CES: The Real Cost of 4G

CES: The Real Cost of 4G

Summary: 4G is going to allow carriers to permit their subscribers to download data at unprecedented wireless speeds. But what is that really going to translate to in terms of cost?

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TOPICS: Mobility, Hardware, Wi-Fi
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CES 2011

4G is going to allow carriers to permit their subscribers to download data at unprecedented wireless speeds. But what is that really going to translate to in terms of cost?

At CES 2011, ultra-powerful next-generation Android smartphones and tablets abound. And central to this seemingly all-Android orgy of a consumer electronics trade show are the 4G networks from Verizon, AT&T, Sprint and T-Mobile they are designed to run on.

If CES is an Android Orgy, then 4G is, well, the Ecstasy. Actually I had a more appropriate analogy for this, but I like keeping my job.

Also Read: When Netflix, iPhone Meets 4G Wireless Hell Breaks Loose

Sure, the idea of downloading mobile wireless data at speeds of anywhere between 2Mbps and 20Mbps a second on LTE, WiMAX and HSPA+ networks is arousing... intoxicating even.

We know that the technology works. It's fast. Very fast -- up to 12Mbps (Megabits per second) with bursts up to 20Mbps already being reported. If you compare it to current 3G technologies, which have a real-world throughput of around peaking to about 1Mbps, 4G's peak download speeds are about 10 times faster than what are in common use today. [Edited for clarity]

However, what we don't really know, and what none of the carriers at CES showing off super-advanced dual core, Android-based smartphones and Tablets will tell anyone yet is what the 4G smartphone and tablet data plans are really going to cost.

We can only go from the preliminary service rollouts that we've seen so far from Verizon, Sprint, Clearwire and T-Mobile.

The carrier that most people are going to benchmark against is Verizon's 3GPP Long Term Evolution (LTE) because they are going to have the most built-out network and also will have the fastest.

Their LTE network, which launched in early December of last year, currently supports Aircards, not smartphones. Right now, they are pricing 5GB and 10GB plans at $50 and $80 per month, respectively. But the user characteristics of business data transfer on Aircards are very different from consumer smartphones, and nobody really knows what Verizon is going to charge for smartphone data.

Sprint, which launched its 4G WiMAX network earlier in the spring of 2010, and already has smartphones using the service, such as the HTC EVO 4G, is currently offering "Unlimited" data with its various consumer connectivity plans.

However, as with its 3G network, Sprint 4G coverage is much more limited than Verizon's, and it is likely that the company will have to improve its infrastructure considerably in order to accommodate growth.

Additionally, Sprint will likely have to take on the additional burden of assimilating Clearwire, the operator of the financially-troubled CLEAR 4G WiMAX broadband network it has a majority shareholder position in and whose chairman and founder, Craig McCaw, resigned last week.

Also Read: Clear 4G WiMAX, Beats Crappy Hotel Internet

For Sprint customers, a takeover of Clearwire and infrastructure buildout needed to compete with the larger carriers is likely to translate to increased costs and a possible move to a metered-style plan, which would be more in alignment with what Verizon and AT&T (who plans to launch their own 4G network in Mid-2011 and has of yet not offered any details regarding pricing) are likely to offer.

T-Mobile, which upgraded its HSPA network to 4G-capable speeds last year, is also offering "Unlimited" data plans similar to Sprint's. But as with Sprint, it will also require considerable infrastructure build-out to compete with the top two carriers, which is also likely to translate to increased cost handed down to the consumer.

Next: Wait, that movie cost HOW MUCH? »

Obviously, as with 3G plans now, there will be heavy competition. As I alluded to in my previous article about the new FCC Open Internet Order, which excludes wireless carriers from most of the key Net Neutrality legislation, the wireless industry is going to become the Wild West, and the pricing of 4G will at some point become heavily commoditized. But in the formative years, it's going to get ugly.

As we have learned, with such high data rates, it is possible under certain conditions to completely eat up your entire 5GB monthly allotment in a matter of hours. When you've got a phone or a tablet that is capable of viewing and live-streaming high-definition video or downloading entire albums of music in a matter of minutes, as Stan Lee says, "With Great Power Comes Great Responsibility." A certain amount of end-user discipline is going to be required.

In the case of Verizon, overages on their LTE network are currently charged at $10 per Gigabyte. That means that if you eat your entire fill on a $50 per month 5GB plan towards the end of the month, and you need to eat more in the last few days, you get hit with a $10 charge even if you exceed it only by 100MB. Verizon currently doesn't pro-rate at smaller amounts, and there's no "Rollover" of unused data.

