Feature Article

November 03, 2014

Survey: 4G LTE Pricing, Wi-Fi Hotspot Access Might Affect Adoption Rates

Price matters.

In France, for example, despite high levels of smartphone ownership (60 percent, according to a recent survey by Deloitte, up from about 53 percent in 2013), only 11 percent of respondents had a 4G phone.

Many respondents apparently were put off by the high costs of both 4G handsets and data plans, although there are indications this is a misperception, as perhaps 81 percent also report they pay no additional fees for 4G access.

On the other hand, Wi-Fi hotspot availability might have something to do with lagging interest, as France has the most public hotspots of any nation, according to iPass. "Most of the devices we use are Wi-Fi only and even on the most advanced 4G handsets, 78 percent of data goes over Wi-Fi,” said Evan Kaplan, president and CEO of iPass.

LTE service pricing tends to reflect a desire by most operators to price Long Term Evolution as a premium service, a tack that generally has not been taken by U.S. mobile operators, which might explain high adoption rates in the U.S. market.

To be sure, as mobile revenue shifts from voice to Internet access, it is understandable that service providers would look to price at a premium.

Mobile data has emerged as the single most important driver of telecom revenue growth, according to Pyramid Research, which forecasts that mobile data revenue will reach $633 billion globally in 2018, increasing from 40 percent of overall mobile revenue in 2013 to 52 percent in 2018.

Asia-Pacific, the world's most populous region, which accounted for nearly 38 percent of the world's mobile data revenue in 2013, should lead the growth.

Pyramid Research expects the global 4G subscription base to grow at a 52 percent compound annual growth rate, from 211 million users in 2013 to 1,750 million users in 2018.

But that growth will still be conditioned by device costs and retail service pricing.

And then there is Wi-Fi. It remains unclear how much reliance users will continue to place on Wi-Fi access even when they have Long Term Evolution access.

Wi-Fi is the connectivity of choice among LTE subscribers. According to a study by Mobidia Technology, a provider of mobile analytics, Wi-Fi accounted for an enormous 75 percent to 90 percent of all mobile data consumed in “leading LTE markets,” according to a study by Mobidia.

Is there a danger that Wi-Fi cannibalizes some mobile data revenue? Probably. But is Wi-Fi also necessary to keep customers happy by allowing them to use lots of data without stressing the mobile network? That also likely is necessary.

So pricing will play a huge role as consumers make decisions about which networks to use, and whether LTE makes good sense. Price LTE too high, and adoption will fall; price it too low and the mobile networks could crash. 


Edited by Rory J. Thompson


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