New 3G devices making their debut included a slew of Ultra-Mobile PCs and
Netbooks such as the Sony P-series Lifestyle PC as well as new handsets
including Palm’s entry into the next generation touchscreen handset market with
the Pre.
Today’s mobile handsets are already capable of browsing the web, downloading
music over the air, and uploading pictures and video to social networking sites
such as Facebook; and 4G networks will only help to enhance this experience with
much faster data rates. As a result handset manufacturers will continue to
develop more mobile broadband-centric devices like Palm’s Pre and T-Mobile’s G1.
It may be a while though before we see these devices on next-generation LTE and
mobile WiMAX networks. Initial CPE devices on these 4G networks will be
limited to USB dongles and PC cards along with a few embedded laptops.
Much like in the early stages of 3G network deployments, operators will seed the
market with low cost USB dongles and PC cards followed by roll outs of 4G
handsets as the price of 4G chipsets begin to decline. Remember, even the
first generation iPhone was on AT&T’s EDGE network during its initial launch.
Many devices in the short term will include dual-mode 3G/4G devices like
Franklin Wireless’s combination WiMAX/EVDO PC card available from Sprint 4G and
in areas with limited 3G coverage we will see some dual-mode EDGE/4G devices.
Not until 4G networks have near ubiquitous coverage, or at least coverage in
most major metropolitan areas, will we see a variety of 4G only CPE. The
first 4G handsets will most certainly be dual-mode as LTE and mobile WiMAX will
only serve data applications with legacy GSM and CDMA networks handling the
voice traffic.
In the long term however, 4G networks will help to usher in a new era of
connected devices. The multi-megabit data rates promised by LTE and mobile
WiMAX will open the door for entirely new devices and applications which would
have been impractical or even impossible on 3G networks. These
applications include everything from mobile video conferencing to in-car HD
video streaming.
Consumers will also begin to connect multiple devices to the mobile data
network. The number of devices each consumer has connected to the network
is expected to increase as many consumers will have both their laptop or ultra
mobile device as well as their mobile handset on a mobile data plan.
Meanwhile, as the price of 4G chips continues to decline, other devices such as
digital picture frames, GPS devices, vehicle security systems and possibly even
some home appliances might be connected to the network.
The adoption of 4G technology and the uptake of these new devices will hinge
upon the ability of operators to offer attractive "all you can eat" data plans
to consumers. Flat-rate pricing, or a lack thereof, will greatly impact
the market for 4G technologies. Consumers will be hesitant to connect
multiple devices to a mobile data network if they constantly have to monitor
their data usage to avoid costly overage charges.
Operators will also have to rethink their business models as far as contracts
are concerned. It’s unlikely that consumers will be willing to sign
lengthy contracts for each device connected to the network. As a result,
pricing plans for devices such as personal media players and GPS devices will be
similar to the initial month to month plans available on the Sprint/Clearwire
networks in Baltimore and Portland.
This isn’t to say subsidies will go away entirely. In some regions
(Western Europe) we’re already seeing deeply subsidized, sometimes even free,
laptops as incentive for consumers to sign up for data services. The
subsidization of laptops and cell phones will continue with the rollout of 4G
networks as a way for operators to lock in consumers for an extended period of
time while unsubsidized USB dongles, PC cards, etc. will provide operators
with an alternative revenue stream.
The availability of ad-hoc month to month service will also have a significant
impact on the retail channels used to purchase these connected devices,
particularly in the short term for USB dongles and PC cards. These devices
will likely be purchased without a subsidy (which essentially eliminates the
need for a contract) and will be available at a variety of "big-box" retail
outlets.
Longer-term, IMS Research believes that the business model for 4G services will
resemble a hybrid between Wi-Fi networks and existing cellular networks with a
wide variety of devices connected and always on.
Bob Perez
Broadband & Networking
IMS Research
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