Wednesday, September 24, 2014

The Addictive and Competitive Nature of Speed

Many in the industry assume that LTE is pretty much done and moved onto the next big thing.  Verizon Wireless and AT&T have messaged that their networks exceed 300 million people covered and T-Mobile and Sprint both have declared national LTE footprints.  At the CTIA Mobile Con convention in Las Vegas, panels were already talking up what’s next – LTE Advance and “5G.” In truth, LTE continues to be rolled out in the U.S. and globally. In contrast, at the CCA (Competitive Carriers Association) Convention, smaller carriers were grappling with LTE buildouts, launches, device access, and roaming issues in order to serve their markets and remain competitive.  

Still LTE has been a boon for the wireless industry. On the network side, the technology is more operationally efficient than 3G; it can deliver more bits and at faster rates to users with the same amount of spectrum resources.  On the customer acquisition and retention end, LTE has been instrumental in switching users’ rate plan decisions from voice to data.  Witness the movement from tiered minute bucket rate plans to tiered and unlimited data plans.  Data is sticky and competitive. This has been validated by carriers’ decreasing churn rates, the markedly increased data allowances in plan changes, and limited time data promotions in the first three quarters of 2014. Once users taste what they can do with data whether it’s browsing or through apps, they remain hooked.   Though data has been around since the 3G days, it’s speed and low latency that enhances our user experience. This phenomenon is similar to fixed line evolution. 56K modems gave way to DSL, which gave way to fiber-based internet access. In some lucky markets, Google and AT&T are going to offer 1 Gbps service.  Over time, we’ve become more productive with speed, we depend on it and now we expect it, not only in the fixed line but also in wireless.   

Yet in the U.S., we’re often reminded about how slow our mobile broadband speeds are relative to Asia.  There have been incendiary articles how we lag the Japanese or Koreans perhaps to ignite emotion and also action. Softbank Chairman Masayoshi Son said as much in his talk to the U.S. Chamber of Commerce in March.  There, he presented a slide that put the U.S. second to last with an average 6.5 Mbps LTE download speed (By the way, Australia was #1 with 22.5 Mbps).   To U.S. carriers’ credit, they continue to invest in their mobile networks to fortify capacity and speed out of necessity and to ultimately provide market differentiation.     

Speed has always been used as a competitive differentiation, aside from the usual network coverage.  In 2013, AT&T claimed the Fastest LTE Network based on some publications and drive tests. Remember the tagline “Faster is Better?” In early 2014, T-Mobile self declared that it of America’s fastest nationwide LTE network based on crowd sourced data. Its aggressive network buildout allowed for presentation of a “Data Strong” tagline and introduced “Wideband LTE” into the marketing lexicon.  Verizon Wireless has also entered with their own brand– “ XLTE” that runs on its AWS spectrum assets with the tagline “The Need for Speed.” For its part, Sprint Spark has potential but yet to be realized.  

Outside the carriers, publications such as PCMag and PC World conduct their own speed tests and declare winners. RootMetrics has been gaining carrier marketing credibility with its own independent drive tests.  In JD Power fashion, it awards winners in many categories including speed, which carriers happily have cited in their own public relations
releases.  The marketing speed card will never let up. Though we hear about network reliability, it’s speed that we can easily discern as we use our smartphones to watch the YouTube video, pull up a weather app or visit a webpage.  We have a multitude of speed test app choices including those from Ookla, OpenSignal, Sensorly and even the FCC to make our own validations. 

Carriers again continue to push the speed envelope as they employ different network and device techniques to improve the user experience.  Specifically, an exciting feature to be rolled out is carrier aggregation with other complementary alphabet soup hardware and current and future techniques such as CoMP, MIMO, and FeICIC.   If we use spectrum/channels as a roadway lane analogy, carrier aggregation allows for piecing different lanes into a superhighway. That may sound like hyperbole, complex, and fraught with execute challenges but it’s in the 3GPP standards releases and carriers say they’re committed.  For example, both AT&T and Verizon Wireless are looking to aggregate their 700 bands with their AWS bands in the future.  Down the road, T-Mobile may eventually aggregate their AWS and PCS bands.  However, in the near term, Sprint (under the Spark banner) says it’s implementing “2X carrier aggregation” on its 2.5 GHz band by end of year 2014 and 3X in 2015 with expected speeds of 100 and 150 Mbps, respectively.  We, of course, shall see since a whole host of factors can including distance from the signal source, network congestion, and physical terrain or blockage affect speed. The point is that the user’s speed experience is going to go up dramatically.  These speeds will exceed fixed line offerings and some Wi-Fi hotspots. In fact, it’s already happening.  

While attending the CCA Convention and CTIA, I routinely abandoned the hotel and airport Wi-Fi for a faster and lower latency LTE experience.  I was addicted to speed.   Recently, my not so fast follower friend, Bob upgraded to an iPhone 5s from a 4s (non-LTE) a couple of weeks ago. He said, “Wow! I can’t believe how fast LTE is.”  He moved to an increased data plan and setting to add his six grader son on soon with an iPhone 5c.  He and his son too quickly become speed addicts.

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