iPhone 5 to drive 4G adoption, Wi-Fi offloading

Increased data traffic on LTE networks, accompanied by a range of operator efforts to deal with it, will be likely side effects of Apple's (NASDAQ:AAPL) decision to include LTE capability in the new iPhone 5.

"You're taking a very sophisticated, highly sought-after phone as a mechanism to potentially really catapult the switch in subscribers from 3G to 4G. And that is not trivial," Murali Nemani, senior director of mobility solutions marketing at Cisco Systems, told FierceBroadbandWireless.

Nemani is not the only industry insider who expects the iPhone 5 to increase consumer awareness of 4G. "In anticipation of the iPhone 5 launch, consumers are beginning to expect fast 4G LTE speed," said Carla Fitzgerald, vice president of marketing at Smith Micro Software.

The iPhone 5's dual-band 802.11n wireless connectivity accelerates the user's Wi-Fi experience up to 150 Mbps, according to Apple.

Nemani claims consumers who are aware of 4G have been looking for a reason to upgrade from 3G to 4G, and now they have it. "The rollout of iPhone 5 is going to make 4G handsets readily available and drive customer demand to the adoption of 4G services, Cisco's Nemani said.

"iPhone 5 is just the trigger point," he added."Every other handset vendor is going to come out with a 4G phone."

Early studies indicate that wireless subscribers using LTE-capable device consume much more data traffic than other customers. Though the higher usage could be ascribed in some cases to the fact that LTE is being used by tech-savvy early adopters, this trend of higher per-customer data usage is expected to continue as more of the mass market hops onto the LTE bandwagon.

"By 2016 we believe 4G will represent something close to 6 percent of total connections and 36 percent of all traffic," said Nemani, citing Cisco's annual Visual Networking Index (VNI) Global Mobile Data Traffic Forecast.

The iPhone 5's 4-inch screen is notably bigger than the current 3.5-inch screen on Apple's existing iPhones and will help drive the use of video-based and content-based apps such as FaceTime and Siri, he said, adding that will put more pressure on operators to migrate away from unlimited data plans because "data consumption is going to increase."

Even though customers may prefer unlimited plans, operators that have not already done so will eventually be forced to move to tiered-data plans and/or shared data plans if they sell the iPhone to their customers, he said.

Apple is promising distinct versions of the iPhone 5 for Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and Sprint Nextel (NYSE:S). The iPhone's arrival could prompt changes in pricing plans at both Sprint Nextel as well as T-Mobile USA, which are both currently pushing unlimited data plans for smartphones, as opposed to AT&T and Verizon Wireless, which have not only abandoned new unlimited data plans but have also launched shared data plans.

Sprint has promised to offer unlimited data for the iPhone 5, even as it undergoes a massive spectrum effort under its Network Vision initiative.

T-Mobile should not see a serious iPhone 5-generated data-consumption upswing, given that it will not be carrying the device and is not slated to introduce LTE service till next year. But the operator does reportedly have some 1 million unlocked iPhones on its 1900 MHz GSM network, which is being refarmed to HSPA+, meaning those iPhones will benefit from faster data speeds on T-Mobile's network once the refarming is completed. And having faster speeds at 1900 MHz could in time attract more iPhone users, especially those looking to ditch AT&T or Verizon in search of an unlimited data plan.

Further, the LTE-equipped iPhone and LTE-equipped smartphones that come after it are expected to drive the need for Wi-Fi offloading.

"The reality is that 4G is still in its infancy, and consumers will not have 4G connections available at all times. As devices get more and more sophisticated, the challenge for operators will be meeting consumer's expectations for better performance and always-on connections when they're in areas where 4G networks are unavailable," said Smith Micro's Fitzgerald. "Directing data traffic between Wi-Fi, 3G and 4G networks with an intelligent offloading system is now critical.

Managing network congestion via offloading will need to be a seamless process, she said, so operators do not also face "an explosion of support calls along with data traffic."

For more:

Special Report: Apple's iPhone 5: Complete coverage

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T-Mobile cajoling 2G users off 1900 MHz
Sprint promises unlimited LTE data for iPhone 5
Infonetics: 70% of operators will deploy Wi-Fi for street coverage by 2013

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