Apple's (NASDAQ:AAPL) iPhone 5 is finally here, and operators are bracing for the impact. Industry insiders are predicting the phone will bring with it massive data consumption, not necessarily because iPhone 5 users will be data hogs (though many probably will be) but because the device will raise awareness of LTE and its capabilities across a wide spectrum of user groups who are expected to migrate to the world of 4G data services.
AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ) are fairly well positioned for any data onslaught. Not only do they have healthy LTE footprints (and AT&T has a robust backup with its HSPA+ coverage) but they've got prophylactic data-consumption (tiered data, shared data) plans that they launched prior to the iPhone 5's debut.
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In fact, Verizon sounds like it is positively licking its chops over the combination of the iPhone with LTE. Speaking at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, Verizon Communications EVP and CFO Fran Shammo said that the company believes that because it has "double the LTE coverage of all its competitors combined" it will have an advantage in iPhone 5 sales.
Yet how long will Sprint Nextel be able to maintain its offer of unlimited data for smartphones once the LTE-enabled iPhone 5 arrives in its customers' hands? There may be a delayed impact, as Sprint just started rolling out its LTE network, but the operator announced this week that it will have LTE in 100 markets in coming months (it didn't actually say how many months…three, six, more?). That could mean iPhone 5 users will be able to stir up a major data storm on Sprint's LTE network pretty soon. Plus, Sprint is doing some very complicated spectrum refarming to make room for LTE, and that could make it even more difficult to deal with a massive increase in data traffic.
Despite the engineering headaches from higher data consumption that an LTE-enabled iPhone may prompt, executives at mobile operators worldwide must be breathing a massive sigh of relief that Apple finally did take the LTE plunge with this latest smartphone and that it included a number of LTE bands for global use. The iPhone 5's three LTE-equipped models cover a swath of spectrum bands as follows: Model A1428 (GSM) supports LTE Band 4 (AWS) and Band 17 (700 MHz) and is targeted at North America; model A1429 (CDMA) is designed for North America and Japan, and supports LTE Band 1 (2100 MHz), Band 3 (1800 MHz), Band 5 (850 MHz), Band 13 (700 MHz) and Band 25 (1900 MHz); and model A1429 (GSM) is aimed at Germany and the United Kingdom, as well as Australia and matural Asian markets (Japan, Korea, Hong Kong and Singapore) by supporting Band 1 (2100 MHz), Band 3 (1800 MHz) and Band 5 (850 MHz).
European LTE operators Deutsche Telekom in Germany and EE in the UK have committed to carry the iPhone 5. However, PCWorld noted that Apple left out two bands--800MHz and 2.6GHz--considered essential for LTE service in Europe. But let's face it: The continent doesn't have much of an LTE footprint yet anyway.
So, it's true that the iPhone 5 will not work on every conceivable LTE band around the world. However, if Apple had not included LTE at all this time around, that would have likely had a tremendously negative impact on the entire LTE ecosystem. Thanks to Apple, even in markets where operators have not launched LTE, customers will be aware now that they are missing something and that could prompt faster LTE rollouts.
4G Americas just reported that 100 commercial LTE networks are active in 49 countries, while the GSA said 96 operators have launched commercial LTE services in 46 countries. I'll be honest; I have no clue which one is correct. Regardless, it's clear that a bunch of operators have thrown beaucoup amounts of money at LTE, counting on people to buy compatible devices and use lots of 4G data services. The arrival of an LTE-equipped iPhone will help make that happen, because every significant smartphone release from every major manufacturer will need to include LTE compatibility to compete from now on, at least in North America and the mature Asian markets.
So, how do you think the iPhone 5's release will impact mobile networks? We have a poll on our home page where you can vote, but we'd love to get your comments below as well.
P.S. For complete coverage of the iPhone 5 launch and the market's reaction, make sure to check out our special report page: Apple's iPhone 5: Complete coverage--Tammy