What was left unsaid at CES speaks volumes

Phil GoldsteinI'm still trying to digest and recover from the Consumer Electronics Show in Las Vegas last week. The surging crowds, seemingly endless lines for press conferences and mixture of huge, flashy booths and smaller stalls served as the scene for a dizzying array of product announcements at the show. However, what wasn't announced was just as important, if not more important, than what was. 

CES largely conformed to pre-show expectations, with a great deal of emphasis on tablets as well as next-generation wireless networks. Some of the dozens of tablet announcements--those from LG, Motorola Mobility (NYSE:MMI), Research In Motion (NASDAQ:RIMM)--were polished and high-profile. There is no question that tablets dominated the show more so than any other product category.

Wireless carriers also used CES as a platform to promote their faster networks. T-Mobile USA touted its HSPA+ upgrade, AT&T Mobility (NYSE:T) promised to accelerate the deployment of its LTE network and launch 20 HSPA+ and LTE devices in 2011, and Verizon Wireless (NYSE:VZ) unveiled 10 LTE devices, including smartphones, tablets and mobile hotspots.

Left unsaid though is what the data plans for these new devices will look like. Verizon, in particular, was non-committal about its LTE data plans for smartphones. Verizon Wireless CEO Daniel Mead declined to give specific pricing--but hinted that, at least to start, LTE smartphone plans will be unlimited, similar to how Verizon's 3G smartphone plans work now. He did indicate that data caps for LTE smartphones might be implemented at some point in the future.

Data pricing will be a major factor in how consumers respond to new networks and devices. If the plans are structured in a way that does not penalize users for actually making the most of their devices' capabilities, then all parties will benefit. If the plans are strictly usage-based for all devices, then I think adoption will suffer.

The potential Catch-22 in this situation is that 4G tablets and smartphones are expressly designed for high-bandwidth applications, but data plans that inhibit high consumption may discourage their use. Handset and tablet vendors spent much of the show hyping the large screen sizes and high-quality resolutions of their devices, as well as their powerful processors and HD video capabilities. However, if users are constantly worrying that the movie they're watching or video chat session they're conducting is burning through their data allotment, they may sour on the idea of 4G networks. What's the point of being able to download a great deal of content in a flash if doing so would crush a customer's bank account?

Verizon's pricing plans--and those of other carriers--are still in flux, and the operators may be trying to gauge market reaction before committing to any definitive pricing changes. They also are likely trying to determine what usage patterns will be and how that will stress the network.

Nonetheless, every device with an HD screen and ability to play 1080p video will lose its luster if the user experience suffers as a result of the data plan attached to it. --Phil

P.S. I'll be in New York City tomorrow covering Verizon's media event, which starts at 11 a.m. EST. Reportedly, the company will introduce a version of the iPhone. Be sure to check back here tomorrow for coverage of the event.