Canada's third biggest wireless carrier has become the first of the country's operators to promise it will deploy LTE service.
Vancouver-based Telus Corp. said Wednesday it will start to upgrade its HSPA+ data network to the 4G technology later this year and begin commerical service early in 2012.
Telus is the incumbent phone company in the Western provinces of British Columbia and Alberta, but it has a national wireless network that it shares with Bell Canada.
The announcement will set off a "domino effect," with competitors following fast, predicted Ron Gruia, a Toronto-based telecommunications analyst at Frost & Sullivan.
That didn't happen immediately.
Bell issued a statement saying that while it has been testing LTE on its network in Montreal and Toronto, 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 was silent on commercial deployment.
With U.S. carriers such as MetroPCS and Verizon Wireless deploying LTE across their networks since 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 their HSPA are are barely a year and a half old and 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.
Some analysts thought that Canadian carriers might wait until they can buy spectrum in the 700 Mhz band auction before going into LTE, because network equipment makers are selling gear made for those frequencies. However, the government has suggested that auction won't be held until 2012. Meanwhile, carriers are seeing increased demand from smartphone subscribers for data services.
In a news release Telus said it will use the AWS spectrum in the 2100 and 1700 Mhz bands that it bought in the 2008 spectrum auction for LTE service. 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 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 made its announcement now. 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 to demand the government limit the trio's ability to buy more spectrum, if not ban them from participating in the auction at all.
"This is a well-timed move on Telus' part," said Grant, suggesting it will show the government that the carrier is ready to start using its AWS spectrum.
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.