Friday, November 5, 2010

T-Mobile, Sprint Sow Confusion Over '4G'

The Wall Street Journal

Get ready for a confusing new war of words in the cellphone business.

While many American consumers are still scratching their heads over what exactly to make of current 3G mobile technology, carriers are already aggressively rolling out claims of faster, next-generation service on networks they're spending billions of dollars to upgrade.

The new buzzword is 4G—for fourth generation—and the implication is super fast speeds that make it a snap to watch streaming videos or download big data files on the go.

The catch is the carriers disagree about what counts as 4G. And the one organization that sets anything like an official definition has come up with a surprising conclusion: None of them deliver speeds that qualify.

T-Mobile USA is the latest to jump into the fray, boasting in ads that started running Tuesday that it owns "America's largest 4G network"—the same one it advertised in March as the country's fastest 3G network.

That doesn't sit well with Sprint Nextel Corp., which has been evangelizing the benefits of 4G for the past two years and rolling out an advanced network. Sprint's ads brag the carrier is "bringing you the first wireless 4G network."

"They are putting a mask on 3G and pretending it's 4G," Matt Carter, head of Sprint's 4G business, said of T-Mobile's campaign.

Clearwire Chief Commercial Officer Mike Sievert said the company's ability to deliver more capacity and better value will continue to set it apart. He added customers aren't going to get caught up with the alphabet soup of technology buzzwords.

Sprint's network, which is being built by partner Clearwire Corp., runs on a technology called WiMax, the first wireless broadband standard.

T-Mobile has been upgrading its network to a faster technology called HSPA+.

T-Mobile defends its decision to brand its network as 4G, claiming it is faster—downloading data at five to eight megabits a second versus three to six megabits a second for Sprint and Clearwire.

"If you look at the speed of the WiMax network out there, we're meeting, beating and exceeding them right now," said Reid Walker, a spokesman for T-Mobile USA, which is a unit of Deutsche Telekom AG.

The increased rhetoric underscores the high-stakes game played by the carriers as they jockey for position.

With subscriber growth slowing, carriers are counting on upgrading customers to more powerful phones and more expensive data services in order to drive growth.

Carriers are also trying to lure consumers by advertising new 4G-capable smartphones, such as Sprint's HTC Evo 4G. Consumers in turn are starting to show interest in so-called 4G networks, even if they don't quite know what they are.

The conflicting campaigns probably won't help.

A recent survey by Yankee Group of more than 1,200 consumers found 57% had either never heard of 3G or didn't understand the term. With 4G, the ranks of the confused jump to 68%.

"That is going to get pretty ridiculous really quickly," said Christopher Nicoll, analyst at Yankee Group.

Jamie Monberg, a 38-year-old executive for a Seattle-based design firm, is a gadget enthusiast who covets a 4G phone. But he acknowledges it's tough to sort out all the claims. "To be perfectly honest, even as a technologist, it's incredibly confusing," Mr. Monberg said.

In a sense, T-Mobile and Sprint/Clearwire are both wrong. The International Telecommunications Union, a United Nations agency responsible for setting global standards for communications technology, announced Oct. 21 that only two technologies—LTE-Advanced and WiMax 2—truly qualify as 4G. The ITU determined those could clear its hurdle of speeds of 100 megabits per second for mobile downloads.

While Verizon Wireless is launching an LTE network and Sprint and Clearwire have embraced WiMax, they are using earlier-stage technologies that don't come close to the specifications laid out by the ITU.

"We are comfortable with the way our LTE network will perform," a Verizon Wireless spokesman said.

He declined to comment on whether the carrier would embrace the 4G name. 

The increased noise over 4G only diminishes Sprint and Clearwire's early move into faster technology.

Clearwire, which turned on its WiMax network in the New York area Monday, is available in nearly 60 markets. Verizon Wireless plans to have its LTE network up and running in 38 markets by the end of the year.

AT&T Inc., meanwhile, is rolling out the same HSPA+ technology as T-Mobile.

"Third-party research is clear—AT&T has the nation's fastest mobile broadband network, period," said an AT&T spokesman.

The carrier plans to start moving to LTE next year. It hasn't said whether the network will be called 4G.