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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 (s goog) 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 (s vz) 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 (s goog) partners, Research in Motion (s rimm) and possibly HP (s hpq). 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.
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