Aggressive postures backed by ambitious new plans were the order of the day at the Las Vegas Convention Center, underscoring just how disruptive an impact strategists expect to see from high-speed mobile Internet services. For carriers like AT&T, “Mobile broadband stands to be this decade’s growth engine,” Stephenson said.
One of the more dramatic demonstrations of what’s in store occurred with Sprint Nextel’s introduction of the first dual-mode 4G/3G smartphone, the Android-based HTC EVO, which Sprint WiMAX subscribers can use interchangeably across the carrier’s WiMAX and 3G networks. At a press demo in Las Vegas officials used the HDMI connection outlet on the new phone to deliver a wirelessly received full HD-quality video to a large flat-panel TV screen.
Responding to Clearwire Corp.’s commitment to extending its 4G footprint to 120 million households by year’s end, other carriers said they would offer comparable services on a vast scale within that time frame. While they lag the Clearwire partners in 4G rollouts, AT&T and T-Mobile asserted their fast-expanding HSPA Plus 3G upgrades (enhanced High-Speed Packet Access built on GSM-based networks) were producing data rates that matched or exceeded Clearwire speeds in markets where both types of service are running. And Verizon said it will roll out 4G LTE (Long Term Evolution) service to about 100 million households in 25 to 30 cities by the end of the year.
Citing side-by-side comparisons with WiMAX in Atlanta, AT&T officials said their HSPA+ network (technically known as HSPA 7.2) was more than holding its own against Clearwire’s data rates. At a press conference Neville Ray, senior vice president of engineering at T-Mobile, said his company would deliver HSPA+ services to 100 markets representing a population of 185 million this year, with half of the upgrades to be completed by midyear. He cited third-party tests that showed average speeds on the T-Mobile HSPA+ network matching or exceeding Clearwire.
“This T-Mobile network may become the most competitive in the U.S.,” said Rene Obermann, CEO of T-Mobile owner Deutsche Telekom. “HSPA has not reached its capacity limits yet. It may be upgraded further, maybe to speeds beyond 50 mbps. 3G isn’t over yet.”
The speed debate is getting intense as Clearwire continues to tout the superior experience it offers users who can connect at Wi-Fi speeds without having to find Wi-Fi hot spots. Clearwire CEO William Morrow, citing the Clear service the company’s retail arm is rolling out in competition with Sprint and MSO partners on the wholesale side, declared Clear was supporting data usage levels “that could shake the rest of the wireless industry to its core.”
“On average our mobile 4G customers are using more than 7 gigabytes of data per month,” he said. “Those who want to have a misguided debate about competing 4G radio technologies are missing the bigger picture. To deliver true mobile broadband requires deep spectrum resources and an all-IP network, and Clearwire remains unrivaled on both fronts.”
The company, reporting its users are averaging mobile download speeds of 3 to 6 megabits per second with bursts to over 10 mbps, suggested 3G users who purchase Apple’s new iPad to operate on AT&T’s network would be better off signing up with Clear and purchasing Clearwire’s $139.99 Clear Spot portable router, which allows any device with a Wi-Fi port, including iPads and iPhones, to connect to the WiMAX network. “Consumers unsatisfied with the speeds and limitations of 3G networks or the need to seek out Wi-Fi hot spots can use the upcoming Apple iPad on Clearwire’s open 4G network,” the company said.
Out-bragging everybody else, Verizon Wireless issued a release saying tests over its LTE trial networks in Boston and Seattle “indicate the network is capable of peak download speeds of 40 to 50 mbps and peak upload speeds of 20 to 25 mbps. The speeds are significantly faster than Verizon Wireless and other wireless providers’ current or promised 3G network speeds.”
But, in truth, such claims are pretty much beside the point of what the average user will experience. In the same release Verizon Wireless said its engineers measured average data rates of 5-12 mbps on the downlink and 2-5 mbps on the uplink in “real-world environments,” resulting in “mobile browsing speeds comparable to customers’ current typical online Internet experience.”
As Verizon Wireless CTO Tony Melone acknowledged, the actual data rates any one carrier will offer is “all about RF loading and engineering.” He indicated the average data rates reported in the trials reflect the design parameters the company will be using as it builds out the network. “When you think about what customers can do at 1, 2, 3 mbps in a highly mobile environment, it opens up very many capabilities,” he said. “Are we going to watch HD on 50-inch screens while we’re on the highway? Probably not.”
