4G Leaders and Laggards

by: Yankee Group

By Chris Nicoll

Despite widespread confusion about exactly what 4G is, it is still being sold as the next best thing in networking. However, operators are all over the place when it comes to 4G network implementation, services and strategy. It’s early, but we’ve just published a report detailing Yankee Group’s take on which vendors are leading and which are following (see “Early 4G Leaders and Followers”).

In it, we find that so far, aggressive marketing for 4G services and devices has confused consumers, making it difficult for them to understand exactly what 4G is, and who the 4G leaders and laggards are. Data from our 2010 Anywhere Consumer: US Consumer Survey – Wave 1-6, shows that not only do nearly three-fourths of users not know or understand what 4G is, but after years of marketing efforts, more than half still don’t know what 3G is. Interestingly enough, one operator’s customers highlighted it as a leader in 4G — but it has not even started deploying 4G yet! For the purposes of our report, we define 4G as the market is currently defining it: HSPA+, LTE and WiMAX.

Here are the highlights: With specific exceptions, 4G is a fractured market highlighted with spotty coverage areas and limited devices. Some operators are implementing more than one type of 4G network, further complicating the marketing and communications problem. Even as a city is lit, large gaps often remain within the service area, creating challenges for early mobile users facing limited or no movement capability or roaming.

We also find 3G leadership, expertise and technology is not necessarily an indicator of 4G success — at least at this point. 4G networks are largely regionally dependent, with spectrum, base technology and regulatory impacts determining speed of rollout.

Specifically, we find operators fall into three main categories:

  • Leaders: Operators we identify as 4G leaders were typically first to market with 4G and have focused their efforts on a specific market, business model or solution as part of their 4G rollout. We find Asia-Pacific shows strong leadership, with Japanese operator KDDI (OTCPK:KDDIF) and South Korean operator KT (NYSE:KT) leading the way with LTE and WiMAX implementations. In the US, Clearwire (CLWR) / Sprint (NYSE:S) and MetroPCS (PCS) are rolling out WiMAX and LTE respectively, and in Europe, TeliaSonera (OTCPK:TLSNF) is leading the way with LTE.
  • Followers: Our 4G followers typically are slower to develop their 4G strategies or have challenges integrating past technology decisions. For example, operators that run multiple networks have challenges in operations, cost, device management, marketing and brand identity, all of which are exacerbated by new 4G infrastructure requirements. AT&T (NYSE:T), Telenor (OTCPK:TELNY) and Vodafone (NASDAQ:VOD) all fall into this category today.
  • On the bubble: Operators “on the bubble” are those poised to land in either the leader or follower category, depending on their business choices and execution over the next six to 12 months. This segment includes both established operators such as Verizon Wireless (NYSE:VZ), Sprint and Vodafone, and newcomer LightSquared.

4G promises to play an ever bigger role in fulfilling the promises of the Anywhere Enterprise and Anywhere Consumer in terms of experience and expectations. Playing a huge role in defining a positive 4G user experience is the range of devices we expect to be offered to address a variety of user needs. Consumers who use superior devices such as the iPhone (NASDAQ:AAPL), EVO 4G and iPad tend to have a more favorable perception of their operator’s network than do users of other devices, and we expect this to be the case with the 4G devices as well. However, a difficult challenge for all operators is to set proper expectations — i.e., don’t over-promise and under-deliver about the benefits (or coverage) of 4G.

Disclosure: No positions