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Speed Bumps Ahead: How to Navigate the Wireless Fast Lane in 2012

As wireless-telecommunications companies create faster networks for your smartphones, you’ll have to proceed with caution. Carriers will attempt to control massive growth in network traffic by introducing new fees or by limiting access for even the fastest smartphones.

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Having the fastest and most powerful smartphone today can be like driving a sports car in a traffic jam. Your smartphone might have the capability to do as quickly almost everything that you can accomplish with a home computer, a digital camera or a hand-held gaming device, but you still are at the mercy of the wireless-network speed that’s provided by your wireless-telecommunications company (or wireless carrier, or carrier) if you want to video chat or download content from the Internet.

Consumers face this dilemma at a time when carriers are trying to widen the wireless highway by expanding bandwidth capacity, so they can accomodate the increase in mobile devices. All four national carriers now sell data plans that are for tablet computers that allow you to access at least 2GB of data per month for at least $30. 

But attempts by carriers to expand smartphone and tablet use might turn their networks into an annoying toll road in the months and years ahead. For instance, some carriers have eliminated or diluted their unlimited-data plans for smartphone users, and some nudge consumers toward upgrading to a faster smartphone from a basic cellphone that runs on a slower network. 

The carriers do this to move subscribers off their slowest networks and convert more bandwidth for use on the fastest networks. But they also do it because data revenue helps them to offset declines in voice-call revenue as more people instead use their cellphones to send texts, instant messages or emails.

In the future, you likely will see carriers increase prices for the fastest-network data plans, particularly during peak-use times, and place restrictions on wireless-data access. The carriers want to prevent wireless-data traffic from overwhelming networks, which is a “hugely challenging” task, says wireless-technology analyst Peter Rysavy. That challenge likely will turn into a burden for consumers that will affect their access to the fastest speeds and the price that they pay for them.

“Five years ago, there was no iPhone or Google Android,” Rysavy says. Network capacity “is a new problem, and it’s getting worse faster.”

UNDER CONSTRUCTION. The most touted approach to increase data capacity is for each carrier to cover the country with the fastest fourth-generation wireless network, which is known as 4G LTE. Although other 4G networks are available (AT&T and T-Mobile USA use High-Speed Packet Access Plus, or HSPA+; Sprint Nextel has Mobile WiMax), experts whom we interviewed agree that 4G LTE is the fastest network technology as well as the network technology that has the most data capacity. All four national carriers launched or plan to launch 4G LTE networks. 

The fastest smartphones need 4G LTE to achieve maximum performance. But carriers must purchase enough broadband spectrum to build their nationwide 4G LTE networks. Even in a best-case scenario, only one of the four nationwide carriers—Verizon Wireless—says it will have a 4G LTE network that’s available to people in all of its markets by the end of 2013. Other carriers that we contacted wouldn’t project when their 4G LTE networks would be available nationwide.

It’s unclear which of the four national carriers—AT&T, Sprint, T-Mobile or Verizon—will rankle consumers the least during the 4G LTE transition. And no matter which carrier that you choose, you likely will suffer whether you have a cellphone that has basic, slower service or a 4G LTE smartphone that has the fastest service.

But this transition will deliver some consumer benefits, too. All four national carriers push you toward purchasing a faster 4G smartphone rather than a 3G cellphone, says Weston Henderek of research company Current Analysis. To spur this transition, carriers dangle reduced prices on 4G smartphones. For instance, in early 2012, Verizon customers who bought a 4G LTE smartphone could sign up for a $30-per-month plan that delivered 4GB of data per month—twice the amount of the standard $30 plan—during the entire 2-year service contract.

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