But let's say you're traveling on a business trip at the end of the month, you're at your hotel room, and you turn on wireless access point functionality on your new Droid LTE-whatever. You want to watch a Netflix movie or download it/stream it from iTunes on your iPad 2 that's tethering to it via Wi-Fi or has LTE built-in. "Oh look, they have TRON Legacy in HD!". It's only 2.5GB.

If you download or stream that, and you were 200MB short of your 5GB on the 29th of the month, you just ate a 3GB overage. Assuming that Verizon charges similar plan rates for their smartphones as they currently do for their LTE Aircards, that $5 iTunes movie rental just cost you $35.

Does that give you some pause? It should. Now think about what happens when you give an entire family of four a bunch of LTE Android smartphones.

Do you think your kids will even think twice about clicking on an embedded HD video on YouTube? Or when Verizon offers music videos and HD content through their own app portal?

With 3G, there was at least the issue of crappy performance and visual quality that prevented you from doing this -- you needed to be in a decent Wi-Fi coverage zone. But with 4G, nothing's going to stop you from chewing up that data, well, because you can. And there will be tons of apps and sites that will be enabled that will allow you to completely exploit that 4G connection.

Of course, Verizon and other carriers that will eventually have to move to metered, overage-based models are counting on the fact that you will become addicted to 4G and will eat the costs. But I'm betting the first time people get socked with $200 data bills because their teenagers went nuts with the download button it's going to be a very rude awakening indeed.

How much do you want to bet the most popular application on 4G LTE phones is going to be an on-screen Gigabyte ticker? Talk Back and Let Me know.

Topics: Mobility, Hardware, Wi-Fi

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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38 comments
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  • That's why T mob system works best

    Its simple, once you hit your limit, you can only send text, but you never get the ugly bill.

    This is the Reason Verizon or Sprint were never my choice. ATT got dropped because of their billing and customer service. Never using them again. In fact, Clearwire is so much better than ATTs DSL lines, and you are up and running in under an hour. With ATT with luck is a couple of weeks!
    Uralbas
    • If you can find a signal.

      @Uralbas

      2 years on T-Mob were the most miserable (from a cell standpoint) 2 years ever. I could go over a week on my travels and never see a cell.
      Bruizer
      • RE: CES: The Real Cost of 4G

        @Bruizer When Google sent me a Nexus One last year to evaluate, it was activated on T-Mobile. I spent about a week with the device in New York City and New Jersey. In New Brunswick, which is a pretty decent sized city in NJ, the N1 barely got a bar of signal and had to step down to 2G and it got ONE BAR. My Verizon Droid? 5 bars of 3G.

        If you live in the Northeast T-Mobile is a non-starter.
        jperlow
      • RE: CES: The Real Cost of 4G

        @Bruizer

        I don't pay much attention to "bars," which can be deceiving. Even 4 bars can be a terrible signal because of the way it is measured. I pay more attention to missed calls and website load times.

        I live in and traveled TX, also traveled some in NM, CA, CO, IL, and through the airports in several other states including in the Northeast. I can remember only twice, rural NM, and rural IL, that T-Mobile let me down.

        Of course I've had the occasional missed call, but not nearly as often as when I was on AT&T, or my friends with iPhones. On a cost and customer service to performance ratio, T-Mobile wins for me.
        colinnwn
  • RE: CES: The Real Cost of 4G

    With the relatively new technology, I think the carriers are going to take advantage of the consumers because of it. I still have unlimited data (no longer offered) on my iphone, and i do not want to downgrade because of possible overages and I don't even tether. None the less 4G is not in my area and probaly won't be for atleast a year or so, in which case they offer reasonable rates and data usage with it.
    Raypep
    • RE: CES: The Real Cost of 4G

      @Raypep Data Surcharges and Coverage

      1. Carriers Globally, apart from '3' in the UK, seem to want to shaft their customers for as much as possoble, with the rampage to dump 'unmimited' data
      2. Apart from Big City, 3G is a joke, never mind the vain hope for 4G. Carriers spend some money sorting out your SHITE 3G networks first. Even in a relatively small country like the UK 3G stinks. Must be appaling in the much larger North American landmass.
      neilpost
      • RE: CES: The Real Cost of 4G

        @neilpost

        I agree! These companies can't even get 3G right so why should consumers pay for unreliable 4G at absurd costs?

