24 Comments

Summary:

Next week, T-Mobile is expected to detail plans for it’s HSPA+ network, confirming strategies that it will again double data speeds to 42 Mbps. Faster mobile broadband is always welcome, but if the pace of improvements is too fast, it can actually be a bad thing.

g2-landscape-open

Next week, T-Mobile is expected to detail plans for its HSPA+ network, confirming strategies that it would again double data speeds. After being the last major operator in the U.S. to offer a 3G network, the fourth-largest carrier in the country spent much of 2010 leading the way by boosting the network to theoretical speeds of 21 Mbps. Next year, that same network is likely to improve to 42 Mbps, and while smartphones and data devices thrive on faster speeds, the pace of network improvements could actually be a bad thing, depending on the timing of such strategies.

Don’t misunderstand me; as a daily user of connected tablets, computers and smartphones, faster wireless broadband speeds are always welcome, provided they’re affordable. The issue is related to how the cellular market works here: Unless you’re a prepaid customer that purchases devices outright, most Americans buy subsidized phones and USB data sticks for mobile broadband in return for a two-year commitment of network services. If the network is doubling speeds in roughly a one year period, then a two-year contract simply doesn’t fit the scenario. And when will new devices even be capable of taking full advantage of the faster speeds?

Indeed, when I first tested T-Mobile’s 21 Mbps HSPA+ network this time last year, I couldn’t even test it with a USB stick that had a 21 Mbps radio in it. To be fair, the network wasn’t commercially available yet, so one wouldn’t expect a wide array of devices at that time. Increasing the overall network speeds brought a speed bump to existing devices; I tested the network after it officially launched and my Google Nexus One with integrated 7.2 Mpbs radio was certainly faster. But even after nearly a year of HSPA+ availability, there are few phones and data sticks with 21 Mbps radios. So what happens when the network doubles speeds again?

Customers that bought a smartphone or data device under contract in the past year or so will either have to make do with what they have, pay full price for a faster HSPA+ device, or see if paying an early termination fee on their current contract will save money when buying a 42 Mbps capable phone, tablet or USB stick. That’s the current state of affairs for all postpaid customers in the U.S. of course, but with one key difference: If T-Mobile aggressively doubles speeds of its HSPA+ network, the network is maturing twice as fast as much of the contract hardware that customers are buying. Even the four-month old T-Mobile G2, one of the best Android phones I’ve used this year, only sports a 14.4 Mbps radio, for example.

Although I’ll speak more to T-Mobile about all of this next week at the Consumer Electronics Show (CES), I’m wondering if the carrier even needs to boost speeds this year. With the right devices in areas of good coverage, I’ve experienced average download speeds topping 8 Mbps, which is plenty fast enough for most mobile activities. Yes, it was nice for me to see 50 percent faster speeds on Verizon’s new LTE network, but T-Mobile’s HSPA+ network is no slouch, even at today’s theoretical 21 Mbps speeds.

Aside from enterprise customers with notebooks, I think the next biggest beneficiary for any HSPA+ network upgrades won’t be phones, however. Next year will see a large number of new tablet entries from the likes of Google Android partners, Research in Motion and possibly HP. All those larger screens will thrive on fast mobile broadband, and since they’re all going to be new products, they won’t much hurt current T-Mobile customers under contract. But if I had recently purchased a smartphone or data device with a two-year commitment, I’d be slightly concerned that the network is innovating faster than my hardware.

From a business perspective, it surely makes sense for T-Mobile to stay ahead of the demand data curve with network upgrades and infrastructure investments. From a consumer point of view, however, it almost looks like a potential disconnect between the network and devices that can effectively run on it. My thought: Sometimes you have to slow down to speed things up.

Related content from GigaOM Pro (sub req’d):

  1. While I mostly agree with what you are saying, why not suggest 1yr contracts.

    OR – Either, renewal for current phone for a small fee based on the age/cost when new and/or extend the 2yr from that point.

    Best of both worlds, turn-over phone for customers that what the Newest – get it at a low cost and customer base is kept/added to.

    Share
    1. One year contracts would help going forward, but won’t do anything for anyone that committed to a two year deal in the past 12 months or so. :(

      The situation is the same with advances in smartphones: they’re improving far faster than the contract length. Unfortunately, consumers here are used to subsidized hardware and I don’t expect that to change for years. That also relates to the small upgrade fee idea: if a carrier paid some of the hardware cost for a first device, they’re likely going to recoup it as much as they can, for a newer device, i.e.: that’s the early termination fee at work.

      Share
      1. Actually, it looks like it’ll be a long, long time before US consumers are ready for non-subsidized hardware. T-Mobile recently (11/13/2010) removed their Even More Plus non-subsidized plans from their web site; you have to call customer service or bug someone in-store to get put on it.

        I like the plans; I bought used phones, and have already saved versus the contract prices.

        Share
  2. I really don’t see how a faster network is bad? They are in 4th place and existing customers on contract won’t see any degradation in speed. In fact, they can market their faster speeds to get NEW customers.

    No one is complaining that existing Verizon customers won’t be able to use LTE because they don’t have handsets that can handle it now and are locked in a 2 year contract. In fact, T-Mobile is one of the only major carriers that offers a discount for customers who “bring their own phone” or “buy their phone outright”.

    Share
    1. Totally fair points, Stuart. My take was from that of customers that just bought hardware that really won’t be able to take advantage of the faster speeds, but you’re right in that T-Mo could attract new customers with a faster network.

