4G Smoke and Mirrors

I recently noticed that all cell carriers are now advertising 4G networks. As a technophile, my first thought should have been “Yeah!  More speed in more places.”  But it wasn’t.  It was a raised eyebrow.

A couple of years ago I was working with a relative on a cell tower investment.  The financial question essentially came down to a valuation of the future use of cell towers compared to alternative technologies.  To establish such an estimate I studied up on what the competing technologies were and what the various companies were investing in.  My conclusion, over simplifying a bit, was that cell towers would appreciate because; WiMax was a leap forward, needed cell towers, and was likely to be adopted broadly. 

In the course of this I learned that Clearwire has been acquiring all sorts of unused community access broadband spectrum in metro areas across the country, to put to WiMax use. And that WiMax really is true broadband – like an enormous home router for everybody – offering WiFi speeds (100+ mbs).  Further, Sprint was/is in partnership with Clearwire to stitch the spectrum together for subscribers.  Both are spending billions to build real infrastructure that is newer and better technology that promises 100x faster speeds. 

AT&T is also working on some infrastructure innovation, called LTE, though it’s inferior to WiMax.  They are years behind Sprint, but at least they are in the race.

The other carriers aren’t really working on any new pipe and delivery capability.  So, how is it that Verizon and TMobile can now say they offer 4G. 

Change the definition.  

The standards agency responsible for such things has changed the definition of 4G. As described in Wired magazine this morning.

4G stands for the the fourth generation of cellular wireless standards. In the narrow terms originally defined by International Telecommunication Union standards, it doesn’t count as 4G unless it offers download speeds of 100 Mbps to 1 Gbps. That’s about 100 times faster than any speeds we’re seeing on networks now.

Seems straight forward enough.  But the standards agency has decided to water down the definition. 

the ITU decision in December opened up those terms to a more liberal interpretation . . .

The technology [used by most vendors] is an incremental approach to upgrading existing HSPA networks, not a whole new generation of technology.

Still, the ITU decision means carriers can start referring to their HSPA+ networks as 4G. . .

Today’s But If Not is my attempt to bring clarity to the question of who has true 4G.

Sprint is the only carrier with true broadband speeds delivered wirelessly.  Their coverage is limited to metros and still has pockets therein.  (Surely we all remember the time when cell coverage was similarly limited and spotty).  Given proper market incentives and prospects for return, this infrastructure build out will get completed and we will all win.  Other vendors will be forced to either upgrade their own networks to comparable speeds or lose market share.

But, with this definitional change, most people will never know who has what.  Further still, why innovate when you can obfuscate.  If you are years and billions behind your competitors in building the next generation of technology you have to do something right?

But it gets better.  Harkening back to an earlier But If Nots post on Net Neutrality regulation, if Sprint ever does complete its build out of this network, creating a legitimate alternative to cabled access to the internet, they will be required to allow other internet service providers equal access and packet-priority on their bandwidth.  It’s only fair right?

Both Sprint and Clearwire are in financial hard times.  Ceasing operation is a legitimate open question.  The value of these companies is completely an estimate of the future returns on their capital investments in spectrum – all of which are rightly being discounted in the market due to regulation and obfuscation.

Finally, just to keep it fun for all of you black helicopter types, the International Telecommunications Union – the organization which changed the definition – is a UN agency.

Who is John Galt?

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