Editor’s note: This is a guest post by Kevin Fitchard who is a journalist covering the mobile industry and wireless technology. He most recently wrote for Gigaom.
If you pay a lot on your monthly mobile bill, you would expect to a get the best possible 4G service out of your carrier, right? Well, an analysis of global network performance using OpenSignal data shows that isn’t always the case. Some of the most expensive mobile carriers in the world actually offer the slowest LTE speeds to their customers. But the numbers did show high prices are a fairly good indication that an operator offers superior 4G coverage.
I recently worked with OpenSignal’s analysts to compare their data on 4G network performance from global carriers against average subscriber revenue data. What we found was there is little correlation between mobile plan pricing and LTE bandwidth. What the research did find, however, is a more direct relationship between price and the amount of time consumers spent connected to LTE versus 2G and 3G networks. So if you value coverage – getting a 4G signal more often in more places – then you’re likely getting more bang for your buck, quid, euro or won. But if raw speed is your bag, paying more doesn’t guarantee you the fastest speeds possible.
The U.S. has the highest average revenue per subscriber (ARPU) of the 29 countries sampled in the analysis at about $59. Yet as far as network speed goes, the U.S. ranks 26th out of 29, supplying an average connection of 7 Mbps. Meanwhile the lowest ARPU in the sample, $3, belongs to the Philippines, yet its two LTE operators deliver average speeds of 8 Mbps, ranking the country above the U.S.
The fastest LTE performance can now be found in Northern Europe, Spain, France, Hungary and South Korea, where speeds between 16 and 18 Mbps are the norm. But the differences in ARPU between them are huge. In Denmark, ARPU is around $19 a month. In Norway that number is $34, which is more in line with South Korea’s ARPU of $33 than it is with Norway’s neighbor just over the North Sea.
Within countries, the pattern – or lack thereof – was the same. In the U.K., EE has the distinction of having the fastest speeds (17.8 Mbps), seemingly justifying the $2 to $6 more it collects in ARPU over its competitors Vodafone and O2. But in the U.S. the opposite is true. T-Mobile has by far the fastest speeds (10 Mbps) compared to Verizon, AT&T and Sprint, but its ARPU is $49, undercutting its next cheapest competitor by $8 a month.
Your monthly bill may have no bearing on the size of your 4G pipe, but when we map price against 4G coverage we do see a clearer pattern. In general, as a country’s ARPU increases so does the percentage of time spent on an LTE network. South Korea, one of the pricier markets for mobile service, lead the world in coverage, its three major carriers supplying an LTE signal to its users 95 percent of the time. Of the ten most expensive countries in the sample, seven of them ranked in the top 10 in terms of coverage according to the OpenSignal data.
There was no hard and fast rule tying each incremental dollar of subscriber revenue to a boost in coverage. Even though the U.S. had double the ARPU of the rest of the top 10, it hardly had double the coverage (It ranked 6th). And there were definitely some big outliers. The U.K. may have been one of the higher priced markets in the sample with an ARPU of $25, but it ranked near the bottom in terms of coverage with time on LTE just 42 percent.
In general, though, there definitely seems to be a trend showing that carriers collecting more money from their individual customers invest more in network coverage. The trend seems to hold within countries as well as without them. Operators with the highest prices tend to have more expansive LTE footprints than their competitors.
If coverage is tied to price, why isn’t the same true for LTE speeds? After all, that’s the big promise of 4G: fatter pipes for more bandwidth intensive applications.
The different regulatory environments and spectrum policies of these different countries probably has a lot to do with those differences. Speed is largely determined not by investment in physical infrastructure, but by the amount of 4G spectrum available in any given market. In the U.S. carriers started out with 20 MHz as their basic LTE building blocks, while in Europe many carriers had access to 40 MHz, giving them double the capacity of their American counterparts.
What’s now considered fast here in the U.S. is pretty slow from Europe or Asia’s perspective. But given how insulated countries are from one another, U.S. consumers aren’t really aware of the discrepancy. Even if they were, they’re not exactly in any kind of position to challenge it. Living in Chicago, I don’t have the option of trading out my AT&T or Verizon service for an EE or SK Telecom plan.
When you look at individual countries, coverage still seems to be the big factor in determining who and how much consumers pay for their mobile service. But I believe as 4G matures speed could prove to be a very powerful competitive dynamic. Again, the U.S. provides a good example.
In the last few years, the title of America’s fastest 4G service has flip-flopped between T-Mobile, AT&T and Verizon as each carrier has built and upgraded their networks. But over the last six months, T-Mobile has come out fastest in The OpenSignal 2015 State of LTE report and other independent speed tests, thanks to T-Mo’s aggressive LTE rollout. The country’s No. 4 operator has played up that fact in its marketing, and T-Mobile is now the fastest growing carrier in the U.S. It’s probably no coincidence that Sprint, which has the slowest LTE network, is the carrier suffering the most.