I don't understand US carriers' 4G hype

Every self-respecting smartphone maker, maybe with the exception of Nokia, released new 4G phones last week at CES 2011. There was a bubbling hype around the new "superfast" data networks enabling new levels of productivity and entertainment to ever-so-mobile people.

But there's something wrong with this hype. The largest US wireless carriers have cut their 3G data transfer quotas across the board and offer currently deals like "1GB of data transfer for $50/month" (example from USB data plan for laptops). For the users of latest HD-video capable smartphones this is a joke. One Gigabyte of data per month does not allow you to stream a single movie from iTunes, let alone stream or upload your own HD videos to the cloud. And this 1GB of transfer capacity is supposed to last for a month? 

The main reason for carriers to limit data transfer must be in their inability of scaling the wireless networks to the demands of latest phones and the data-intensive use patterns of smartphone users. Why do I say inability? Because I've seen it done better elsewhere. I'm currently splitting my time between US and Europe, and have been recently re-introduced to my native Finland's wireless carrier service. Mobile broadband is a commodity there with typical monthly plans for unlimited data transfer at the highest speed of the network available for less than 15 euros a month. The networks seem to have so good coverage that many people have opted in using mobile broadband as their primary internet connection at home. I've had Skype voice and video calls from my iPhone 4 in moving train over 3G network in Helsinki. Good luck with that in San Francisco.

I think it is scandalous that carriers hype up the super-fast 4G network speeds, but at the same time throttle the data usage to a level that can be regarded as a sad joke. Why would anyone have any use for, say 20Mb transfer speed if they can use it only for 10 minutes a month before running over the limit? Are the carriers hoping to rip people off by charging $30-50 for every GB transferred when other countries are providing unlimited data traffic at similar speeds for less than half of the first GB cost in the US?

But there is hope. This data transfer limitation of major carriers such as Verizon and AT&T may open a fantastic opportunity for smaller rivals such as Sprint and T-Mobile to gain market share by offering lavish data plans for users with fixed monthly fees. I truly hope they use this opportunity to change the tide and get Americans back on the mobile information superhighway.
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Mikko, having been involved in the initial 2G/3G network build ups of AT&T, Cingular (now merged with AT&T) and TMO there are truly couple of parameters where North American operators are having challenges:
1) Coverage is a huge is issue in the U.S. because the operators have selected to market their plans in broad areas and offer 'nation-wide coverage'. Building coverage for high speed just isn't feasible.
2) Cell tower site acquisition in the U.S. and also in other parts of the densely populated world is becoming prohibitively expensive. With bigger data transfer speeds you just simply need more sites, period. It is the law of nature in radio access. NIMBY people are effectively blocking buildup of new sites and at the same time complaining about the lack of high speed radio access. Crazy. One has to realize that if you want to have fast radio access you also have to accept the fact that the base station site with radio antennas is relatively close to your location.
3) U.S. cellular carries have failed in building/investing sufficient capacity in their data transfer networks from mobile sites to switching systems and beyond. Many sites are being served by too low capacity transfer networks. Amazingly, the bottleneck of the network is not necessarily radio access but the traffic pipeline from the base station to radio network controller and beyond. This is caused by the structure of the U.S. telecoms industry i.e. how different companies are able to build different networks. For a fixed line data carrier the business case of upgrading the fixed data line is not very good, thus the bottlenecks.

Overall, I agree, this will not get solved by building yet another data network. However 4G might help the specific situation in densely populated areas because it is more spectrum efficient than 2G / 3G.

— jphelminen
I use AT&T on my iPhone 4s. I had the unlimited data plan at $30 USD per month. When AT&T reorganized their rate plans, I was grandfathered into keeping the unlimited data plan. Here's the catch: If I go over 3gb data transfer per month, my bandwidth gets throttled down to a level that does not allow me to stream much. I understand that the infrastructure is not set up to handle the rising number of smartphones sucking huge amounts of streaming bandwidth..but I can still complain! Those glory days of streaming movies, music, etc are long gone and it had made me reliant on wi-fi, which is hard to get on and is bogged down in most places. Here is AT&T's policy:

If you have a smartphone that works on our 3G or 4G network and still have an unlimited data plan,

-->You'll receive a text message when your usage approaches 3GB in one billing cycle.
-->Each time you use 3GB or more in a billing cycle, your data speeds will be reduced for the rest of that billing cycle and then go back to normal.
-->The next time you exceed that usage level, your speeds will be reduced without another text message reminder.

If you have a 4G LTE smartphone and still have an unlimited data plan, the same process applies at 5GB of data usage, instead of 3GB.

You'll still be able to use as much data as you want. That won't change. Only your data throughput speed will change if you use 3GB or more in one billing cycle on a 3G or 4G smartphone or 5GB or more on a 4G LTE smartphone.

— kmstrand