Report: Alltel's choice of LTE a big loss for WiMAX, UMB

With the smallest subscriber base of the top five wireless carriers (13.3 million) in the US but one of the biggest networks (in 34 US states and parts of Canada), ABI Research thinks Alltel has picked a winner by aligning its future development with GSM-based Long Term Evolution (LTE).

Alltel yesterday announced that it is committed to LTE for the future of its network. Following Verizon Wireless' path, Alltel is now the second CDMA carrier to commit to LTE instead of Qualcomm's Ultra Mobile Broadband (UMB) or Mobile WiMAX, championed by Intel.

UMB has been presented by Qualcomm as a fast alternative to WiMAX that complements 3G deployments. However, it has been given very little support from wireless carriers, and has analysts predicting its demise even before its scheduled 2009 rollout.

Globally, more have gravitated toward LTE, with AT&T, T-Mobile, China Mobile, KDDI, and Vodafone including it in their plans for future network protocol.

Nonetheless, Alltel's announcement is simply the beginning of a process which will not see any appreciable progress for several years, by its own admission. The company specifically cited its avoidance of WiMAX in favor of LTE, but that its move toward the as-of-yet-a-standard will take three to five years to come to fruition.

It is within this time frame that analysts at ABI Research expect the United States' mobile network will take a new form. Phil Solis says, "For the next five years we will see 802.16e mobile WiMAX pick up steam, with LTE right behind it. In five to ten years, LTE will surpass mobile WiMAX in subscribers, and IMT-Advanced-compliant networks will arise from upgrades to 802.16m mobile WiMAX and LTE-Advanced."

At this point, he postulates, mobile WiMAX will remain strictly a secondary air interface, with LTE acting as the primary 4G network technology. All the main carriers in the US have LTE in their plans except Sprint Nextel, which was the first to actually commit to a next-generation standard with WiMAX. It will also undoubtedly be the first to roll out its 4G service to the public at large.

Sprint's $3.5 billion dollar WiMAX project has regularly been met with legal and financial troubles, and the struggling wireless company recently posted a loss of another one million subscribers.

Coincidentally, in Alltel's earnings call this week, it announced that it had actually gained over one million subscribers in the first quarter of this year, representing a 74% year-over-year growth.

Although Alltel has roaming agreements with Sprint Nextel, by virtue of having effectively repudiated WiMAX, it could be looking to usurp Sprint's third place position in top US wireless providers, even if it takes ten years.