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Summary:

All signs point to Apple unveiling the first iPad with LTE on Wednesday, but if that tablet — and more importantly the forthcoming iPhone 5 – doesn’t support LTE, then Apple will have struck huge blow to the wireless industry and impeded mobile broadband’s progress.

Apple Event 10/4 Apple Logo

Apple Event 10/4 Apple LogoAll signs point to Apple’s unveiling its third-generation iPad on Wednesday, and while millions of consumers will follow Apple’s San Francisco event in anticipation, operators around the world will watch with trepidation. New reports emerge daily that the iPad 3 will be the first iOS device with LTE connectivity, but Apple hasn’t given any official confirmation. There’s a lot riding on that spec sheet. If the new iPad — and more importantly the next iPhone – doesn’t support LTE, then Apple will have struck a huge blow to the wireless industry and impeded mobile broadband’s progress.

The simple fact is that LTE is a much more efficient way of delivering mobile data than its HSPA and EV-DO predecessors. There’s much attention focused on the speed of LTE networks, and while 10- to 20-Mbps connections are nothing to scoff at, the hidden yet very real value of LTE is its ability to deliver a bit of data far more cheaply than previous-generation technology.

That means operators not only have more capacity to offer their customers but also can – theoretically at least – sell that capacity at a lower price. If we really are dreaming of having 100 GB monthly plans that don’t cost the equivalent of a house payment, we are going to need LTE to get there. Operators can’t fully make the leap unless Apple is on board and helping to push consumers on to next-generation networks.

LTE is a global phenomenon, but nowhere do operators have more to lose than in North America, where every single major U.S. and Canadian operator has either launched or is in the process of building these new networks. By the time of the new iPhone’s expected launch this fall, there will be five commercial LTE networks in the U.S. alone and another two in the process of construction. Those operators are selling plenty of Android LTE smartphones, but without the world’s single-most-popular smartphone and tablet connecting to them, the true potential of those networks won’t be realized.

What exactly is at stake

At first glance, this may seem like a minor setback for carriers – their mass transition of the iPhone to 4G will just have to wait another year – but the repercussions of a sans-LTE iPhone are far larger. Let’s name a few:

  • Operators would be forced to invest in older, less-efficient technology rather than new technology. The enormous data traffic a new iPhone or iPad would have placed on the mobile network doesn’t just disappear. It gets shifted to HSPA and EV-DO networks. Instead of pumping their capital investment dollars into LTE, operators would be forced to build new infrastructure to boost their 3G capacity in order to meet the data deluge of millions of new iOS devices.
  • Spectrum would be tied up in older technologies for years to come. Operators like AT&T have already overloaded their HSPA networks with iPhone traffic. If a new HSPA iPhone emerges, it will have to start adding new capacity by either tapping into spectrum it is reserving for LTE or cannibalizing its GSM networks. AT&T may already have begun the process of re-farming its PCS and cellular airwaves for HSPA. Once it commits those frequencies, though, they will remain HSPA. No operator can afford to build one network and replace it two years later. Likewise, Verizon Wireless and Sprint eventually want to shut down parts of their EV-DO networks and repurpose those airwaves for LTE, but if millions of iPhones are still running over them, they will have little choice but to leave them be.
  • Data pricing could remain static. It’s a simple matter of math. Cellular networks are in essence shared broadband resources. The slower the connection your device makes with the network, the less overall capacity is available to the network as a whole. The prices operators’ charge for data is determined by how efficiently they deliver data. If the majority of smart devices on the network are making bad use of the network’s resources, then costs can’t come down.

Why Apple could pass on LTE

Apple has plenty of valid business reasons not to put LTE in its next wave of devices. The cost of LTE chips are still high, and LTE radios suck a lot more power than their 3G predecessors (though Motorola and Nokia seem to have solved this problem by simply slapping bigger batteries into their LTE phones). LTE is still experiencing growing pains as any customer who has had to deal with one of Verizon’s numerous 4G outages can attest.

