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4G, or not 4G? That Is the Question with AT&T's Phony iPhone Marketing

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Here's a rare occurrence: Apple (Nasdaq: AAPL  ) has given in to the demands of a wireless carrier.

AT&T's (NYSE: T  ) willingness to cede unprecedented amounts of control to Cupertino played a large part in how it landed iPhone exclusivity in the early years, while rival Verizon (Nasdaq: VZ  ) had to wait nearly three long years to get its big red hands on the device.

Such stuff as 4G dreams are made of
Meanwhile, the semantic debate over what technically qualifies as "4G" data technology has continued to rage on unabated within the industry, while AT&T and T-Mobile have kicked up their marketing attempts to mislead the members of broader public who may not be as versed in the technicalities. According to the International Telecommunication Union, the only two technologies that truly qualify as 4G are WiMAX and Long Term Evolution.

Of these two, LTE has emerged as the clear winner: Both of the largest carriers are in the process of rolling out true 4G LTE networks, while smaller Sprint Nextel (NYSE: S  ) is left scrambling with its soon-to-be obsolete WiMAX flavor and floundering partner Clearwire (Nasdaq: CLWR  ) . That undynamic duo is now rushing to build out LTE. There goes that "first mover" advantage they sought with WiMAX.

A 3G network by any other name would be just as fast (or slow)
T-Mobile doesn't have an LTE network, and AT&T is in the early stages of its LTE rollout, while Verizon is leading the pack in LTE coverage availability. T-Mobile and AT&T market their HSPA+ networks as 4G, but you can really think of them as enhanced or accelerated 3G networks.

They claim that their networks reach "4G speeds" so they proceed with marketing, and even further blur the line by releasing smartphones that literally include 4G in their names, such as the HTC Radar 4G and T-Mobile myTouch 4G on T-Mobile, and the LG Thrill 4G* and Samsung Infuse 4G* on AT&T. Those asterisks are there because AT&T's fine print reads: "*4G speeds delivered by HSPA+ with enhanced backhaul."

Methinks Apple doth protest too much
Handset OEMS like LG, HTC, and Samsung, among others, have all been willing to play along with these marketing games that the carriers set up, but they've also always had less bargaining power than the massive beast that is Apple. The Mac maker has even said it wasn't going to participate in the semantic battle, with marketing chief Phil Schiller stating "We're not going to get into a debate in the industry of what is 4G and what isn't. We leave that to others to talk about" at the iPhone 4S unveiling.

Back in October, there was word that AT&T was pressuring Cupertino to play ball with marketing the AT&T version of the iPhone 4S as a "4G" device, which would seemingly make its version seem more equal than others in an Orwellian sort of way. The device is the same on AT&T, Verizon, and Sprint, but AT&T is the only iPhone carrier that has an HSPA+ network and you can bet it wants to use that as a differentiator.

Well, guess what? It looks like Apple has at long last caved to one of AT&T's demands. In the wake of the new iPad unveiling yesterday, Apple pushed out an iOS software update, quietly sneaking in this change for the AT&T models. The little "3G" indicator has now been replaced with a "4G" one, purely for the benefit of Ma Bell.

Looks like Schiller might need to backtrack on his words a bit, since Apple is now, at least implicity, participating in this debate.

Beware the ads of March
Did my AT&T iPhone get faster overnight? Not even a little bit. Is AT&T's iPhone a 4G device? Not really – it depends on who you ask. Does AT&T's 3G network actually claim a theoretical speed advantage over rivals Verizon and Sprint? Technically, yes. Is AT&T going to kick up its marketing and proclaim itself as the only carrier of a “4G” iPhone 4S? Yes. A million times, yes.

An iPhone with true 4G LTE will likely debut this year, following the new iPad as Apple's first 4G LTE devices. Until then, don't fall for AT&T's phony iPhone "4G" marketing ploys.

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Fool contributor Evan Niu owns shares of AT&T, Verizon Communications, and Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio.

