How Long Before 4G Starts Costing Us More?

One of the more remarkable aspects of 4G data in Australia is that, to date, we haven't had to pay any extra for it. If you have a suitable device, neither Telstra or Optus charges extra for using the 4G network, a factor which has undoubtedly driven rapid uptake of the technology. But are we kidding ourselves if we imagine that will continue indefinitely?

The consensus from experts would seem to be 'yes'. Right now, telcos have a vested interest in having both business customers and consumers use 4G; it helps reduce congestion on existing 3G networks, which increases customer satisfaction overall. And 3G remains the main game. Telstra, for instance, has the largest 4G footprint right now, but that still only covers 40 per cent of the population. Telstra's rollout should see that hit 66 per cent mid year, but even that still leaves a third of the country firmly in 3G territory.

In the long term, market watchers expect that local carriers will emulate providers overseas and begin charging a premium for the higher speeds which 4G provides. Those speeds themselves are variable, and inevitably become lower as more users sign on. But they remain faster than 3G, and ultimately that difference will be a potential source of income.

Cisco's global technology policy VP Dr Robert Pepper pointed out earlier this week that in the US, where 4G-branded plans have been on sale for longer, there has been a notable shift. "The initial deployment looks very similar, but over time one of the things that operators have done is their 4G plans begin to look different from the 3G plans," he said. That's not always reflected in price; it can also change the way the service is delivered. "In the US there were unlimited data plans for 3G but moving to 4G,, they're no longer unlimited -- they come in step functions." We haven't seen unlimited mobile data in Australia, but shaping is a potential tactic that could be used.

Telstra actually promised to introduce shaping on mobile data back in 2011, but two years later it hasn't yet managed to do so. Whether that means we'll suddenly see shaping applied to 4G remains to be seen, but it's certainly not out of the question. Shaping can help you save money by eliminating excess data charges, but it can also be a sneaky means for providers to minimise network saturation.

The level of hype around 4G can blind us to the fact that it remains a niche technology. Cisco projects that by 2017, 4G will account for 12 per cent of mobile data traffic in Australia, a distant second to 3G's 77 per cent. However, 4G will consume 40 per cent of the data total. Charging more for that data is going to be a hard temptation to resist for cash-strapped telcos.

Another potential route is to charge an extra fee for each device attached to the network. Again, this has been pursued with success in the US. "The leading US LTE operators have shown a remarkable maturation of pricing strategy as they continue to increase ARPU [average revenue per user], moving from flat rate pricing, to tiered pricing, and most recently to multi-device pricing plans, effectively monetising the consumer trend to multiple devices," research firm Analsys Mason pointed out in a recent research note.

We might not have the confusing range of technologies marketed under the 4G banner in America -- here, LTE is being deployed by all three carriers. But it seems naive to assume we won't see these techniques at some point.


Comments

    I was going to upgrade but the comparable plan on Optus to the one that I am on is a few dollars extra and comes with 500mb less. So it kind of is costing more.

      Exactly; with Optus it almost is already "costing more". Existing customers don't get access to 4G, only those who recontract or sign a new contact can get 4G access on their account.

      At least Telstra treated everyone the same; offering all of their customers access to 4G without requiring special plans or recontracting.

      Agreed. The fact Optus wanted me to re-contract with less data and no included social lead me to move to Virgin. I'd move to one of the other MVNOs if one without a history of billing or poor CS issues would get 4G.
      Hurry up and move to 4G TPG!

      But the difference is not to do with 3G or 4G service, Optus have changed their rate plans entirely. So if you upgrade to a new phone you will be on a new plan, if the phone is 4G capable it will get the faster speeds and if the phone is 3G it won't.

    Telstra dropped their data amounts on their caps across the board. I wonder if this is why. But it's stupid to charge extra for 4G anyway, cuz 4G customers are likely to use more data and hence pay more anyway. Not to mention the fact that 3G is crippled in Australia (or at least in Melbourne) so it's in their interest to get people onto 4G.

    How does it work in the US? Do you pay an extra monthly fee for "high speed mobile internet", or is it that 4G data is priced higher per kb? Either way, with Australia's patchwork coverage it's a hell of a thing for people to try and track the charges of. I'm not in a 4G area, so I only get 4G at random times while out and about. A fixed price access fee would be pretty unfair for the few hours a week I might have access, but alternatively charging higher per kb for 4G data is also problematic. Try explaining to a non tech savvy person why downloading that youtube video today in the city cost you twice as much as yesterday when you were at home.

    As others have noted above, and the author appears to have missed, 4G on Optus already costs more as it requires a 4G plan (with reduced plan inclusions).

    I'm not entirely convinced Telstra will ever charge more for 4G. Why? Well shifting congestion only works as long as you *actually* do so and the 4G migration is projected to be pretty slow. Furthermore, Telstra has a 42mbs DC-HSDPA 3G network, making the benefits of 4G to the average bloke less clear. No, I think 4G will primarily be used as a differentiator between Telstra and their MVNO's.

    4G?
    I work in a highly developed manufacturing/industrial area in Southern Melbourne and I cant even get 3G!

    i know this is more specifically on the topic of mobile 4G, but I use vividwireless as my main internet source and at like $70 a month for unlimited access at the 15-16mbits I get... It's a pretty good deal.

    Not to mention that they've been bought by Optus, which is going to within roughly a year translate into one of the largest 4G networks in the city of Perth, with unlimited data packages bundled on prepaid SIM cards, allowing me to pay for my phone and net in one bundle as with most any other company!

    I don't really see why it would start costing more.. The infrastructure is far cheaper for them to provide than with hardline services, and can reach a much larger userbase with but a single investment per area.

    4G? I've been using a 4G handset for a while.. I'm not so convinced the upgrade is even worth it.. I'm considering getting a new personal phone (mine is currently work) and I wouldn't be too fussed if I went back to a 3G handset... might only get 4G for the ability to still use it in time to come...but I don't see that happening any time soon either.

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