A Closer Look at AT&T's 4G LTE Launch

By Jeff Goldman — September 26, 2011

last week launched its 4G LTE network in five cities across the U.S. -- Atlanta, Chicago, Dallas, Houston and San Antonio -- with plans to expand coverage to at least 15 markets and to 70 million Americans by the end of 2011.

Four devices (none of them smartphones) are currently available for use on the network: the HTC Jetstream tablet, the AT&T USBConnect Momentum 4G, the AT&T USBConnect Adrenaline, and the AT&T Mobile Hotspot Elevate 4G.
Yankee Group principal analyst Ken Rehbehn says that while AT&T’s initial LTE footprint is tiny compared to Verizon’s – five cities in contrast to Verizon’s 143 – there’s been less pressure on AT&T to build it out thus far, thanks to the solid data performance of its existing 3G network. “It uses a much fatter pipe than Verizon’s older 3G technology, and it supports capabilities that Verizon has not had with its 3G network, such as simultaneous voice and data,” he says. “So it’s been very important for Verizon to build out its LTE network very quickly in an attempt to leapfrog AT&T – AT&T is responding and building out its own LTE network, but the pressure to build it out is quite a bit less than the pressure on Verizon.”
Still, Chris Hazelton, research director for mobile and wireless at The 451 Group, says AT&T should expect a relatively rapid and significant uptake of the new devices. “Just as Verizon customers have bought heavily into LTE smartphones and MiFi devices, you’ll see that with AT&T customers,” he says.
And Rehbehn says it’s in AT&T’s interest to drive as many data users as possible from 3G to LTE. “It’s a struggle sometimes for the mobile operators to support users that are being very demanding with the radio spectrum,” he says. “So by launching the LTE network, AT&T immediately in the areas it’s launched it is opening up a chunk of highway that was never used before -- and as they can get users to embrace data dongles or tablets with the LTE technology, that traffic, instead of riding over a fairly busy 3G network, now goes over to the new network.”
Rehbehn says LTE should provide significant benefits to a wide range of enterprise users, particularly who need to leverage mobile video. “For companies that had looked at mobile data as being a bit limited and not answering their needs, they can now start thinking differently and perhaps coming up with solutions that aren’t restricted by the bounds of the old network,” he says.
At the same time, Hazelton says users should keep in mind that the combination of LTE and capped data plans can be dangerous, particularly since it can be harder to tell the difference between LTE and Wi-Fi than between 3G and Wi-Fi. “You won’t have that kind of built-in reminder that you’re on a WAN network instead of a LAN network -- so you may see people get in trouble with overage fees,” he says.
Philip Solis, research director for mobile networks at ABI Research, says it’s inevitable that users will use more data on a faster network, putting themselves at a higher risk of running through their data caps. “If you have a faster connection, you won’t get fatigued as easily waiting for things to load,” he says.
But as usage of the new network increases, Solis says there is a way this could work out to the user’s benefit as well -- increasingly, he says, carriers are likely to offer data plan sharing, allowing a business user to share a single plan among multiple devices (smartphone, tablet, laptop, etc.), or a family to share a single data plan between several users. At the D9 Conference earlier this year, AT&T CEO Ralph de la Vega said it’s something the company is considering.
Instead of paying a $30 or $60 monthly data fee per device, a user would simply purchase a “bucket” of data for all of their devices -- a strategy which, Solis says, makes sense both for the carrier and the user. “If you’re going to pay to for usage, then it shouldn’t matter what device you’re using it from,” he says.
Hazelton says it’s also worth noting that the arrival of LTE has the potential to make any roaming experience more complicated, not less, as AT&T’s and Verizon’s LTE networks aren’t compatible with each other, and neither network is compatible with European LTE networks. “So you can take your AT&T device to Europe and use 3G services, but you can’t use the LTE service,” he says.
Looking forward, Rehbehn says, AT&T will need more spectrum to expand its LTE networks with the bandwidth needed to match Verizon -- which makes the company’s planned acquisition of T-Mobile a key component of its strategy. “The acquisition would significantly boost the bandwidth that AT&T can use to attack the market,” he says. “When we examine AT&T’s spectrum holdings, there are a number of metropolitan areas where AT&T has deficiencies that need to be addressed -- and that’s why AT&T is working so hard to make this acquisition a success.”
And while initial reports indicate that AT&T’s LTE network is extremely fast, Solis says it’s important to keep in mind that it’s not loaded yet. The larger point, he says, is that both leading carriers now have LTE, with AT&T currently somewhat behind on the rollout and on device availability. “Verizon has an edge right now -- and what AT&T does later this year and next year will determine how quickly they close that gap,” he says.


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