How Great is the Demand for 4G LTE in Europe?

Long Term Evolution fourth generation network deployment has lagged in Europe, but is that necessarily a bad thing, despite worries that “Europe is falling behind” in 4G?

One might argue that since 4G is the next generation of mobile networks, the faster it can be deployed, the better. That might not be the case. Every market can be different. And European executives remember what happened with 3G deployment, a case where costs were so high, and revenues so low, that many firms nearly went bankrupt.

To be sure, European deployment also faces some additional challenges, ranging from inconsistent spectrum allocations to fragmented national regulation and some genuine scale issues, to fierce competition and end user preferences that might not be so conducive to spending more money, even for faster access.

It is questionable, for example, how much incremental value a typical consumer might see in a 4G network, over a 3G network, if most Internet access operations, and especially the bandwidth-intensive operations, occur on Wi-Fi networks, not the mobile network.

U.K. consumers increasingly are using mobile devices to connect to the Internet, but as is the case elsewhere, increasingly they also are using Wi-Fi to do so. In fact, some studies suggest as much as 80 percent of U.K. Internet access using a mobile handset uses a Wi-Fi connection for access.

That could have important implications for fourth generation network Long Term Evolution demand. If 80 percent of Internet access is at home, on a Wi-Fi network, what is the value of out of home 4G access?

Even if 4G access provides a better experience than 3G, what is the value of better experience 20 percent of the time, especially if the out of home use is mostly for applications that do not necessarily require or benefit much from the faster speed?

According to the Oxford Internet Institute, 57 percent of Web users in Great Britain will access the Internet using a mobile device in 2013.

Some observers, including eMarketer, think the increased availability of 4G access will change consumer behavior. Others might be so sure.

Maybe consumers are satisfied with the speeds and prices they already buy. If so, rapid 4G deployment might create new problems, not solve them.