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4G costs carriers less to deliver than 3G, so why does it cost more?

Did you know that when you upgrade your phone to your wireless providers' 4G network, you are actually helping your wireless provider financially? Wireless providers' 4G networks are cheaper to deliver for cellular carriers. So, why do you end up paying more for using the 4G network than on the slower 3G service?

Published onMay 12, 2014

AT&T 4G LTE Logo

Did you know that when you upgrade your phone to your wireless providers’ 4G network, you are actually helping your wireless provider financially? Wireless providers’ 4G networks are cheaper to deliver for cellular carriers. So, why do you end up paying more for using the 4G network than on the slower 3G service?

ReadWrite did a fantastic story detailing the way that wireless providers have blatantly lied (with help from the International Telecommunications Union) about what a 4G phone actually gets you as the “real” definition of 4G are download speeds of 1 gigabit per second in a fixed location and 100 megabits per second while in motion.

LTE Open Signal

Although the story goes into great detail about the difference between 4G and 3G networks, the bottom line is that carriers are delivering significantly more speeds at half the cost/effort.

Foremost, the ability to slap “4G LTE” onto devices helps sell smartphones and make fun television commercials. Second, consumers want “4G,” even if they don’t actually know quite what that means. The carriers are delivering faster service with higher margins, and pocketing the rest of the money from users who think it’s a deal. After all, doesn’t it just make sense to you to pay as much or more for better service than you were getting? –

People in the United States pay considerably more for cellular plans with just 500MB of data than almost every other country.

Essentially, the U.S. carriers are able to gouge consumers even though the cost per bit on their networks is technically going down over time. The carriers will contend that they need to charge what they do because they investing in the infrastructure of the country. But once all the base stations are built, all the backhaul is optimized, will prices actually go down? –
smartphone average monthly bill cost

The chances of consumers paying less for their services in the future are slim to none. Most, if not all, of the big players in the wireless industry have put millions into lobbying in Washington DC. Verizon and AT&T seem able to convince many that their manufactured spectrum crisis is about to pull down the economy unless they can merge with rivals companies.

So, while our wireless networks may not be the fastest or cheapest, they do make more money than any of their overseas counterparts. A report by analyst Chetan Sharma shows that in 2014 the United States will become the first nation to cross the $100 billion mark in annual mobile data revenues. The report also notes that 2013 was the first time data revenues exceeded voice revenues ($24.8 billion in the fourth quarter).

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