Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Informing consumers of the benefits of LTE, HSPA+ or any mobile data service that might be promoted as “4G” may be a challenge. This is partly the result of misleading marketing as to what exactly constitutes 4G. More than 6% of mobile users believe that they already have a 4G handset, according to the results of our latest “Connected Consumer Survey,” conducted across six European countries and the United States. More than half of consumers do not understand mobile network generations or are unsure of the connectivity generation of their phone.
Apple’s numbering of iPhone models (and occasional use of “G” as an abbreviation for “generation” – at least for its iPod products) has also confused consumers. About 28% of iPhone users believe that they already have a 4G-capable handset. This figure rises to more than 46% for iPhone 4 users.
Question “Which of the following personal devices do you own or use > mobile phone > network generation”; n = 7140.
Figure 1: Handset owners’ understanding of their mobile network generation, by handset type [Source: Analysys Mason’s Connected Consumer survey, 2011]
As a result, operators will face a significant challenge when it comes to marketing and selling handset-based 4G services to consumers. To educate users about the benefits of LTE and 4G, service providers will need to focus on the differentiating factors of the new access technology from an enablement point of view, rather than solely from a technical one. The following two key benefits immediately spring to mind.
–Convenience: LTE enables consumers to use mobile data services with a much higher degree of reliability than previous-generation data networks – particularly deeper into buildings and while on the move – and at higher data rates. Many users abandon efforts to load a photo on their phone or look up an entry on Wikipedia because the loading time is too long. These consumers would usually then either wait until they had a more reliable connection (for example, over Wi-Fi) or, more often, would simply not make the page request again, in which case an instance of revenue-generating data usage has been lost. More-advanced mobile data services – particularly LTE – will reduce the number of such lost opportunities considerably, by providing better throughput-per-user on congested cells and better performance for users when they are on the move.
–Support for bandwidth-heavy services: LTE will also significantly reduce the latency of mobile data connections, which will improve online gaming capabilities and video communications in particular, as well as the mobile browsing experience in general. Apple has made a significant impact on the mass-market penetration of video calling through the introduction of FaceTime. LTE will increase the reliability of such services over the cellular network. Furthermore, games for mobile devices will increasingly include an online element, as they have for consoles and PCs. 4G data services will reduce latency to near-wireline levels for such games, significantly improving playability.
However, the risk is that operators may turn the battle for market share entirely into an exercise in rhetoric – something that operators that have not invested heavily in LTE yet, or lack the required spectrum, are banking on. For example, when U.S. operator T-Mobile USA failed to acquire spectrum for LTE in the 700MHz spectrum auctions, it invested in backhaul to improve average throughput. The operator then began to market its enhanced 3G services not just as 4G-like, but actually as 4G services. “When consumers look at 4G … if you ask nine of ten, they’ll say it’s about the speed,” explained a spokesperson from T-Mobile USA.
Accordingly, articulating the technical aspects of new mobile data services is also important. In the example given, rival operators were quick to criticise T-Mobile USA’s approach, but may have been wary of emphasising the technical superiority of their own networks because they were also using the “4G” badge for services that fell short of the ITU definition.
Martin Scott leads Analysys Mason’s Fixed Broadband research programme. His primary areas of specialisation include fixed broadband retail pricing and bundling, and customer satisfaction and consumer-facing marketing strategy. Scott also specializes in statistics, surveys and the analysis of primary research, and he co-ordinates Analysys Mason’s Connected Consumer series. He has produced research for Analysys Mason on different aspects of broadband (next-generation) access, consumer demand for present and next-generation services, and the business case for value-added services, such as videotelephony and three-screen advertising. Scott has a Master’s degree in Mathematics from Oxford University.
