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LTE telephony finally off the ground, but take-up will be slow

Lack of phones and financial upside for operators can hinder popularity of Voice-over-LTE

By Mikael Rickna$?s, IDG News Service
August 13, 2012 01:20 PM ET

IDG News Service - Last week saw the launch of the first commercial Voice-over-LTE (VoLTE) services, but most operators are likely to take a cautious approach as they face technical and business challenges.

U.S. operator MetroPCS as well as SK Telecom and LG Uplus in South Korea will be the first to offer VoLTE services.

BACKGROUND: MetroPCS claims world's first voice-over-LTE service

MORE: Verizon not launching VoLTE any time soon

"It is the crystallization of all of what we have been working on in the last two years," said Dan Warren, director of technology at industry organization GSM Association, which has lead the work to implement VoLTE.

Eric Ericsson, head of the Mobile Telephony Evolution Program at Ericsson Networks, agrees: "It is proof that VoLTE works. I find it difficult to believe that someone would make a commercial announcement without being fairly sure that it works from a technical standpoint," he said.

However, take-up of telephony will be slow compared to the roll-out of commercial LTE networks for mobile broadband, which is expected to reach 150 networks by the end of the year, according to industry organization Global Mobile Suppliers Association (GSA).

Expectations for VoLTE are much lower, according to market researcher Dell'Oro Group.

"There will be up to ten commercial launches next year around various parts of the world. The success or failure at MetroPCS and shortly thereafter Verizon Wireless and what happens in Korea will determine whether the other projects go ahead quickly or slowly," said Chris DePuy, analyst at Dell'Oro.

For operators, VoLTE has to make sense both technically and financially, and the latter may be a struggle in the short term, according to DePuy.

"The problem with VoLTE is that operators aren't able to charge more than for current voice services, and therefore carriers are spending money but not getting more revenue; possibly even getting less revenue because voice usage is going down, and it's very competitive," said DePuy.

Swedish TeliaSonera was the first to launch a commercial LTE network for mobile broadband in 2009. But when it comes to moving voice to 4G the operator won't be an early adopter, as it sees few advantages over existing systems, according to Tommy Ljunggren, vice president of system development at TeliaSonera.

"The drivers for us in Europe for implementing VoLTE for economic reasons are not strong. In the long term, and that is in the very long term, it will be easier for us to handle just IP. But producing VoLTE isn't automatically cheaper than circuit-switched voice," said Ljunggren.

TeliaSonera will instead continue to rely on CS (Circuit-Switched) Fallback, a mechanism that allows smartphones to access the Internet using LTE and then switch to GSM or 3G when there is an incoming call. So the radios for GSM and 3G as well as LTE don't have to be turned on at the same time, which increases battery life.

Warren, on the other hand, isn't a big proponent of CS Fallback.

"I am hoping [the first launches] will give a strong indication that within the next 12 to 18 months operators can take the step directly into VoLTE and not encumber themselves with a CS Fallback launch," said Warren.

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