The 4G Era Arrives! How Much Will You Pay?

For all the hype, the most revolutionary thing about the iPhone 5 may be its compatibility with a wonky technology standard called LTE (as in Long Term Evolution) used in the high-speed 4G wireless networks being rolled out around the world. Carriers have spent billions so they can offer faster Internet connections and boost their capacity—and they need to win over consumers to recoup their investment. “The iPhone is going to be the first big catalyst for adoption of LTE,” says Murali Nemani, a director of marketing at Cisco Systems.

LTE promises to enable smartphones to stream high-def movies, handle videochats, and store files and photos on cloud services without a hitch. Getting consumers to pay the freight for all those bytes is another story. While LTE networks can handle twice the traffic of most 3G networks, the proliferation of smartphones, tablets, and video-streaming and cloud-computing services will drive up demand for mobile data eighteenfold through 2016, according to Cisco. So far, carriers are dealing with the increase by moving away from unlimited plans in favor of usage caps. If they charge too much, customers may stick with cheaper 3G networks or piggyback on free Wi-Fi at work or the local coffee shop. If they price 4G plans too low, there could be traffic overload that would slow or disrupt service.