4G: The Expectation is Faster Speeds (and higher prices)

But, will 4G really be faster? And, if so, for how long?
by Todd Knutson

4GToday's Wall Street Journal (March 17, 2010) reports that as 4G wireless technology becomes more widely available in the next year, download speeds may be 3-8 times faster than with current 3G service. But, with that increase in speed, unlimited-use pricing models may have to change.

The first challenge to be overcome is that consumers are going to have to be persuaded that 4G is really faster than 3G.

Keep in mind that as more 4G wireless devices are brought online, traffic will increase and download speeds are likely to decrease. Bill Davidson, SVP Marketing & Investor Relations at Qualcomm, Inc., says in the article, "...it's much more about preserving [the] experience that end users have now. I haven't seen a lot of people guaranteeing a lot of speed."

So, is what we're hearing just early-stage hype? Will the expectation of 4G speed be more flash than substance (introduced, or course, by good advertising and word of mouth chatter)?

 

As to pricing, what's creating the pressure? AT&T has reported that

3% of it's subscriber base, likely armed with an Apple Inc. iPhone, make up 40% of the carrier's data traffic.

Seeing this statistic, it's not hard to understand the problem from the carriers' perspective. What has to change is the unlimited-use plans in the hands of heavy data users. They're likely to be replaced by tiered plans, based on usage, which will be more in line with how you're charged if you use a data card with your laptop. However, as Roger Cheng describes in his article, there are challenges to be overcome. For example:

  • Customers don't currently have any way of knowing how much data they're using, as "phones don't usually provide a read-out of current data usage."
  • Customers aren't used to tracking how many emails they send, or how big the files are that they download, or how much they surf the Web or watch videos.

Will the benefits of (potential) speed outweigh the additional cost? It's too early to tell.

Thanks to the numbers of iPhones and Blackberrys in use by ad agency new business people, once 4G is rolled out, we're likely to initially enjoy the benefits of faster downloading and, probably, higher monthly fees. Let's hope that by the time 4G becomes the norm, the carriers will have figured out how to maintain higher download speeds in order to justify the additional expense.

 

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