Everyone involved somehow in the mobile technologies and market knows very well that the hot topic of the industry is LTE (Long Term Evolution of UMTS) or EPS (Evolved Packet System) as is the correct term as per 3GPP standards.
From a technology point of view it is easy to understand that EPS is by far better than 2G and 3G in order to support the current and future packet-centric services. However a lot of the industry thought leaders remain sceptical towards EPS as they claim that the return on investment of such a dramatic change is low for the operators. The cost of deploying EPS is quite high as new spectrum licence has to be acquired, new equipment in the RAN and Core need to be purchased and new IP-based transmission network needs to be deployed. While on the other hand the data services haven't really taken off yet in most of the countries and the voice and SMS services remain the main source of income for most mobile operators.
I think the answer to this question came to me after I got my iPhone. The use of data services really EXPLODES once someone gets one of the new iPhone-like smartphone consuming on average 30 times more bandwidth than a voice user! Even people who never used to do packet services before, become regular data users with the smartphones. And the experience from UK and US has shown that once these devices become available people start getting them in bulk exploding the bandwidth usage from one day to another.
One can now claim that HSPA is fast enough to provide the data rates required by most of the current applications which are not that demanding (email, browsing, IM, facebook, etc.). However the main killer is not the air interface, but the backhaul (see also The Future of Mobile Backhaul for details). Operators need to increase the backhaul bandwidth significantly and the cost for that is not trivial as they need to purchase a huge amount of leased lines in the current TDM/ATM based deployments. Moving to IP is the way forward but this what EPS is all about! Another killer is signaling. Smartphones generate so much signaling in the current voice-centric networks that make it really inefficient for the capacity but also for the mobile's battery life.
Moving a bit away from the immediate problems that operators are facing now and thinking longer term, we will see that EPS will allow the support of completely new services such as online gaming, mobile TV, etc. which are now very difficult to get with current networks. These services may seem very distant for most of the people, but we shouldn't underestimate the fact that young people and kids or the "internet generation" as we call them adapt very fast to the new fancy services and change their consuming behaviours very quickly. Facebook is a good example, which has almost become the killer application that 3G operators were looking for a long time.
Finally if EPS can provide the data rates that is promising, then mobile operators can drastically enter the broadband market and compete with the fixed line operators making significant amount of business in this field before WiMAX operators do so. Why should I have a fixed broadband service if I can get all my telecoms services with one contract? Furthermore they could also provide mobile broadband to countries with poor infrastracture and become the main broadband providers as their implementation costs will be lower than the fixed ones.
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