Recent trade analysis on the potential ramifications of the introduction of the 4G network raised some interesting issues. Mintel takes a look at three of the issues raised, and briefly explains what it will mean for telecom operators, and how businesses can benefit from likely consumer reactions.

US-led introduction of 4G Android devices will soon spread awareness internationally

Apart from some low-key trial rollouts in small, contained areas of the country, the majority of UK consumers are as yet unaware of the impending rollout of the LTE network, or the opportunities it will afford them. This lack of awareness has provided major telecommunications operators a large degree of breathing space, as they are able to continue testing and planning without any great pressure spurred by consumer demand.

However, Samsung, HTC and Motorola have all been pushing out 4G devices in the US for some months now. As is typically the case, these devices will shortly migrate into the UK, and whilst the consumer impact of Android 4G equipped devices is likely to initially be low, it is extremely likely that their widespread availability will soon push smartphone and tablet manufacturer Apple to also begin providing 4G compatible devices, in order to remain competitive. Apple's media and marketing footprint is significantly more advanced than any individual Android handset manufacturer, and once Apple 4G devices are rolled out in the UK, consumers are going to become significantly more aware of the network, and the opportunities it affords them.

Based on activities over the previous years, a safe prediction for the release of the next major iteration of the iPhone is summer 2013. Knowledge of 4G availability will spread shortly after, and with 56% of the population owning a smartphone as of December 2011 according to Mintel data, it is likely that by early 2014 a majority of consumers will either be looking to leverage 4G capabilities immediately, or will be bearing the availability of the network on individual handsets in mind, for when their current contract replacement cycle reaches its zenith. Pressure on telecommunications operators to offer a 4G service will increase accordingly during this time, and greater brand interest may be generated by a forward facing approach, which stresses the operator's dedication to allowing consumers to make the most out of their portable device on the 4G network, as soon as possible.

Older telcos, made wary after the 3G auction, approach LTE with care

The 3G auction netted the government £22 billion approximately a decade ago, as telecommunications operators excited by the possibilities that 3G afforded scrambled to acquire spectrum. Trade contacts have speculated that having burned their fingers spending huge sums (with little ROI) on 3G services, the incumbent and established mobile operators in the UK will be unlikely to approach the 4G auction with a similar gusto. Instead, the appearance of a "disruptor" is widely predicted, as any new company entering the space will lack the enormous financial overheads incumbent operators face in renovating the essential legacy network infrastructure supporting the huge amounts of data received from 4G devices over the air.

Much like in the fixed line telecommunications market after local loop unbundling took effect, this could be a watershed moment for mobile networks, as the introduction of a new operator or operators forces pricing and service innovation, in order to maintain a parity of appeal to consumers.

It is unlikely that the traditional model of offering a subsidised handset alongside a fixed term data plan will disappear; more likely, we may also see the inter-weaving of fixed line and mobile connectivity, providing a more general and well-rounded telecommunications package to consumers. Fixed line operators, at times desperately struggling to innovate within a stagnant and slowly declining market, would be well placed to potentially offer 4G services to consumers as part of a package deal, alongside fixed line communication services.

Trade analysis has suggested a number of external companies may begin selling wholesale access to the 4G network, rather than selling directly to consumers. This is likely a positive move; as Mintel's recent brand analysis into fixed line telecommunications providers has shown, trust is extremely hard to gain for UK telcos - not one current fixed line operator in the UK gained a trust rating of more than 40% in the Mintel research, and only two operators managed to approach the trust levels seen by incumbent BT. One of these was Virgin Media, which has only managed to generate a relatively exciting image for itself at a cost; in doing so it only turned a profit for the first time in February 2012, with revenue primarily driven by broadband and cable TV services.

Consumers are therefore unlikely to switch to a new provider - 4G or otherwise - without either a defined brand image, or an extremely competitive pricing model to engage them. Should a disruptor wish to sell directly to consumers, sponsorship or advertising partnerships with other trusted British brands may serve to extend initial awareness, and mitigate any initial mistrust.

Relentless growth of streamed media will provoke further interest

In the US, traffic from video on demand service Netflix has supplanted illegal torrenting as the greatest share of all broadband activity, and with Netflix having moved into the UK as of the beginning of 2012, and with a number of video on demand services also looking to increase their footprint (including a new offering from Sky, most likely in Q3 2012), data-heavy applications and activity over the internet is set to become more commonplace.

This holds a particular relevance for the 4G network, as many of these video on demand services are explicitly targeting mobile devices (such as smartphones and tablets), in order to maximise reach and to entice consumers with an "access anywhere" approach. Mobile operator 3 announced in February 2012 that data now accounted for 97% of its mobile traffic, and this percentage is likely to increase with the growing popularity of out-of-the-home video access. Exclusive consumer research for Mintel in January 2012 reveals that a fifth of consumers have accessed VoD services from a smartphone in the last 3 months, and 14% have done so from a tablet device.

Data traffic over the 4G network is expected to be significantly higher than over the 3G network, as the increased speed of the service will allow for higher quality content to be pushed out to mobile devices nationwide. Operators looking at maximising the opportunities that the 4G network offers them may wish to consider partnering with video on demand services, which are gaining in popularity and which would provide an excellent example to consumers of the benefits that 4G can confer.