The biggest reason, though, is LTE doesn’t gel with Apple’s core go-to-market strategy. Whenever it has been able, Apple has produced a single version of both the iPhone and iPad, selling essentially the same device throughout the world. LTE’s adoption has been driven by North America and Asia, which account for the vast majority of LTE’s subscribers today. In Europe and the rest of the world, LTE networks are still few and far between. That’s a lot of territory where an iPhone’s or iPad’s LTE parts would just be extraneous silicon and antennas.

But Apple may be forced to change that strategy for LTE. The fragmentation among global LTE bands — with four being supported in the U.S. alone — means Apple will most likely need to come up with regional versions of the devices. If Apple does split the iPhone and iPad into separate SKUs, it will be hard-pressed to include LTE in any North American version.

In a few days, we will have an answer. If LTE winds up in the iPad, it’s almost certain to make it into the iPhone. If LTE doesn’t make the cut, we might excuse Apple for not taking a business risk on new technology. After all, Apple has shown that skimping on radio technologies like 3G and HSPA+ in the past hasn’t done a thing to hurt sales.

But the point I’m making here is there’s a lot more at stake than just Apple’s billable cost of materials. Apple has a chance to show leadership by embracing the key technology driving the mobile broadband revolution forward. It may be late to LTE, but on Wednesday Apple could arrive just when it really matters.

  1. Qualcomm has said that 1/3 of their chipsets will be LTE enabled exiting 2012. The only way the math works is if Apple goes LTE in a big way this year.

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    1. With just about every Android device coming out now with LTE I don’t think it matters to Qualcomm if Apple is even in the picture.

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      1. I don’t think it matters to Apple if Qualcomm is in the picture.

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      2. You are right, if you never leave the US. Most of the rest of the world has barely started rolling out their LTE networks and their handsets reflect that. Look at HTC…a LTE version of the One X for the US, and a non-LTE version for the rest of the world.

        Qualcomm will be shipping >60 million LTE units a quarter by the end of the year. The absolute only way you can get to those kind of unit numbers is if Apple ships a LTE iPhone this year.

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  2. Actually, if Apple doesn’t put LTE in it’s next gen devices, they are effectively “jumping the shark”. Android is already eating market share, and are putting LTE in almost all of their devices. Apple has to keep up.

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    1. Constable Odo Monday, March 5, 2012

      Apple does not have to follow everywhere Android leads. I doubt that Apple will be copying the Samsung Note anytime soon.

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      1. Kevin Fitchard Monday, March 5, 2012

        Hi Jai, Hi Odo,

        I don’t think it’s a question of Apple following anyones lead. It would sell millions of iPhones if they were connected to the network by tin cans and string. It’s a question of working with the industry and advocating the interests of their customers (faster connections, cheaper data).

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      2. rick gregory Monday, March 5, 2012

        Kevin,

        Do you honestly see any of the carriers dropping their prices because of LTE? None have done this so far. 5 year from now we might see more bandwidth per dollar, but come on… the carriers won’t drop prices.

        As for advocating the interests of their customers… I doubt many of us care about LTE. The Spec geeks are on Android where they get all hot about the Tegra chipset being used, etc. Apple knows that I’ll be pissed if my new iPad is 50% heavier just due to LTE or if my 10 hour battery is 4 hours all of a sudden. Aside from specwars, I still haven’t seen anyone demonstrate a real customer advantage for LTE.

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      3. Rick, An order of magnitude increase in the average user’s peak and avearge speeds with LTE, coupled with both a 2x spectral efficiency improvement and more radio for the money are significant motivators.

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      4. @Kevin
        Empires are born and empires die. Apple is the emperor today and for good reason. If, as you mention, LTE is killer tech, and Apple decides to ignore it, rest assured, emperors will die. Sony was an emperor. So was Microsoft. And a hundred others.

        That said, *if* LTE is killer tech, then your question begs to be asked. In any case, there are 2 answers 1) LTE might not turn out to be the manna we hope it will be. 2)There could be other solutions such as a dongle propping up. Or an iPad4 and the next iPhone.

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      5. Kevin Fitchard Tuesday, March 6, 2012

        Hi Rick,

        I know it sounds naive, but I honestly do think operators will drop prices if their networks are more efficient. I don’t think they’ll do it out of the goodness of their hearts, but once there are four nationwide LTE networks, Sprint or T-Mobile with initiate a price war. AT&T and Verizon will resist, but eventually they’ll have to follow.

