With rate increase, Sprint bows to 4G consumption reality

While Sprint isn't willing to give away its unlimited data plans, the carrier must also make concessions to reality.

BACKGROUND: Sprint CEO doesn’t see metered 4G service

With the announcement today that its unlimited WiMAX mobile data plans would cost users an extra $10 per month, Sprint is acknowledging that it can't continue to offer its users all-you-can-eat data without charging more to maintain network quality. In its press release issued this morning, Sprint emphasized its rate increase would ensure that Sprint would be able to maintain "a wireless network able to meet the growing appetite for a richer global experience." The company also noted that the availability of higher speeds on its WiMAX network was "driving exponential growth of mobile data traffic."

Sprint is the only carrier to offer unlimited data plans on its 4G wireless network, as both Verizon and AT&T are committed to offering tiered pricing systems for their LTE networks. One reason that Sprint can afford to offer unlimited data plans is the strong combined spectrum portfolio that it and its partners at Clearwire share for their WiMAX network. Indeed, Sprint has said that it has enough spectrum on its books to deploy both WiMAX and LTE simultaneously if it wanted to.

Several research firms and companies have projected an explosion in wireless broadband consumption over the next few years, fueled mainly by 4G mobile data technologies such as WiMAX and LTE that will allow for the streaming of high-definition video over the air. IT research firm Ovum, for instance, has projected that the number of mobile users subscribing to either 3G or 4G services will grow to 2 billion worldwide by 2014. Goldman Sachs' investment research arm, meanwhile, projected last month that wireless data revenues would surge by more than six-fold by the year 2020 and that wireless data revenues would nearly triple over the next two years alone.

The Federal Communications Commission also released a technical paper last year claiming that growth in mobile data services will require around 822MHz of total spectrum, or 275MHz more than the 547MHz of spectrum available today for dual use in voice and data services. The United States will have all of the wireless spectrum it needs to meet mobile data demand until 2013, the FCC projected, as mobile data demand is not expected to cross the 547MHz threshold until then.

During a talk at the EmTech conference in Cambridge last year, Sprint CEO Dan Hesse reiterated his company's commitment to offering users unlimited data plans and said the company could keep its plans unlimited by charging more if it eventually found that customers were consuming more data than the carrier could handle. Hesse said there were rare circumstances where service would not be unlimited but that those circumstances were limited to less than one per cent of users who consumed unusually large amounts of data on a monthly basis. In those cases, Hesse said the company would work out a deal with those users to pay more per month for 4G service or would tell the user they would be cut off after they consumed a certain amount of data.

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