Apple’s decision to include LTE in its latest iPad device was the first serious move by the consumer electronics giant into the world of mobile broadband and could have a significant impact on the uptake of services that have so far been more a marketing dream than a usage reality.
Apple’s decision to include an LTE option was seen by most wireless industry observers as one of the more dramatic updates to the tablet that at least from the outside remains strikingly similar to previous iterations. For the wireless industry, the move is even more dramatic as it signals the first play by what is arguably the hottest consumer electronics producer into the LTE arena.
The impact 3G versions of Apple devices have had on networks has been well established. However, with what is a dramatically more efficient means of data transport embedded in the LTE standard, as well as much higher data speeds, the New iPad could be setting the stage for faster consumer adoption of LTE services.
To this point the New iPad is limited domestically to Verizon Wireless and AT&T Mobility, both of which will receive different devices due to divergent 3G technologies for coverage outside of still limited LTE coverage as well as for the use of different bands for their respective LTE networks.
“The addition of LTE will provide the new version with considerable marketing support from U.S. mobile operators AT&T and Verizon Wireless as they continue their efforts to drive greater adoption of their 4G networks,” explained Andy Castonguay, principal analyst at Informa Telecoms & Media in a report. “Given the considerable increase in pricing tiers for the new iPad, mobile operator subsidies and marketing support will be important to sustain Apple’s tablet sales trajectory.”
The device is also being made available to Canadian wireless operators Rogers Wireless, Bell Canada and Telus Mobility.
The big loser amongst carriers to this point are those smaller operators that were not included in the initial launch plans, though to be fair few other operators have the scale of LTE coverage to match that of the two larger players. There is also the potential that consumers could pick up a Wi-Fi-only version of the New iPad and pair that with a mobile hotspot from other carriers to tap into their latest network offerings.
However, if a flood of LTE usage bogs down the networks at AT&T Mobility or Verizon Wireless, which has already seen its fair share of headaches, then the decision to be left off the initial list could be a welcome surprise.
Pricing premium
Pricing appears to remain a potential sticking point for uptake of LTE-equipped devices. According to Apple, AT&T Mobility pricing for the device begins at $15 per month for 250 megabytes of usage, ratcheting up to $30 for 3 gigabytes and $50 for 5 GB. Verizon Wireless’ pricing is slightly more upscale, beginning at $20 per month for 1 GB, before moving to $30 for 2 GB and $50 for 5 GB.
While pricing remains on par with current 3G connectivity, it would have to be assumed that by surfing at faster speeds with LTE consumers will soak through buckets at a faster clip, and bang into hefty overage charges in no time.
The pricing models also continue the decision by carriers to charge customers a separate fee for different buckets of data for each of their devices. Carrier execs have for some time talked about unveiling “bundled” or “family” data buckets that would allow consumers to purchase a single tier of data to be shared across multiple devices, but that has yet to make a commercial appearance.
The NPD Group reported last year that the sale of Wi-Fi-only tablet devices had increased from 60% in April to 65% by October, showing increasing consumer reluctance to pay an up-front premium for a service that they might not use.
“There are multiple reasons for greater Wi-Fi reliance,” said Eddie Hold, VP of NPD Group’s Connected Intelligence. “Concern over the high cost of cellular data plans is certainly an issue, but more consumers are finding that Wi-Fi is available in the majority of locations where they use their tablets, providing them ‘good enough’ connectivity. In addition, the vast majority of tablet users already own a smartphone, which fulfills the ‘must have’ connectivity need.”
Sure, the lure of “4G” could hypnotize at least early adopters to pick up the cellular-equipped version of the New iPad, but the NPD Group research seems to show that broader consumer uptake tends to be from the lower cost Wi-Fi-only models.
“There is a relatively low mobile connection rate for tablet users today in light of the fact that these were early adopters, and therefore less price conscious than the mainstream,” stated Hold. “If there is not an ongoing need for these early adopters to be always-on, then the carriers clearly face challenges with the larger consumer audience moving forward.”
Of course, the decision to stake its first claim in the LTE waters with a fringe mobile broadband device like the iPad could have been a move designed to placate wireless operators. This should allow them to monitor usage on those networks from a device expected to only occasionally tap into its network ahead of an expected inclusion of LTE technology in the next version of the iPhone.
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