The decisions Apple makes this year with its smartphone line will have huge repercussions in the wireless industry. We’re not just talking about new game-changing services or apps like Siri. The radio technologies Apple chooses to support in its next iteration of the iPhone this fall will have profound implications for the way and the speed at which future mobile networks are built.
By putting LTE in the latest version of the iPad, Apple has signaled it’s ready to embrace the newest mobile broadband technologies, which hopefully means LTE will make it into at least some versions of the new iPhone. Knowing Apple, nothing is for certain, but if the iPhone does include those expected LTE radios, it could help trigger a big wave of new LTE deployments, which in turn would lead to higher-capacity mobile broadband networks. That means more-plentiful and cheaper mobile data for consumers.
It may seem ridiculous to ascribe so much power to a single company — and to a company that each year releases a single new handset, at that — but in this case Apple has that power. The individual iPhones are the best-selling smartphones in the world. And while Android may have surpassed iOS in overall global market share, the penetration levels of the iPhone in major developed markets, coupled with the disproportionate share of data the devices’ owners consume, give Apple the ability to dramatically affect the traffic moving over operators’ networks.
LTE will have an enormous impact on mobile data’s future. But if the maker of the world’s most popular smartphone isn’t on board, that progress could be impeded, and, worse, the industry could actually start regressing.
Behind Apple’s radio reasoning
It’s an age-old problem in mobile: What comes first, the devices or the networks? Manufacturers won’t build devices unless there are networks for them to run on. Carriers won’t build networks unless they are assured they will get devices. The industry has overcome the problem through gradual compromise.
When new wireless technologies launch, the first devices are always laptop dongles or, more recently, mobile hotspots, which are much easier to produce in a short time frame. When phones make their appearance, they are usually expensive specialty devices optimized for a particular operator’s network.
We saw that with LTE in the U.S., as Verizon’s initial 4G launch with LTE modems were soon supplemented with the HTC Thunderbolt, custom-made to Big Red’s network specs. The trend continues today. Samsung and HTC have designed global HSPA+ versions of their flagship phones, the Galaxy S III and the HTC One, while customizing variants of the devices for LTE operators.
The problem is that Apple doesn’t play that game. It has always created a single version of its iconic iPhone and sold it throughout the world. The one exception was the CDMA iPhone 4 that Apple originally designed for Verizon, but that phone was eventually swallowed up by Apple’s single-SKU strategy as well when it began embedding CDMA and GSM radios in the same devices.
For Apple to build an LTE iPhone it will have to abandon that strategy and create different versions of its device for the huge array of varied 4G bands in the world. It now appears ready to do just that. The new iPad comes in two different versions, one optimized for Verizon’s LTE network and one optimized for AT&T’s 4G network. But that approach has created new problems for the company. Apple is facing criticism internationally for marketing a 4G iPad that doesn’t serve any 4G network outside the U.S. and Canada.
LTE presents both a supply chain and a marketing conundrum for Apple. It was easy with 3G. The technology could support the large majority of the world’s carriers with a single set of radios and single set of bands, and it could safely ignore those that weren’t supported (i.e., T-Mobile USA). Make no mistake, Apple’s first foray into 4G will come at a big sacrifice to its accustomed — and highly profitable — distribution model. But it’s a very necessary sacrifice.
Why we need 4G
The most publicized benefits of LTE are its raw speeds, and the over 20 MHz configurations being deployed by Verizon and AT&T are truly impressive. Network testing firm RootMetrics found that those two operators’ LTE networks averaged download speeds well over 15 Mbps and upload speeds of 8 Mbps.
But speed isn’t why LTE is so important (the differences between a 5 Mbps HSPA+ connection and 15 Mbps LTE link are negligible for anything you could do on a smartphone). LTE is so necessary because it’s a more efficient mobile broadband technology. You can simply pack more bits into a hertz of spectrum with LTE’s underlying orthogonal frequency division multiplexing access technology than you can with HSPA’s wideband CDMA.
LTE’s air link is also less fragile, meaning the network can maintain its high-bandwidth connection as you move toward the cell edges. That means higher overall capacity for the network, and it gives LTE the ability to get much closer to its theoretical capacity and speed limits.
In short, LTE puts our limited airwaves to much better use than any of our previous-generation technologies ever could.
What’s more, LTE is the first building block to even more efficient, more powerful networks of the future. Self-organizing and self-optimizing network technologies (which I examined in a previous piece) are designed into the LTE standard, allowing future networks to literally wrap big cells around hundreds of thousands if not millions of small cells. Those small cells will let operators reuse the same spectrum over and over, eventually leading to the advent of the heterogeneous network. HetNets will turn today’s big-tower mobile grids into dense, multilayered and tremendously high-capacity networks.
