The usual honeymoon manufacturers get, i.e. being able to charge premium prices when bringing a new product on the market does obviously not apply for the brand new LTE technology.
The first commercial deployments in Scandinavia (Sweden and Norway) shows that, base station equipment capable of delivering GSM, 3G and the new LTE technology comes at a price that is a fraction of what was demanded for 3G equipment 6-7 years ago. Chinese vendor takes the lead – “price erosion” is hardly the word, “free fall” is more appropriate. This may look disastrous to the vendors, but it is a natural consequence of the operating reality of most operators. The added value of LTE is mainly to provide higher data rates and thus some relief to the capacity problem in urban centers, but with the flat rate charging models for wireless data, the low price of equipment is not a bonus – it is a must!
In this first step operators are replacing equipment in existing GSM/3G sites but to match future traffic demands and to really challenge wireless IP access, this is not sufficient. More base stations in ever denser patterns will make base station prices and manufacturer margins drop even more. In the long run, why should a pico/femtocell base station be priced higher than a WLAN access point?
The parallel to the computer industry is evident, the main value in future networks does not lie in the (highly commoditized)hardware, but in how to deploy and operate them.
