Telus first to announce LTE service in Canada

Canadians will soon get their hands on the 4G technology that American carriers have been offering their customers for months.

Telus Corp. said Wednesday that it will start construction later this year of a new wireless network capable of running the LTE (Long Term Evolution) standard on enabled equipped handsets, laptops and mobile equipment, with service to start in major cities next year.

LTE offers download data speeds under ideal conditions of up to 150 Megabits per second. By comparison Telus’ current wireless network, which runs the HSPA+ standard, can get up to 42 Mbps.

But most users likely see average speeds of one-third to one quarter of those maximum.

The announcement will set off a “domino effect,” with competitors following fast, predicted Ron Gruia, telecommunications analyst at Frost & Sullivan.

That didn’t happen immediately.

BCE Inc., which owns Bell Mobility and shares a wireless network with Telus, issued a statement saying that while it has been testing LTE on its network in Montreal and Hamilton, Ont., it has made no announcement about commercial availability.

In a release Rogers Communications Inc., which has been testing LTE on its network in the Ottawa area, noted it was first to announce a technical trial. But it too is silent on commercial deployment.

With U.S. carriers such as MetroPCS and Verizon Wireless deploying LTE across their networks starting late last year, it was only a matter of time before Canadian carriers would join. However, some industry analysts thought carriers here would hold off a while because HSPA can be upgraded to get download speeds of 84 Mpbs.

Executives of Canadian carriers have always said they are waiting for the ecosystem of handsets and USB modems for laptops to be big enough to justify the cost of upgrading their networks.

One reason Telus might be moving to LTE now is that Shaw Communications Inc., its cable competitor, is scheduled to start its wireless service in Western Canada early in next year. Telus may be hoping to get a technological lead over Shaw, which will be a formidable challenger.

Jean Brazeau, Shaw’s senior vice-president of regulatory affairs, shrugged off the announcement as a “natural evolution” of Telus’ network.

However, he wouldn’t say whether Shaw will start with HSPA or LTE data service when it debuts.

“As for us, we’re still rolling out our service and the technology we decide on will be decided at a given time. I don’t think we’re overly concerned Telus will be able to offer LTE services.”

Some analysts had thought that Canadian carriers might wait until Ottawa holds the 700 Mhz auction before going into LTE, because network equipment makers are selling gear made for those frequencies. The ability of signals in that band to penetrate buildings makes 700 Mhz ideal for data services. But rules for that auction haven’t been set yet and before the election the Harper government suggested it wouldn’t be held until 2012. In addition, carriers are seeing increased demand from smartphone subscribers for data services. Telus doesn’t want to wait.

In a news release Telus said it will use the AWS spectrum in the 2100 and 1700 Mhz bands that it bought in the 2008spectrum auction. The release also said the carrier believes the timing is right and will enable it take advantage of economies of scale in as network and handset makers ramp up manufacturing of LTE equipment.

“I’m a little bit surprised,” Gruia said in acknowledging that he was among those who thought Telus would wait to deploy until it could get spectrum in the 700 Mhz auction.

On the other hand, he added, “I think this tells you how Telus is hedging its bets.” The carrier wants “to get its feet wet” on a new technology, he believes, as well as cover itself in case it can’t buy the amount of 700 Mhz spectrum it wants.

Bidding in that auction is expected to be at least as fierce as the 2008 auction, which unexpectedly drove the total price of spectrum won to over $4 billion.

The intensity of the auction will depend on whether Ottawa decides to allow open bidding – in which case Bell, Rogers and Telus will likely outbid newcomers like Shaw, Wind Mobile,  Mobilicity, Videotron and Public Mobile – or whether there will be a set aside of spectrum only for those with no or small market share, as happened in 2008.

It will also depend on whether Ottawa changes the restrictions on foreign companies to invest in wireless carriers. More investors will also drive up prices.

Telecommunications consultant Iain Grant of the Montreal-based SeaBoard Group has another theory about why Telus announced its intention to deploy LTE. His firm recently reported that Telus, Bell and Rogers are still sitting on a considerable amount of spectrum, including all of the AWS spectrum they bought in 2008.

That has led some in the industry –including Grant – to demand Ottawa limit the trio’s ability to buy more spectrum, if not ban them from participating at all. [The most recent plea happened at a conference earlier this month.]
“This is a well-timed move on Telus’ part,” said Grant, who also noted that Wednesday was the last day carriers could file final submissions to Industry Canada on how they think the auction rules should be tailored. Telus will still be at least eight months away from commercial service according to its schedule.
Telus’ HSPA network, launched with Bell in November, 2009, must be relatively unused, Grant added, another reason to wonder why announce LTE is coming.  Still, he said, “it’s nice to have a horse race.”
In its press release, Telus CEO Darren Entwistle partly addressed that. While LTE service will be offered in cities, extending it to rural areas will depend on the rules of the 700 Mhz auction. Telus believes spectrum in that band is best for non-urban areas because signals travel further than AWS spectrum, making it less expensive to build a network.

“It will be critical for the Federal Government to enable an equitable opportunity for Telus to acquire 700 MHz spectrum in the auction … to support our plans to expand availability of 4G+ LTE wireless service to rural markets,” Entwistle said in the release.