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      6. Kevin Fitchard Tuesday, March 6, 2012

        Hi Cheese,

        I don’t think LTE will be the killer tech per se, but it will be a necessary one to move the efficiency of networks forward. But you’re right, there is a lot out there besides the air interface that will drive the trend of cheaper broadband.

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      7. rick gregory Tuesday, March 6, 2012

        Whyrless – motivators for WHO? Me? Not at all. LTE right now gives me 1) Faster speeds and 2) crappy battery life. I don’t want the second and I don’t care about the first because

        a) aside from streaming HD video, I don’t need faster speeds for what I do (email, twitter, facebook, etc).

        and

        b) I’m capped at 2gig. I can’t use faster data to any appreciable extent without blowing past that cap.

        Combine a) and b) and I don’t see any consumer advantage to LTE right now. I’m sure there will be in the future, but tech has to improve to the point where I won’t kill my battery in a few hours, the higher speeds actually enable me to do things I can’t right now and using those new capabilities doesn’t blow me past my bandwidth cap.

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  3. This was really interesting. Thanks for writing a post about it.

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  4. BackInAction Monday, March 5, 2012

    The other thing to consider is that many? most? very large percentage? of users do NOT use that much wireless data. So, while the vocal (online) minority would complain about the lack of LTE, most would be unaffected by it.

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    1. Daniel Blois Tuesday, March 6, 2012

      But you are missing an important point – as wireless speeds increase, become less expensive, and easier to do – more and more people will start to use more bandwidth. That is a fact.

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      1. John Harrington, Jr. Tuesday, March 6, 2012

        That is unless they are incapacitated by their cellular provider…or “throttled”. Many unlimited-data users are seeing their 4G connections reduced to 2G connections from just what your talking about–using more: http://bit.ly/yNe0lZ

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      2. John Harrington, Jr. Tuesday, March 6, 2012

        My apologies; did not mean to post a dead link
        Here’s what I intended to reference: http://bit.ly/zjhqsz

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  5. In theory, I think you’re right about LTE’s more efficient use of bandwidth. However, I don’t think it will matter, as the carriers will spend as little as possible on their network, and then blame lousy performance on the incredible adoption of LTE devices like the ipad3. It will be like Katrina all over, with spokespeople for the carriers saying “nobody could have foreseen it”.

    It’s sad that I continuously lower my expectations for big companies, and yet they manage to crawl under the bar every time.

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    1. Kevin Fitchard Monday, March 5, 2012

      Hey Ken, I figured you would chime in on this post :)

      I appreciate your skepticism, but I look at this way: removing older technology barriers removes excuses.

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      1. Just keep throwing me that batting practice, and I’ll keep swinging…

        OK, I’m with you on getting rid of an excuse. And I think it’s a good idea, as why wast spectrum on 2G. But when it comes to the carriers, I’m from Missouri.

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      2. Daniel Blois Tuesday, March 6, 2012

        Ken the link you just posted proves you wrong. In that case Verizon is not just making an excuse – they are looking to spend more on their network.

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      3. Daniel, they’re looking to buy spectrum, yes, but that doesn’t mean they will spend money to actually use the spectrum. That will cost more money. They want to buy the spectrum so nobody else uses it.

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  6. H. Murchison Monday, March 5, 2012

    Just give me shared data. Throttling has caused my “unlimited” plan to become useless. I’m ready for an LTE future.

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    1. Mukesh Aggarwal Monday, March 5, 2012

      Just FYI, LTE will not make carriers offer ‘unlimited’ again.

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      1. Daniel Blois Tuesday, March 6, 2012

        You can tell the future? what will tomorrow’s lottery numbers be? You have no precedent to base this on.

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  7. Reblogged this on Dots Of Color and commented:
    That is a great article. To LTE or not to LTE.

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  8. Missing LTE could be a problem – unless they’re advocating for something like a micro-WiFi network in its place.

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    1. Kevin Fitchard Monday, March 5, 2012

      Hi Sve,

      Wi-Fi is definitely part of the equation, as small cells and denser network builds. But ultimately if data costs are going to come down macro networks have to become more efficient.

