LTE is providing operators with a new lease on life, and not just in terms of being able to offer an improved user experience, a chance to sharpen branding messages and an opportunity to differentiate themselves from rivals. Operators are also seeing changes in consumer behavior, and initial signs are that LTE users are consuming more data than 3G customers.
This is extremely encouraging news for operators, because it indicates that LTE will deliver on the promise of bringing about an increase in data consumption and therefore spending on data services.
Early adopters are responsible for some of the higher LTE usage that operators are seeing, with members of this group having higher-than-average usage profiles. At the same time, it is the typically greater capabilities, larger screens and faster processors of LTE devices that will help stimulate incremental usage, and not just the faster networks.
Although LTE networks are still young, evidence is emerging that LTE users are consuming more data than 3G users, especially in markets where services have been most aggressively launched:
Data-traffic analysis carried out by Informa Telecoms & Media with data-monitoring vendor Mobidia shows that the migration to LTE is helping stimulate incremental traffic demand on cellular networks. According to the analysis, which covers Android devices in the US, the average LTE-capable smartphone generates 1.6GB of monthly cellular data, 50% more than on non-LTE-capable smartphones, where the figure averaged 1.1GB.
The Mobidia/Informa analysis also shows evidence of an elasticity-of-usage effect, with increased usage on cellular networks being accompanied by a rise in average consumption on Wi-Fi networks. In the case of Netflix, a premium video-streaming application and one of the most popular apps, its cellular-centric usage rises from 243MB a month to 499MB on LTE-capable smartphones, while its average Wi-Fi usage jumps significantly, from 584MB to 1.1GB. This indicates that LTE will lead to more use of high-bandwidth apps such as Netflix than on non-LTE devices.
This view is supported by SKT, which indicates that 39% of LTE use on its network is for multimedia services, compared with 30% on 3G.
Data usage on LTE is as much as 100% higher than on a 3G phone, as data collected by US-based mobile-usage-analytics company Validas shows. Validas compared monthly data usage on an HTC LTE device with that on a 3G iPhone and found that average LTE usage was 1.2GB a month in August compared with 562MB for the iPhone 3G.
Looking at increased data usage with LTE from the perspective of ARPU, recent Informa LTE research shows that since DoCoMo launched LTE services, its postpaid-ARPU figure has declined more slowly than the market average, even though it charges a premium for LTE (see fig.).
Japan, NTT DoCoMo’s blended ARPU and market average since LTE launch, Nov-12
Although it’s difficult to isolate the impact of one service on KPIs, this data, in conjunction with related information from other sources, indicates that LTE has had a positive effect on the performance of these aggressive LTE operators, which can in large part be attributed to higher spending on LTE.
Increased mobile data usage is the biggest single opportunity LTE offers operators, and they will have to rethink their pricing and marketing strategies so as to best capitalize on this emerging trend. Early evidence suggests, though, that the right LTE marketing, pricing and device mix can bring about an increase in data usage, which can in turn increase consumers’ monthly spending on mobile services.
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