Launching an LTE network is a necessary component in getting to LTE-Advanced (also the subject of another GigaOM Pro report), which promises some breathtaking speeds, up to 1 Gbps while stationary. Key techniques such as coordinated multipoint (which will allow your phone to connect to multiple towers simultaneously) and relays (which move connections closer to the transmission source) become available only when LTE-Advanced gets off the ground.
For consumers and businesses, all of this means cheap data. Lots of it. The more efficient operators’ networks become, the more bang operators can get out of the same spectrum and the same infrastructure. And the more overall capacity they have, the cheaper it becomes for those carriers to deliver gobs and gobs of bandwidth to their customers. It won’t happen overnight, and the operators, being red-blooded capitalist enterprises, will resist lowering prices too quickly. But those price drops will come as long as there is a competitive market.
How the iPhone stops the network evolution clock
These networks are our mobile data future. We have to start investing in them en masse, and now. If we don’t, the industry might regress by entering a 3G stasis. Carriers need to feed the iPhone’s hunger, no matter which network it resides on. That means if there’s no 4G iPhone, they will need to continue their investments in 3G networks.
There haven’t been any instances of a carrier’s taking spectrum earmarked for 4G and using it for 3G, but there certainly is a lot of refarming of 2G spectrum going on. AT&T is taking its GSM networks offline in New York City, replacing it not with LTE but new HSPA systems. T-Mobile (which doesn’t have the iPhone yet but will soon) is sunsetting a huge portion of its GSM capacity nationwide, and while it is using some of those newly freed airwaves for an LTE network, it’s devoting a large portion of them to build more HSPA+ networks.
While it’s true that it will be some time before operators start wholesale replacements of their 2G networks with LTE, these new 3G builds only prolong the transition. Once carriers have sunk the money into building new HSPA cell sites, they will keep them running for a good 7 to 10 years in order to make a return off their investments. That puts valuable airwaves that could have been designated for LTE in a few years time off-limits for the foreseeable future.
What the iPhone does to the network
In its recently released Traffic and Market Report, infrastructure vendor Ericsson took measurements of data traffic patterns in mobile broadband networks throughout the Americas, Asia and Europe and discovered the iPhone is having an outsized impact. Though the iPhone accounted for less than 25 percent of the devices on the networks measured, the device was responsible for more than 45 percent of all mobile data traffic. On networks where iPhone penetration was particularly high — Ericsson measured one with more than 60 percent penetration — the device accounted for nearly 80 percent of all traffic.
According to Ericsson, individual Android and iPhone users consume data at the same rate, about 350 MB per month. Those numbers would imply Google has just as much if not more impact than Apple on carriers’ mounting traffic — and that would be the case if their two platforms had equal penetration. But in the networks Ericsson studied, Android devices accounted for about 15 percent of all handsets and a little more than 30 percent of all mobile data traffic.
Regardless of which vendor is currently ahead in the global mobile OS race, Apple’s devices have and will continue to have a disproportionate impact on the network. Since a plurality of their traffic is coming from the iPhone, operators are forced to build their networks to meet its demands. That means as long as Apple keeps making 3G-only smartphones, carriers will have to keep building and upgrading 3G networks. If the industry is to really move forward with 4G, Apple has to start making LTE phones.
It’s not just about the carrier, it’s about the consumer
When I have written on this topic in the past for GigaOM, readers have come to Apple’s defense, pointing out Apple’s customers are the consumers, not the carriers. They argue it’s not Apple’s job to take a risk on a new technology — dealing with LTE’s bugs and its power problems — just so the carriers can put more devices on their shiny new networks.
Those are valid points that definitely held true when Apple released the iPhone 4. They began to wear thin when the iPhone 4S came out last year. Now Apple has no excuse. All four nationwide U.S. operators have LTE networks either built or under construction. Asia isn’t far behind, and Europe is starting to get its 4G act together.
If Apple doesn’t support LTE in the new iPhone it releases this year, it won’t just be slighting the carriers. It will he hurting its customers. Unless our networks evolve, consumers will be stuck with the same expensive data plans, the same punitive throttling policies and the same restrictive data caps. Granted, the launch of a new LTE iPhone wouldn’t suddenly precipitate a drastic drop in prices or shepherd the second coming of the unlimited data plan. But an LTE iPhone will set the groundwork for those future price drops, allowing carriers to focus on their future networks rather than maintaining their old ones.
Apple deserves enormous credit for what it has done for the mobile industry. Its innovations on the user interface, the mobile browser and the mobile app distribution model were groundbreaking, and they continue to this day with its experimentation with natural language understanding through Siri. Now it’s time for Apple to apply that spirit of innovation to the smartphone radio.