Phone Carriers: Main Threat to The Future of 4G Devices?

Yesterday a Swedish cell phone provider announced they would offer the first 4G/LTE plan available to the public. Initial pricing of the plans offered by TeliaSonera will be $83 per month in Sweden and $120 in Norway. This price covers up to 30GB of data transfer, but does not include the price of the device itself.

This announcement comes few days after AT&T made public they are considering cutting back amount of data users can transfer on their iPhones. AT&T has been criticized for network problems due to higher data usage, and now seems to be projecting the problem to their customers. You might be wondering how much data on average an iPhone user transfers per month? This article puts that number close to 100MB in 2008, although the source did not mention if that amount is per month or per day. Even if we assume it is per day, a very unlikely assumption, the total would be close to 3GB per month. Again, very unlikely, but let us assume that is the case.

The question that popped up in my mind after reading about the 4G mobile finally coming to the market, was how will the providers handle this new rates? If AT&T cannot handle current small number of iPhone owners, estimated to be around 6.4 million by Nielsen, how will they be able to persuade users to upgrade to 4G cell phones once they are available? The technology of the cell phone devices and the BTSs will make transfers quicker, but still the back bone that is required to carry this amount of data needs to be upgraded. And if they are more interested in “managing” how their customers use their cell phones rather than making that upgrade right now, there is no guarantee they will be willing to do perform those upgrades once customers start using the faster 4G devices.

I hope the major cell phone providers understand that when a customer pays higher price in terms of mandatory data plan and a longer contract, they expect to use the device they received as an incentive. And I hope while researchers and developers in hardware manufacturing companies are working on the technical aspects of the 4G devices, the business people in carrier companies are also working on understanding customer data usage trends and plan to upgrade their networks accordingly.

UPDATE, three months later: March 12 2010, AT&T CEO unsure if LTE will trigger pricing changes but “reiterated his position that such a move would happen.”