4G: CNBC Explains

There aren't many tech fields that move faster than the cell phone world. Not only are the devices themselves designed to be disposable within two years, but the back-end technology powering the networks is constantly being upgraded.

That means the transition to the next generation of wireless communications is already under way. The latest is called 4G — and all of the carriers are peppering their marketing with the phrase. What many are failing to do, though, is explain what's so important about 4G and why consumers should care.

What is 4G — and how is it different from 3G?

4G is the fourth generation of phone data networks. The first generation (1G) made its debut in 1979 in Japan. The analog network, launched by Nippon Telegraph and Telephone, was a breakthrough at the time, but it lacked range and required enormous battery power. (It was also incredibly insecure and allowed just about anyone with a little tech know-how to listen in on calls.)

The new Sprint HTC Evo 4G smartphone is displayed at the International CTIA Wireless 2010 convention at the Las Vegas Convention Center March 24, 2010 in Las Vegas, Nevada. CTIA is the international association for the wireless telecommunications industry.
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The new Sprint HTC Evo 4G smartphone is displayed at the International CTIA Wireless 2010 convention at the Las Vegas Convention Center March 24, 2010 in Las Vegas, Nevada. CTIA is the international association for the wireless telecommunications industry.

2G made its debut in 1991 and introduced digital signals to cell phone technology. This added a layer of security to conversations and took up less bandwidth, meaning the batteries \(and thus, the phones\) could be smaller. During this time text messaging and email delivered to your phone became possible.

3G, the current standard, made its debut in 2001 – but no one really took notice until 2007, when Apple introduced the iPhone. 3G allowed providers to simultaneously provide voice and data services. Also, people could watch video on their phones. But as smart phones gobbled up more bandwidth, the reliability of 3G became spotty.

4G further strengthens cell phone security and dramatically increases bandwidth. That means fewer dropped calls, significantly faster streaming and Web access, and more multimedia functionality.

Is it everywhere?

Not yet, but it's expanding at a steady pace. All the major telecommunications companies are building 4G towers as fast as economically feasible. Accounting firm Deloitte says the 4G expansion could create as many as 771,000 jobs between 2012 and 2016 – and expects wireless companies to spend up to $53 billion to build out their technology over the next five years.

Because of the cost associated with making the switch, though, telecoms are focusing first on large cities.

Furthering the expansion of 4G is the entrance of new players in the space. Dish Network has reportedly filed a waiver with the FCC to use parts of the radio spectrum it now owns to launch a 4G network.

Is there more than one kind of 4G?

Like the beta/VHS battle of the 1970s and 80s, there's a format war going on with 4G. One type of technology, called WiMax, had a head start in the field and was quickly adopted by Sprint and Clearwire. The second technology, called LTE, came later, but earned the backing of AT&T and Verizon Wireless. The size and reach of those companies propelled it to the lead.

It's too early to declare LTE the winner in the battle, but if Apple debuts an LTE iPhone, then LTE may reach the tipping point toward victory. Apple, of course, is secretive about upcoming versions of its smartphone, but there have been several media reports about the company's testing such a version, though the release date is unclear.

If those prove true, the massive popularity of the product, along with the public's desire to have the latest version could accelerate the move to whichever format Apple decides to support (just as the company's adoption of 3G pushed that technology into the spotlight).

Will it cost more?

So far, people using 4G networks aren't paying any more than those who use 3G. However, the technology is still early — and those prices can change.

Consumers’ primary focus should be the cost of data plans. Most carriers have discontinued the "all you can eat" models (charging a flat fee for unlimited usage), and are moving to metered plans that include overage charges and monthly caps. That's a signal they're becoming more price conscious. And as streaming video becomes more common on 4G networks (via services like Netflix, YouTube and other providers), those plans might change again.

Will my cell phone be able to use 4G?

If you've bought a smart phone in the last year or so, it's possible it's equipped for 4G service. If your phone is more than two years old, it almost certainly won't be able to take advantage of the faster network.

However, most of the newest smart phones include 4G compatibility. The iPhone 4 (and previous generation models) do not support 4G, but as new models are introduced, the iPhone is expected to join the movement to 4G as well.

4G isn't just about cell phones, though. Several other devices, such as laptops and tablets, also use it to access the Internet. And as the Internet weaves its way into other devices (such as cars and even appliances), those too will likely rely on 4G for connectivity. However, those Internet appliances aren't expected to see a wide rollout for several years, at which time 4G will be standard.

Why should I switch to 4G?

Faster Web browsing is nice, but it doesn't necessarily justify buying a new $300 or $400 smart phone. If you don't use your handset for more than calls and occasional texts/pictures, there's no rush to switch.

But as online services like cloud computingand digital distribution become more widespread, the bandwidth 4G promises will be essential. Bigger pipelines also usually mean bigger apps — so the game (or other programs) you download from your provider's app store might be a couple hundred megabytes. With 4G, you won't notice the larger size — but if you're still on 3G, it's going to take what seems like forever to download an app.

Since things change so fast, should I just wait for 5G?

It's going to be a long, long wait if you do. 4G was ratified in December 2010 by the International Telecommunications Union, an agency of the United Nations that's responsible for information and consumer technologies and establishes worldwide standards. None of the carriers are even talking about 5G yet. And it will likely be several years before they do.