with broad national coverage by mid-2010. T-Mobile is also focusing on M2M business, with a partnership model that offers billing flexibility and simple certification. The operator is also the first to launch an HSPA module with embedded SIM in it (with Motorola)- as T-Mobile pointed out, some M2M (such as surveillance) will benefit from the higher speeds, but M2M overall is going to be more about the economics and logistics for supporting the volume of connections, rather than the throughput per se; Echelon has partnered with T-Mobile USA for smart grid solutions.
• AT&T is still committed to HSPA+, moving up priority on LTE: AT&T has not made an about-face on HSPA+, as some recent press indicates. Wireless CTO Kris Rinne is still saying what she told me last year at 3G Americas: AT&T will explore all software upgrades available with HSPA+ but will not make antenna (read: MIMO) upgrades, as it will spend on antenna changes for LTE rather than HSPA+. What may have shifted is the increased priority now being placed for having ready dual-band LTE devices to work in AWS and 700 MHz bands, to support LTE trials in 2010, initial launches in 2011; current effort is getting out 7.2 Mbps upgrades on HSPA and continuing backhaul upgrades to Ethernet over fiber.
• In Latin America, Telefonica and America Movil are both looking at HSPA+ (in part due to lack of spectrum for LTE, but also because HSPA+ capabilities are attractive) - America Movil will move forward with trials before the end of ’09 in two countries, whereas LIME in the Caribbean said if its HSPA rollouts don’t happen soon it may move directly to HSPA+; Telefonica will use HSPA+ in Europe but may go directly to LTE in some Latin American markets, this will be a pragmatic market-by-market decision.

Central and Latin America:

• Key challenges in the region for 2010 include handset prices, backhaul, high taxation on mobile services (as high as 40% in Brazil) and foremost – spectrum availability and harmonization across the region to support mobile broadband growth and deployments of LTE. Ken Corcoran, CTO of America Movil, noted the progress made on the IP core and HSPA deployments, and identified backhaul as a key remaining challenge for the next couple of years.
• Prepaid mobile broadband is an important element of growth for 2010: In a region with a large percent of prepaid mobile subscribers, prepaid options for mobile broadband will be an increasingly important driver of mobile broadband penetration. Of course, networks will need to be able to profitably support even more increases in data traffic, particularly in regions with limited fixed broadband. Carlos Pino of LIME in the Caribbean noted it will launch prepaid 3G in Jamaica before the end of the year. America Movil noted is its already seeing success with prepaid mobile broadband, particularly with day and monthly passes.
• Mobile broadband being used for “fixed” indoor usage:  Telefonica indicated that more than 70% of their data traffic is indoor usage. Operators rolling out 3G in Chile were surprised to find how much of the usage was for fixed broadband substitution in rural areas. We anticipate mobile broadband will be the only broadband connection for many users in the region, and that the majority of use will continue to be stationary, indoor usage.

Backhaul and data traffic growth:

• Backhaul was a consistent theme – operators are now placing as much priority on backhaul upgrades as on RAN upgrades. Some operators are ahead of the curve, others in the midst of upgrades: Rogers has been upgrading backhaul over last 3 years, has 150 Mb backhaul per site for its 21 Mbps HSPA+ upgrades, and is currently seeing data consumption increase 8-10% every two weeks on its network, with over 50% of devices sold now considered smartphones. AT&T is moving to Ethernet over fiber, using its own fiber where feasible, and T-Mobile USA has been negotiating leased fiber deals in preparations for its move to 21 Mbps. America Movil identified backhaul upgrades as a key priority for the next couple years.
• Network intelligence- and then more importantly putting that intelligence to use for better services and cost savings – is on the increase: Both T-Mobile USA and Telefonica noted potential to better shape offerings for customers and manage data traffic on networks, using traffic shaping and billing innovation, as well as use of subscriber analytics to target best offers to particular customers. HP is working with operators in the region to address cost/revenue issues through BSS/OSS upgrades.

Convergence and femtocells slow moving but growing focus:

• Two leading converged operators are Rogers of Canada and Telefonica. Rogers is moving beyond converged billing toward services with the same look and feel across wireline and wireless networks. Although Telefonica’s positioning and strategies vary from market to market in the Americas and Europe, it has a global technology strategy, plans LTE trials upcoming in Latin American markets, and sees its recent deal with China Unicom as complimentary for the Latin American region. Telefonica is one of the leading operators in very actively pursuing network intelligence and utilization of subscriber information (e.g. opening up location APIs for applications developers).
• T-Mobile USA and Rogers both have had some success with UMA and will look at expanding the in-home experience and are both watching femtocells; AT&T just launched femtocells a week ago in Charlotte, NC, with a slow-roll approach to make sure everything works smoothly.

Regulatory issues: 

• Operators across the board emphasized the need for regulators to address spectrum issues and to recognize that mobile operators must be able to manage quality of service and realize an acceptable return on investment in an industry segment that is quite distinct from landline (references of course to the net neutrality debate and spectrum cap issues). 

You will see us addressing a number of these topics in more detail in upcoming reports, and as our clients know, we love to share our insights in a one-on-one format tailored to your specific needs through email, phone conversations and webinars, so please contact us at wireless@strategyanalytics to arrange for a conversation or briefing.  If you haven’t yet read our latest reports, I would encourage you to look at our take on the Voice/SMS over LTE issue, LTE Needs Circuit Services - VoLGA to the Rescue?, and our summary of Q2 operator performance, Operator Financials Hold Firm in Q2 as Subscriber Volatility Increases.  I will also be moderating an online panel on backhaul at the upcoming FierceWireless “The Future of 4G: A Reality Check” virtual conference on Oct. 28 and would welcome your audience participation. -Susan Welsh de Grimaldo