Wim Sweldons, president of the wireless product division at Alcatel-Lucent, offered what may be the best gauge of what to expect from 4G. Citing results from 40 trials the company is participating in with carriers worldwide, Sweldons said, “What we need to focus on is what the average end user will see. Five to 12 mbps download and 3-5 mbps upload is what is typical.”
Indeed, with this next leap in mobile data rates, the message is less about how mobile compares to fixed broadband, which is rapidly moving to the 50+ mbps realm on the strength of cable DOCSIS 3.0 and Verizon FiOS rollouts, than it is about the implications of ubiquitous wireless connectivity at multi-megabit rates for what comes next in terms of services, applications and the impact on consumers and the economy as a whole. Seen in this light, the strategies discussed at the CTIA event represent a sea change that appears to be every bit as momentous as some speakers claimed.
“Penetration rates as we use them now will become meaningless, because everything that it makes sense to connect to the Internet will be connected wirelessly,” said Deutsche Telekom’s Obermann. “Billions of machines will be connected, not only in businesses but in homes. Think about hundreds of millions of connected cars.”
The ubiquity of mobile connectivity and its implications for business models was a persistent theme among carrier CEOs. “We tend to think of wireless devices as phones, but almost everything is going to be wireless,” said Sprint Nextel CEO Dan Hesse. As one indicator, he cited new developments in health care, such as athletic shirts with wireless chips embedded to monitor a runner’s heart rate or, further out in the future, “wireless chips in pills you take so your doctor will know how the chemicals in the pills are interacting with you system.”
Hesse, referencing his appearance as a keynote speaker at a recent meeting of the Health Care Information and Management Systems Society in Atlanta, said the health care industry expects IT spending to grow from roughly three percent of overall spending to 43 percent in the years ahead, “largely because of wireless.” The impact on treatment costs and efficiency could be huge, he said.
“There are a staggering number of applications coming on board,” Hesse noted. He cited connectivity between ambulances and emergency rooms allowing doctors to view patient data and prepare for treatment. Transmissions of subscriptions from doctors to pharmacies will solve another problem. “Forty percent of prescriptions are filled inaccurately because of lousy handwriting,” he said.
“But the big opportunity will be with remote health care,” he continued, citing the ability of doctors to use high resolution video connections to examine patients from a distance. “4G, because of its video capability, is going to revolutionize health care,” he said.
With data becoming the main driver to mobile industry expansion, there was wide agreement that the days of reliance on a single minutes-based billing model are numbered. “Discussion around rate plans will move from how many minutes you get in your bucket,” Hesse said. “The real distinction will be how many gigabytes you get, and that will determine how rate plans are set.”
“We believe very strongly that if you take a look at the traditional phone market, everybody who wants a phone has one,” said Maurice Thompson, director for open development at Verizon Wireless. “New growth comes in with emerging devices that demand connectivity.”
In this data-centric environment new business models are essential, Thompson said. “We had one product that came on board where our traditional plans didn’t work, so we had to create a new one,” he noted, suggesting this will become the norm going forward. “How many people want to pay $60 per month for a connected picture frame? How many will pay a lot for a connected refrigerator? Carriers will have to find new ways of thinking about business models based on what works for specific verticals.”
Glenn Lurie, president of emerging devices at AT&T, echoed the point. When it came to figuring out a business model for iPad users connecting to AT&T’s mobile network, the company decided to let customers activate service on screen and to give them a pre-pay option. “They want flexibility where they don’t have to pay $60 a month,” Lurie said. “We’re saying to our partners, you decide how you want to monetize with us. When it comes to the iPad, national retailers want to stack them up and watch them fly.”
Noting that many financial analysts are skeptical that carriers can recoup their investments in next-generation networks, notwithstanding massive surges in data usage, Deutsche Telekom’s Obermann said the skeptics are missing what’s about to happen when it comes to business models. As one example of how things will work, he said now it will be possible to go to media companies and cut deals enabling higher quality service on high-speed mobile networks based on “micropayments” the media companies will pay as users access their content.
Where, in 2005 when T-Mobile first launched mobile Internet service, monthly data consumption was running at “a couple of megabytes per month,” the carrier expects to see average usage at 14-15 gigabytes by 2015, Obermann said.
With customers already averaging 7 gigabytes per month on the Clear service and some hitting a terabyte, Morrow suggested the lower costs of providing high volumes of data throughput over the Clearwire 4G infrastructure will allow the company to generate profits on relatively low prices for high levels of usage. “Think about how our network supports everything being connected over an architecture that lowers the costs at the core as well as on the access side,” he said. “I don’t think we’ve scratched the surface.”