4G business models are diverse and innovative

One undeniable fact about the mobile industry's move to so-called “4G” services is that it will cost a lot of money. We are not talking about a few million dollars here and there, nevertheless tens, otherwise hundreds of billions of dollars that will be spent on spectrum and network infrastructure all the way down to device subsidies. A recent report from Deloitte L.L.P. claims the mobile industry could invest up to $53 billion in so-called “4G” networks between 2012 and 2016, investments that are expected to result in up to $151 billion in gross domestic product growth and creating up to 771,000 jobs.The report, “The impact of 4G research on commercial interactions, economic growth and U.S. competitiveness,” notes that the $53 billion figure assumes U.S. carriers investing more rapidly in 4G networks and produce 4G-based offerings previously global competitors gain traction. “In this scenario, the demand stimulated by new offerings justifies more network investment, setting off a virtuous cycle of investment and market response that positions the U.S. to retain its mobile broadband leadership,” the company noted.“Investment in such a powerful form of communication contributes to the economic recovery and provides a job-creating engine for the future,” said Phil Asmundson, vice chairman and U.S. media and telecommunications sector leader at Deloitte. “The key to harnessing the potential benefits of 4G technology lies in America's market-driven wireless sector, which encourages the emergence of innovative applications that spur productivity and could produce the same surge of technology and demand we experienced while the 3G era.”To re-coup that investment, the industry is becoming more creative in how it's handling network upgrades as then as how carriers are marketing and pricing access to higher-speed wireless networks. One interesting model is being used by Sprint Nextel Corp., which through its Network Vision initiative is looking to update its current 2G and 3G network to support 4G services. The carrier has said the network upgrade will allow flexibility in how it handles a variety of network technologies and spectrum bands, and is working to attract companies that might not be interested in deploying their own network infrastructure. The most prominent customer to this offering is LightSquared, which recently announced a 15-year, “spectrum hosting and network sharing” agreement. The deal calls for Sprint Nextel to “host” LightSquared's L-band spectrum assets in the 1.6 GHz band across the carrier's evolving Network Vision network upgrade program.Financially, the deal calls for LightSquared to pay Sprint Nextel $9 billion over an 11-year period for the spectrum hosting and network services as so then as in broad outline $4.5 billion in credits for LTE (Long Term Evolution, latest standard in the mobile network technology) and satellite wholesale usage. Sprint Nextel will as well have the option to purchase up to 50% of LightSquared's L-band capacity. This should help Sprint Nextel foot the roughly $5 billion it expects to spend on the network upgrade.On the consumer side, many carriers have so far priced 4G services similar to what they charge for 3G services in an attempt to woo clients. One difference although is that with higher speeds, could come higher usage, which could help carriers up-sell consumers to higher-priced plans compared to 3G services and in this way help recover investment costs."Tiered pricing plans deliver multiple advantages as the growth possibility in the wireless market increasingly shifts away from voice communications and toward broadband data services,” noted Jagdish Rebello, senior director and principal analyst for communications and consumer electronics at IHS, in a recent report “On short notice, tiered pricing provides operators with tremendous flexibility to encourage increased data usage among average mobile broadband data users, during deriving more revenue from power users that engage in greater consumption of network resources. In the longer term, tiered pricing will allow operators to take advantage of and become relevant players in the new paradigm of cloud storage and cloud computing.”IHS noted that from 2010 through 2015, global data service revenue will rise at a 9.1% compound annual growth rate, more than twice the 4.5% expansion of the overall wireless operator business. In 2015, IHS predicts data earnings will rise to $337.9 billion, representing more than 30% of the total wireless service market, compared to just $218.1 billion and 24.4% in 2010.Another area where carriers are becoming more creative with 4G is that these more robust networks are allowing for non-traditional services. Just about every operator currently deploying or looking to deploy advanced networks is as well working on business models outside of the traditional “buckets” of data access that have dominated the mobile space in the 1G, 2G and 3G world. “By adding to day in day out “devices” the ability to instantaneously share a picture, purchase a song, or livestream a baseball game, it's interesting to see how an ultra-broadband wireless technology can create a web that keeps us much more connected than any 2G, 3G or Wi-Fi network ever could in the past,” noted Jason Collins, VP of Emerging Technology and Technology at Alcatel-Lucent, in a recent contributed article.Taking everything into account, one positive for carriers is that the market does not seem to be shying away from going mobile. If anything, the benefits of mobility are luring people away from fixed connections, and that alone is enough to justify the expense.

Every wireless operator has strategies and processes in place to attract and retain enterprise clients. A carrier without a clear vision for every type and size of business is leaving money on the table, in substance letting its competitors gain influence and power.

The continuous demand for every-increasing speeds

The continuous demand for every-increasing speeds and capacity for broadband is causing carriers and cable companies to dramatically shift their network strategies.