What You Get (and What You Don't) When Procuring "4G" ServicesWhat You Get (and What You Don't) When Procuring "4G" Services

4G is now essentially a term used by providers to describe any service faster than what was previously available--which means users need to get under the hood to understand what each provider is really offering.

All four national U.S. wireless network operators are now offering services branded as "4G." As exasperating as it is to purists, marketing departments couldn't give a hoot that none of these services actually fulfills the ITU's data rate requirements for 4G. 4G is now essentially a term used by network providers to describe any wireless service that is faster than what was previously available, which means users need to get under the hood to understand what each provider is really offering.

As of today, U.S. network operators are offering the following under the label "4G":

* AT&T--HSPA+ (with LTE to follow later in 2011)
* Sprint--WiMAX (though Clearwire)
* T-Mobile--HSPA+
* Verizon Wireless--LTE

The claims and counterclaims among the four operators concerning data speeds and coverage can be bewildering. T-Mobile claims that its 4G network is 60% bigger than Verizon Wireless' and 40% bigger than the Sprint/ Clearwire WiMAX network (whatever "bigger" means). Sprint gets frustrated with AT&T and T-Mobile for calling HSPA+ "4G," and Verizon Wireless seems to want to claim the high ground by talking about the "quality" of its network compared to its competition (a poke at AT&T and its iPhone-spawned network issues, which is rich given that the new Verizon Wireless iPhone is not 4G compatible and thus will not test Verizon’s 4G network).

Attempting to make sense of the marketing hype is a no-win game. Instead, telecom managers are better served by talking with the wireless network providers individually and requesting specific coverage and service speed information for their companies’ primary markets and business locations, e.g., giving the carriers a list of locations and requiring them to detail the up/down network speed they can provide at each location. But even this type of analysis can only tell you so much, and ultimately the best approach is to conduct trials of each service. Independent testing organizations offer this service to enterprises and also make their signal test and coverage findings available online.

Wireless Service Level Guarantees
Persuading wireless service providers to convert their (often dubious) coverage and speed claims into hard contractual commitments can be like getting blood from a stone. Wireless carriers continue to be years behind their wireline counterparts in providing robust network performance service level guarantees, and to a large extent, customers have accepted that. Wireless services have always been provided on a somewhat "best efforts" basis: if your call drops because you drive under a bridge, or download speeds seem slow because everyone else at the airport is also online, you moan about it but you don’t expect a service credit.

Moreover, if a wireless service provider's network does suffer a problem, it affects all customers indiscriminately, so the network operator is highly motivated to fix the problem as soon as it can. Wireline services are different, since a failure of a connection or hardware element may only affect a single customer, and that doesn’t give the service provider a strong motive to quickly resolve the problem. To enhance the service provider's motivation to swiftly resolve wireline network issues, customers negotiate service level guarantees and associated financial penalties for non-performance.

But best efforts availability and speeds do not suffice when users begin to contemplate using and relying upon 4G wireless services to deliver critical business functions, such as using those services as a replacement for DSL, backup connection to MPLS services at small offices; using MiFi products to provide temporary connectivity for a team at an exhibition; or streaming the latest product video over 4G-enabled tablets at customer meetings.

Historically, wireless provider service level guarantees have tended to be limited to matters other than network performance, e.g. guaranteeing the timeframe to deliver new equipment to users, or the responsiveness of customer service centers. More recently, some providers have begun to offer limited network performance guarantees, such as data latency, data throughput and data connection success. But even then, the network performance metrics are based and measured on the overall national performance of the wireless network, so isolated issues for a subset of users within one enterprise will not cause the carrier to miss service level guarantees, even though the impact may have been severe for those users.

A major challenge with obtaining robust service level guarantees for wireless services is that it is not easy to measure service performance on a user-by-user basis. Service providers do not report on the average throughput speed that each user receives, latency performance, or how many dropped data connections or connection failures are experienced by each user--and something that is not measured cannot be guaranteed. That said, as smartphones, tablets and other wireless devices become more powerful and sophisticated, there is no reason that service providers can’t develop solutions for measuring service performance on a user-by-user basis. Combined with the QoS capabilities built into the WiMAX and LTE standards and equipment, the providers have an opportunity to catch up with wireline service, and if enterprises succeed in enshrining meaningful service performance guarantees underwritten by robust service credits into wireless agreements, we will finally be able to judge which network provider has the "biggest, fastest and highest quality" network.

Service Level Commitments for Fixed Location Wireless Services
One area in which improvement is already on the way involves obtaining service guarantees with respect to specific business locations. Carriers realize that if they want customers to purchase wireless services for primary or back-up connectivity (i.e. in place of wireline services), they will need to provide service level guarantees for such services (just as customers expect, and receive, for wireline services). Enterprises should demand Site or Connection Availability guarantees for 4G services, and, as a guide, should expect to receive the following service levels when negotiating a wireless data SLA for fixed locations (noting that suppliers will typically want to confirm that a location has coverage and adequate signal strength before agreeing to the SLA). In addition, when the wireless data connection is the backup to a dedicated MPLS connection, the enterprise should expect a 99.95% Site Availability guarantee.

4G Equipment
An additional note of caution for enterprises that arises from the deterioration of 4G from a standard to a marketing term has to do with wireless equipment branded as "4G." AT&T and T-Mobile are both labeling devices that utilize their HSPA+ networks as "4G," but few, if any, of these devices also work with LTE, which AT&T at least has stated it will begin deploying later this year.

And of course despite the name, the iPhone 4 is only compatible with 3G technologies, regardless of whether you buy one from AT&T or Verizon Wireless.

In light of this, customers may wish to seek rights in their contracts to upgrade to devices that support the latest network technology (in this example that would be from HSPA+ to LTE) at a subsidized price, regardless of whether or not a user has fulfilled his/her line term, and without paying an ETF (early termination fee).

Contract Flexibility Remains Key We have always counseled customers to keep wireless contract terms short and flexible because wireless technology, pricing, devices and services have been evolving extremely quickly, and the current rate of change seems greater than ever before. As if the advent of 4G services, equipment and pricing plans isn't enough, telecom managers are also having to deal with user pressure to offer and support an ever increasing array of smartphones and wireless apps while learning to manage new wireless pricing that, unlike unlimited plans, includes capped allowances, data overage charges and data pooling. No doubt something else will change tomorrow. Accelerating change in the wireless industry means that maintaining short contracts with flexible terms, including reducing/managing the impact of early termination fees, is more critical than ever.

Ben Fox is a Managing Director of TechCaliber Consulting, LLC, a global technology and telecom consultancy that advises the world's largest companies on strategies for reducing their costs for telecom and technology products and services. Kevin DiLallo is a partner in Levine, Blaszak, Block & Boothby, LLP, the leading firm representing large users in the negotiation of network services and related agreements. Ben and Kevin can be reached at [email protected] and [email protected], respectively.