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      1. Kevin,

        Well, since a lot of the issues with congestion have to do with signal/control congestion which has nothing to do with the available bandwidth, many operators plan to fix that by deploying a lot of ‘pico-cells’ where they take an existing macro-cell using 3G and divide it up into a number of smaller cells for 4G deployments–putting enodeB’s on light poles for example. They all still end up back at the macro-cell so it still matters how it is connected and what kind of network access it has, but improving that bandwidth isn’t the only solution at hand.

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  9. Alex Satrapa Monday, March 5, 2012

    LTE is going nowhere until the carriers put in the towers and the back haul to handle the load that will be imposed by people actually using as much bandwidth as the carriers are selling.

    Since they can’t cope with 3G traffic as it is, why do you think LTE will be better? Sure, LTE is cheaper per bit transmitted over the air due to more bits per second, but those towers need to be supported by decent back haul.

    I do not mourn the passing of “unlimited” plans, those were a Tragedy of the Commons in the making. As it stands, I barely use 1G of data per month due to the terrible infrastructure offered by Optus here in Australia. Well, that and I am not streaming movies 24×7.

    LTE is a tick-box feature, and IMHO Apple will be making a mistake to head down that path. LTE might have a future for fixed networks that cannot connect to wired broadband (rural communities, for example).

    I do not know anyone who actually needs to stream HD movies while driving.

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    1. Kevin Fitchard Monday, March 5, 2012

      Hi Alex,

      Actually almost every LTE site here in the U.S. is connected via fiber. Is that not the case with HSPA+ and Optus? If that’s the case, I see your point. Mobile broadband is pretty useless if there’s a bottleneck in the transport network.

      As for the movies to the phone I agree entirely, but the case I’m making for LTE isn’t speed to the device. It’s for more efficient networks, which ultimately will make mobile data cheaper

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      1. Kevin,

        The numbers I’ve seen are that 70% of the macro sites in the US are connected via Fiber. Not “almost every”. Microwave companies wouldn’t be selling so many products if what you say were true…

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      2. Kevin Fitchard Tuesday, March 6, 2012

        Hi Fanfoot.

        Well, fiber or fiber equivalents is what I meant. Microwave isn’t quite the same as a fiber Ethernet link, but it’s a lot better than T-1s, which is what almost all 3G sites were fed with until recently.

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    2. It’s true that Optus’ sales model seems to be to compete with the more data-competent Telstra by throwing data at its plans it knows you have no hope of using, due mainly to its lack of coverage.

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  10. Pretty big overstatement of Apples importance if you ask me. There’s a difference in being the top selling individual phone and being the top selling platform. As a platform its being outsold by a large margin by a platform that will probably be all LTE where ever available this year. They can stay behind and all the rest of the data will move on to LTE. Sales will only continue due to the tech media doing anything it can to claim LTE isn’t all its cracked up to be. And the only reason Apple hasn’t moved is because they can’t be first and need to figure out how to claim they’ve done it right.

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    1. Kevin Fitchard Tuesday, March 6, 2012

      Hi Phil,

      I agree there’s a big difference between phone and platform, but in the case of the U.S. it’s both. That’s a huge chunk o traffic. What’s more Apple maintains it legacy devices for years. Even if we get an LTE iPhone 5, Apple is still going to sell millions of 4s and 4Ses in 2013

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      1. Apple’s legacy support of older iPhones is already causing them problems. Higher crash rates since the release of iOS 5. Older phones with lower hardware specs struggle with newer OS complexity. Developers face challenges sorting out how to support varying hardware specs and API updates. A frustrating form of fragmentation, where older iPhones become less stable. This is the primary reason Android phones are not as backward mobile…less legacy issue. With the added advantage of allowing new model hardware and Android updates to evolve faster.

        As far as iPhone 5 LTE and battery issues…the Razr Maxx has proven the battery life of LTE devices does not have to be dismal. As far as LTE speed is concerned…Android user who have LTE phones are pretty much universal in their praise of LTE speeds. And as far as data usages are concerned…if it comes down to not getting as much done because of slow 3g speeds and not getting as much done because of 4g data caps…I will take the 4g data caps. At least what I do get done…will be faster.

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