Apple enters the 4G age; will carriers return the favor?

Apple(s aapl) finally gave the wireless industry the 4G device it’s so long been craving. Even more importantly, LTE connectivity in the new iPad virtually assures similar treatment in the next iPhone. Apple has stepped up. Now it’s the operators’ turn to reciprocate by lowering mobile data prices.
On Monday, I wrote that if Apple failed to include LTE in its devices, it would have essentially impeded the mobile broadband revolution, letting business considerations override progress and the interests of its customers. 4G isn’t just a boon to the industry because it supports faster data. LTE also is a much more efficient mobile broadband technology, allowing carriers to build higher capacity networks for less investment and run them at lower operating costs. Translation: LTE is a much cheaper way for operators to ship you bytes.
By moving its mobile portfolio to LTE, Apple will precipitate an enormous migration of traffic from operators’ 3G EV-DO and HSPA networks to their LTE networks, which are much better equipped to handle the load, especially as they add capacity to those networks in coming years. That will not only save carriers a lot of operations cash; it will also let them avoid spending millions more on adding capacity and spectrum to those old 3G networks — money much better spent on their LTE rollouts.
Apple may not exactly be visionary when it comes to embracing new radio technologies, but it’s latching onto LTE when it really matters here in the U.S. And make no mistake, it had to make some sacrifices to do so. LTE still issues a powerful suck on device batteries. Apple had to account for that in the latest iPad design, though it seems to have largely overcome the problem. SVP of Marketing Phil Schiller reported the new tablet will run for 10 hours on HSPA+, but LTE would only cut that performance by an hour. The iPad also has to deal with LTE’s flaws as a brand-new networking technology. Verizon’s LTE network has gone down at least five times in the last year. Apple went ahead with LTE, warts and all, knowing full well that new 3G-only iPads and iPhones would have sold just as well.
Operators need to return the favor by dropping prices. It won’t happen immediately — it will take some time before Verizon Wireless(s vz, s vod) and AT&T(s t) can move the majority of their data traffic over to the LTE, even with new 4G iOS devices. In fact, the pricing plans that both carriers announced for the new iPad are exactly the same as those of its 3G predecessors. But eventually operators need to start cutting prices to reflect the new efficiencies built into 4G devices and networks.
I’m not naive enough to think carriers are suddenly going to slash data plan rates tomorrow out of any sense of duty. But they may be forced to. By the time the new iPhone launches, there will be five live LTE networks in the U.S. and another two on the way. At some point, competition is going to take over. With more spectral efficiency and network capacity  to play with, one of them will start offering buckets of cheap data, triggering a price war. We’re already seeing the minutest evidence that operators are treating LTE capacity as more of a commodity than HSPA or 3G. Under AT&T’s new throttling policies for grandfathered “unlimited” subscribers, the ceilings are set at 3 GB for HSPA, but 5 GB for LTE.
Unlimited plans won’t suddenly make a comeback. But the price per gigabyte will come down incrementally. If it doesn’t, operators will have a different problem. Apple kicked off the mobile-data revolution when it launched the first 3G iPhone in 2008, and since then average data consumption has skyrocketed. There’s an underlying expectation that data rates will fall as usage ramps up. If that’s not the case, then Apple will take its revolution elsewhere. In some ways it already has, as evidenced by the vast majority of iPad customers that use their tablets solely over Wi-Fi.
Featured image courtesy of Flickr user Aidan Jones.