The 4G revolution in wireless won't just make Web surfing on your mobile phone faster; it could help you say good-bye to traditional cable and DSL broadband.
Clearwire's 4G WiMax service, currently the only 4G wireless service on the market, offers average download speeds between 3Mbps and 6Mbps, which are comparable with many DSL and cable modem services on the market.
As a result, consumers in the 27 markets where Clearwire currently offers service now have another choice for their broadband service. And many are deciding to ditch cable and DSL for 4G wireless.
Tim Elliott, who lives in Atlanta, is one of those customers. Ten months ago when Clearwire came to town, Elliott, who had subscribed to an AT&T DSL package, canceled his service and signed up.
Elliott said he was convinced to subscribe to the service because he got a free Netbook as part of a promotion. He added that he plans to stick with Clearwire even after his contract expires because he likes the convenience of having broadband anywhere. Even though he could have gotten free Wi-Fi access to any AT&T hot spot as part of his old AT&T DSL subscription, Elliott said the ubiquity of WiMax makes the service more valuable to him.
"I love being able to go anywhere in town with my laptop and not worry about finding a hot spot," he said.
Elliott isn't the only subscriber who has decided to cancel his existing broadband service for Clearwire's 4G wireless service. In fact, Clearwire's chief commercial officer, Mike Sievert, said during the company's fourth-quarter 2009 earnings call last month that roughly half of the company's subscribers are using its new Clear brand 4G wireless broadband service as a replacement for DSL and cable modem services.
Sievert's comments are the first indication that 4G wireless could actually compete in the duopolistic broadband market. Wireless executives at this week's CTIA trade show in Las Vegas may downplay this fact as they tout new mobile devices for 4G. But as 4G wireless speeds continue to match speeds for traditional broadband, 4G wireless will serve as a viable replacement for some consumers who are not interested in subscribing to a costly triple-play package of TV, phone, and Internet services.
Indeed, other 4G wireless services will offer similar speeds to those offered today from Clearwire. Verizon Wireless is building its own 4G network using a technology called LTE and is expected to launch the service in 25 to 30 markets by the end of the year. It claims that the average download speeds it has seen in its test networks are between 6Mbps and 12Mbps.
But Verizon and AT&T, which will test 4G LTE technology later this year, have been careful not to talk much about 4G wireless as a broadband replacement service. After all, these companies sell DSL services and they have each invested billions of dollars upgrading their wired networks to provide faster fiber-based services. Verizon has taken fiber all the way to the home with its Fios service. And AT&T has extended fiber to neighborhoods to boost high-speed Internet speeds.
Neither AT&T nor Verizon Wireless have talked about how they will price their 4G wireless services. There are some indications that the companies plan to implement usage-based pricing, which would likely discourage many people from using their 4G wireless services as a replacement for DSL.
But it's clear from the recently released National Broadband Plan that the Federal Communications Commission expects 4G wireless to be a broadband competitor. Today, about 95 percent of the U.S. population has access to at least one broadband provider, according to the FCC's report. About 13 percent have access to only one provider, while the vast majority, roughly 78 percent, have access to two providers, cable and DSL. Only 4 percent have access to three or more providers.
The FCC recognizes that broadband needs to be delivered not only to the 4 percent who don't have it, but also that more competition is needed in markets with only one provider. Even though two competitors are better than one or none at all, three could be even better, which is why many consumer groups have advocated for more competition even in markets with two suppliers.
The problem is that putting broadband infrastructure in the ground is expensive. And earlier attempts to force competition in the telecommunications market through regulation have not been successful.
Now it looks like the FCC has acknowledged that getting a "third wire" into the home is unlikely, and it has instead turned its attention to 4G wireless. … Read more