The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 09, 2012, at 5:07 AM, almypal817 wrote:

    So why are you saying at&t has a phony ad if their 4G speeds are technally faster than Verizon and Sprint? I have at&t and love the service. You couldn't pay me to go to Verizon

  • Report this Comment On March 09, 2012, at 8:35 AM, motleyinfo7 wrote:

    Sprint fumbled when they tried to cheat on Clear (CLWR) and go with Light Squared, watch announcement any day now for sprint begging on its knees to Clear to have them back to the table.

    Meanwhile Clear has added Millions of customers and doubled their revenue base with no help from sprint.

    There is no official definition of 4G so technically the AT&T speeds do not qualify for 4G but they can go ahead and make those claims since legally there is nothing stopping them. It's like saying a car is cool, there is no definition of cool legally so someone can correlate it with nearly anything.

    With that being said Clear is in the top position right now because it has both the highest spectrum holdings and additionally has the better technology that they are launching which is going to be the FD-LTE technlogy which is the world standard and is different from what AT&T and Verizon is using.

    More and more phones will be built on the FD-LTE technology versus the ones that Verizon and AT&T uses which is less dense and only used in the US currently.

  • Report this Comment On March 09, 2012, at 8:48 AM, Nomadder wrote:

    3G, 4G, who cares?

    So long as all US carriers have ridiculous data limits it doesn't matter.

    If all I can do is stream one movie on Netflix/Amazon and then maybe a few hours of music per MONTH, before getting raped in the face by my assailant of choice, I'm not bothering with anything other than the Wi-Fi's.

  • Report this Comment On March 09, 2012, at 10:12 AM, Fly419 wrote:

    To the author, you need to check your facts. The ITU classified HSPA+ as a 4G technology. A quick Google search will yield plenty of information on the topic. AT&T, T-Mobile and every other HSPA+ carrier are correctly advertising these networks as 4G per the ITU's stance. Also, AT&T's LTE network is quite a bit past the initial stages of the rollout. Last time I looked they cover 74M pops in 28 major markets. Verizon does have broader LTE coverage at this point with 200M pops covered.

    MotleyInfo7, you are confused. Clearwire is rolling out TD-LTE, AT&T and Verizon are both rolling out FD-LTE. TD-LTE is the Chinese variant that has superior spectrum efficiency because it can run unpaired. It is also being rolled out by China Mobile. There is a lot more that goes into decisions about what technology a carrier chooses, it has to work with the respective carriers spectrum holdings. Clear is able to roll unpaired TD-LTE out because they have all that 2.5Ghz and above spectrum. Their challenge is that it's cost prohibitive to build out the required pop density on those frequencies. They need cheap technology that can be deployed in DAS configurations.

    I do agree with one thing you said, Sprint did fumble.

  • Report this Comment On March 09, 2012, at 11:07 AM, BonePilot wrote:

    FLY419 is correct. Prior, there was no official 4G standard. Now there is thanks to the ITU, and the ATT iPhone 4S qualifies. A quick google search will show you that is the fatest variant.

    AAPL's biggest future market for iOS devices is China. There, future LTE devices will be TD-LTE, and use CLWR tech and networks. Here Clearwire's spectrum will be used or sold -- and its the only finite resource in this dialogue.

    Long CLWR, even if they are managed poorly.

  • Report this Comment On March 09, 2012, at 1:54 PM, spokanimal wrote:

    As long as your talking about the evolution of 4G, then why not take it to it's logical conclusion instead of portraying 2013's most likely success story as an "undynamic duo".

    When you draw distinctions between LTE and WiMax or HSPA+... it follows that you should draw a distinction between an equally momentous evolution...

    ... from FD-LTE, to TD-LTE, to LTE-Advanced...

    ... or perhaps your understanding of 4G hasn't evolved that far.

    It HAS evolved in global wireless leader China Mobile's labs... where TD-LTE - come 2.5ghz - come LTE-Advanced has set the standard for the planet's most populous, far-east geographies.

    Further, Ericsson's test net in Sweden has exhibited transmission speeds well in excess of 100 megabits using these protocols (verizon currently tops out at about 16 megabits). To achieve such speeds, you have to have a lot of dedicated spectrum...

    ... the quantities of spectrum that only one American company currently has... an "undynamic duo" company, as you would say.


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