        In a global economy where investors expect a constant return on investment the companies feel the need to gouge the consumer. Is it fair? Heck no!

        If you haven't noticed these companies have us by the grapes! They're in it together and want us to stream everything so we become dependant on the network!

        I feel sorry for the families that burden themselves with family plans. I have a 16 and 13 yr old at home. I took both of their phones away because the phones impaired their ability to function in school at home and abroad. I'm sorry but take your eyes off the phone and look around...there's a whole world out there if you just take your eyes off the screen!
        Rob.sharp
  • RE: CES: The Real Cost of 4G

    If the big boys alienate their customers enough, there is a great deal of incentive for Sprint, T-Mobile, and even MetroPCS to steal a ton of market share, Verizon iPhone notwithstanding.
    hoaxoner
  • Real world 3G far outdoes 256kbit to 1Mb/sec

    I consistently get 2.7-3.1 Mb/sec. Ping times still bite, however.
    Bruizer
    • RE: CES: The Real Cost of 4G

      @Bruizer
      Author used two different terms: 256 k bytes per second, whereas he gave the other one in M bits per second. This is roughly equivalent (8 bits per byte, forgetting overhead).
      JimboNobody
      • RE: CES: The Real Cost of 4G

        @JimboNobody I tried to distinguish between Megabits and Megabytes. Kilobits and Kilobytes also. A lot of the literature behind 3G and 4G standards is measured in bits, not bytes, but the LTE performance is measured in Megabytes.
        jperlow
  • Now if they would only get around to building out the wired network

    great, my phone gets more bandwidth than my workstation!
    sparkle farkle
  • Kinda like a pickup and $6 a gallon gas!

    ;-)
    kd5auq
  • SIMPLE ANSWER: Whatever WiMax Costs

    If WiMax has done nothing, it has set the ceiling for the price of LTE.
    gallee
  • It has happened to me

    Recently my teenage daughter spent and evening watching you-tube videos using my turbo stick on Bell's 3G network here in Canada. That put me 4.5 GB over my 5 GB limit. Bell charges 5 cents per MB!!! That works out to $50 per GB! And that is on 3G. That makes that 2.5 GB netflix movie cost $125. It's time for Canada to get into the 21st century as far as rate plans go otherwise services like Netflix are going to go the way of the dinosaur in Canada.
    ian.burton@...
    • Dude....

      @ian.burton@...

      I hope your daughter is doing the laundry, dishes and shoveling the sidewalk for the next 2 months. $250 overage is harsh.

      Have you ever listened to the "Verizon Math" MP3? Might make you feel a bit better as it is a good laugh.
      Bruizer
    • RE: CES: The Real Cost of 4G

      @ian.burton@...

      Do you think the carriers care???


      You sucking down large quantities of `garbage` in the form of streamed downloads is like a cash register constantly churning out ca$h. Netflix does not get saddled with that bill - <b>you do!</b>

      Only when it becomes common knowledge that people get screwed downloading streamed content, will companies like Netflix get hurt. All due to <b>carrier greed.</b> And considering how carriers operate, they will cry like hell about the <i>bandwidth hogs</i>.

      Just remember BOHICA -

      <b>B</b>end
      <b>O</b>ver,
      <b>H</b>ere
      <b>I</b>t
      <b>C</b>omes
      <b>A</b>gain!!
      fatman65535
      • RE: CES: The Real Cost of 4G

        @fatman65535

        This is just so ignorant. The purpose of overage charges isn't to make money it is to encourage people to curb their usage.

        They don't want you to use more than your allotted amount because then you harm the network, decreasing overall customer satisfaction, increasing costs and increasing churn, if it ever gets to the point where an overage has to be assessed this means that the metered plan failed in its purpose.
        Doctor Demento
      • carrier greed

        @fatman65535

        If they were greedy, then why would they complain about bandwidth hogs?

        Your comment makes no sense. If you are going to accuse someone of greed, at least understand what the word means.
        otaddy
    • RE: CES: The Real Cost of 4G

      @ian.burton@... CLEARWIRE offers unlimited 4G mobile internet my friend, in more than 60 markets in USA an Hawaii. The speed is not that bad: Download 3 to 6 mbps upload 1mbps; and the reception is pretty good; LTE is the future, but i think wimax/lte networks will coexist.
      franciscomedinav