What is the definition of 4G? According to ITU’s Radiocommunication Sector, LTE-Advanced and WirelessMan-Advanced (WiMAX 802.16m/Release 2) are the two official technologies belonging to the 4G standard today. So far, industry players have affixed the “4G” label to LTE in a variety of instances: as the network to be deployed by Verizon in December of this year; to systems using mobile WiMAX technology such as the network deployed by Clearwire and Sprint; to HSPA+ 21 Mbps, such as the network deployed by T-Mobile USA. AT&T is referring to its network as HSPA+, when it is in fact HSDPA. It seems these companies are using the 4G label inappropriately, more as a marketing strategy rather than to identify what is actually being deployed.

I was confused when reading an article entitled: AT&T upgrades 80% of its network to HSPA+ – immediately I thought: “Oh wow! Has AT&T upgraded from 7.2Mbps to 21, 28Mbps or higher?” After digging a little bit deeper I found that what everybody is calling HSPA+ from AT&T is nothing but HSDPA 14.4 Mbps. Although the operator reports to have deployed HSPA+, the reality is that the speeds supported by its upgrade just double its previous 7.2Mbps offering, reaching (in theory) a maximum of 14.4Mbps. AT&T has not officially mentioned any plans for 21Mbps yet, which we do not discount could be its next step in anticipation of its LTE rollout next year. Let’s remember that HSPA+ supports 21Mbps or higher. What is even more surprising is that T-Mobile is claiming to be “America’s largest 4G network”, when it is deploying an HSPA+ 21Mbps network that in a real-world scenario reaches between 5 to 10Mbps per second, as compared to Clearwire’s mobile WiMAX network of between 3 – 6Mbps and up to 10Mbps per second, and AT&T’s HSDPA network that reaches speeds of around 7Mbps with its new network upgrade.

This is not ultimately a matter of speed however. Verizon Wireless, which is going to commercially deploy the first large-scale LTE network in the United States by the end of this year, has reported that in a real-world environment its LTE network will deliver between 5 – 12 Mbps. This is not far from what competitors Clearwire, T-Mobile and AT&T are offering using other technologies. Users are pretty much going to get about the same speed regardless the operator they choose. Ultimately users don’t care about technology, but they do care about devices, quality of service and pricing. Thus, we believe that this is more a matter of improving overall network capacity to handle increasing volumes of data traffic. In this regard, LTE is going to do a much better job than HSPA, 3G and all its variants.

Today the big 4 US operators by number of mobile subscribers are: 1) Verizon Wireless with 93.2 million; 2) AT&T with 92.8 million; 3) Sprint with 48.8 million; and 4) T-Mobile 33.8 million (totals as of September 2010). AT&T has gained a stronger market position thanks to the introduction of the iPhone, for which it has a contract of exclusivity with Apple. In Q3 2010 alone net iPhone adds during the quarter totaled 5.3 million, taking away customers from its main competitors Verizon Wireless, Sprint and T-Mobile. This gives AT&T a market advantage for now, however the company will be threatened by the growing availability of competitive Google DROID devices, as well as Verizon Wireless’ intent to also gain a contract with Apple to sell the iPhone and iPod for use on its LTE network. Also Sprint’s WiMAX devices, the HTC EVO and the Samsung Epic, are gaining a lot of subscribers. By the end of 2010 there will be as many as 2.5 million subscribers served by Sprint’s WiMAX smartphones, out of Clearwire’s 4 million subscriber total.

Rumors have circulated in the industry press, blogs and web discussion boards that a CDMA iPhone is being produced by Apple, possibly to be sold by Verizon in early 2011. Apple, meanwhile, has made it clear that it will seek to expand markets beyond current operators. It has not gone so far as to outline specifics of how its relationship with AT&T might change. Maravedis anticipates that Apple will make all or a portion of its mobile devices available to Verizon and, perhaps, additional operators within North America and in other geographic regions. 

We believe that in the next 6 months the operator to remain the most competitive on the US landscape will be AT&T. Clearwire and T-Mobile are still too small to matter that much, and Verizon’s LTE network, despite being commercial by the end of 2010, will not have an impact until late 2011 due to a lack of compelling devices.

MARAVEDIS is a leading analyst firm focusing on 4G and broadband wireless technologies and markets. 

Author: By Cintia Garza, Team Leader 4GCounts & Market Analyst CALA