      Share
      1. So tell Apple to put our new iPhones every 2 years instead of every year, right? Because anyone who bought an iPhone in 2010 won’t be able to get the iPhone 5.

        This is absolutely ludicrous. Once you have a customer locked into a 2 year contract, cash the check and do whatever you can to get the next person to sign a 2 year contract.

        Share
      2. It’s nothing new here; it’s happen since several Years. As soon you have your new fastest ($199.99) Phone in your Neighborhood; ink is dry on your contract; one of your Friends has a faster better phone; carrier has a better deal; and your phone is not more that great. Suck it up or upgrade every so often no matter what and PAY; you signed a marriage contract. Or pay $600+ and buy something new/faster/better every 3-6 month. To have always the newest was always expensive.

        Share
  3. Faster networks are going to hurt customers if carriers continue to impose the same bandwidth caps. Think about it – the faster the network, the sooner you will hit that 5GB wall. The switch to 4G infrastructure should have moved carriers to eliminate all caps and offer a flat all-you-can-use pricing model tiered only to speeds, much the same way home DSL is billed. Carriers today fail to cater to heavy users, and charging a monthly fee for service that can be used up in a matter of days is an oxymoron.

    Unless US carriers seriously overhaul their current mobile billing practices, their dreams of rolling out a nationwide next-generation mobile data network won’t be winning them any long-term customers or sustainable revenue streams.

    Share
    1. I think your confusing speed with capacity. 4G technologies increase the speed of an underutilized network, they don’t increase capacity. As speeds increase, it will be necessary for even more draconian caps to keep networks below capacity so that advertised speeds can be achieved.

      Share
  4. My myTouch 3G was bought in September 2009. I would appreciate faster speeds, and it would be great if I could do that without buying a new phone. Further, it would be nice customer-friendly if T-Mobile would recognize that customers who have been with them for 14 years deserve some consideration as far as 2-year contracts are concerned.

    Share
    1. T-Mobile is a company for which the word “nice” doesn’t exist in their business model. After just 5 years of patronage, they outright breached their contract, burdening me with countless inconveniences and out-of-pocket expenses.

      It took the enforcement of a court order for the company to pay back what their lies and incompetence cost me.

      Share
  5. Silly rabbits. Signing two year contracts with full knowledge that 1) technology will not stand still during the contract period and 2) they cannot upgrade for 22 months, and then whining that they can’t upgrade to the new technology fast enough.

    Share
  6. Let’s call this “technology fragmentation” or something, so we can freak people out over nothing just like with Android fragmentation.

    Share
  7. No you’re not thinking like a consumer. You’re thinking like a phone geek. When you do this the lines that distinguish reality become blurred.

    Consumers won’t lose sleep over an ever expanding network with faster DL and UL speeds.

    Multi layer HSPA + (4G) is more than just raw speeds. It’s greater network efficiency and better latency for mobile gaming which ultimately leads to better call quality, fewer data interruptions and more capacity to hold more users at once.

    HSPA + 42 or higher is backwards compatible with any 3G or 4G device T-Mobile sells so all devices should see an improvement in speeds and data throughput.

    Yes it’s true that HSDPA only devices will never be capable of HSPA + 42 but in all seriousness neither will any device (at all).

    I think T-Mobile deserves an award from coming out from the most behind to one of the major speed trendsetters here in the US. 2011 outta be a great year for them with increased net growth.

    Share
  8. This is great, except for the fact that T-Mobile can barely push 3 Mbits/s on its HSPA+ network in Boston… nevermind 40+.

    Boo hiss.

    Share
    1. 3 Mbps on any mobile network is nothing to complain about. But if given 10 Mbps then we’ll want 20 and if given 20 we’ll want 50 Mbps. Mobile enthusiasts will NEVER be satisfied with the status quo. Thank God your average customer is not as fickle as we are.

      Boston is a big city so speeds will always vary in any given spot at any given time. If 3 Mbps is the max anyone could ever get in Boston then it sounds like T-Mobile hasn’t finished their fiber ethernet rollout yet. I doubt this is the case in all parts of the city. Even in Los Angeles there are still sites w/o fiber ethernet due to telco/cableco availability and delays so users in these particular spots may see much less speeds than theoretically advertised.

      Backwards compatibility can sometimes be an achilles heel for any 3G or 4G network operator who already has an existing user base (in the millions) of devices already taxing the network. This is true in T-Mobile’s case so it’s beneficial that they stay a few steps ahead where they can just to maintain existing demand let alone future demand. The more 4G capable devices they sell the more this will be an issue to address.

      Share
  9. You know, everywhere you turn the mobile market is in an absolute frenzy to speed things up, so consumption may be more, and easier. Unlimited plans are popping up faster between the different carriers, and other service providers, than moles at a gravel convention. Fast mass consumption, with very little, or no regard for any control, is in the limelight, and those who don’t need, who cannot afford, and certainly don’t want such a product are getting lost in the fray. One example of this is tracfone being the only really really cheap wireless provider with tiny plans. I propose that a little more attention is gifted to th low end market, so they too, can enjoy a competitive market.

    Share
    1. I hate to point out the obvious here mate. But straight talk, the provider that flogs unlimited plans for $45 apiece, is a tracfone subsidiary. They’re as much into selling mass consumption, as any of the big carriers – if not more so. The only thing detering them is their lack of big consumpton phones. But I reckon that step is not very far off.

      Share
  10. If there was serious competition, eventually I would expect the best firms to offer trade-ups in hardware by simply including a re-up on the contract.

    Share

Comments have been disabled for this post