Wireless technologies in Canada
The growth of wireless technologies in the last five years has been phenomenal. Demand for data services continues to increase at a rapid pace, pushing development of newer technologies such as Long Term Evolution (LTE), WiMAX and HSPA+. Although the urban population enjoys very good access speed from different technologies, rural areas with lower population density do not have access to decent broadband services and have to struggle with sub-par (700 kbps to 1 Mbps) speed.
LTE is a fourth generation (4G) technology, which is generating a lot of hype in the mobile and wireless industry. Presently, the LTE market encompasses a number of chip manufacturers, equipment vendors, software developers and system integrators. Although this presents the mobile operators and service providers with a wide array of prospects for technology adoption, capital expenditures in this area have become a concern for LTE commercialization in the current market. The penetration of LTE in the near term (less than 2 years) will be limited in the exurbia areas, as the spectrum allocation for LTE will be in the 2.1 GHz range and thus will be targeted to areas in the dense urban, urban and sub-urban areas. As and when the technology matures and telcos resort to re-farming lower spectrums such as 800 MHz and use newer spectrums such as 700 MHz, LTE will be extended to areas beyond urban fringes and even to rural areas in the mid to long term (3 to 5 years). The speed offered by LTE in these areas initially with LTE basic could be 5 to 12 Mbps in the downlink, but may increase with LTE advanced. The range of LTE could be as much as 25 Km, making it viable even for far flung locations from the cell tower. Canadian service providers such as Bell and Telus have committed to deploying LTE without specifying the year in which it will be deployed.
In Canada, Rogers and Bell have partnered to provide WiMAX services to exurbia and rural areas. They have been providing WiMAX services since 2006. They have been using their existing infrastructure. However, the service speed achieved through their network is only in the range of 1 to 3 Mbps. It is highly unlikely that WiMAX will usurp LTE as the 4G technology in Canada. Fixed WiMAX in some communities may act as a last mile or backhaul. However, we do not anticipate telcos investing on WiMAX technology, mainly due to the fact that fixed WiMAX is capex intensive and all the service providers are set for a migration path from HSPA+ to LTE. The existing WiMAX networks in parts of Canada will continue to exist and eventually will be taken over by LTE to serve the same exurbia and rural communities.
HSPA Release 6 and HSPA+ Release 7 are currently receiving lot of traction as the wireless network technology of choice by the top service providers in Canada. HSPA+ Release 7 will likely be upgraded to HSPA+ Release 8 by most of the telcos. Rogers has committed to further new releases of HSPA+ in the next two years, while Bell and Rogers have committed to migrate to LTE from their existing HSPA+ networks. However, HSPA will remain one of the dominant wireless technologies in Canada for the next 3 to 5 years and will suitably complement LTE in the exurbia and rural areas, once LTE is deployed in those areas.