Does the iPhone 5 need LTE wireless to succeed?

Limited LTE network coverage could hurt iPhone 5 sales, says one analyst, while another says customers won't care

When Apple announces its next iPhone as expected on Wednesday, many analysts predict it will have faster LTE wireless capability along with other improvements, including a larger 4-in. display, more powerful processor and overall design changes to woo expectant buyers.

But some analysts question how important LTE service will be to next-generation iPhone customers, since LTE deployments are not far along in many regions of the world and LTE isn't widely appreciated by the vast majority of U.S. smartphone users.

"The wireless industry's all wrapped up in LTE, but customers don't get it," said Jeff Kagan, an independent analyst. "Most customers don't know what LTE is, and they don't care. LTE is important, but it is not what will make the difference in a [smartphone] sale or not. Customers get bigger screens, but not industry jargon like LTE."

Rob Enderle, an analyst at Enderle Group, said that because LTE coverage won't be widespread on most wireless carriers for many quarters, even in the U.S., sales of the next-generation iPhone could suffer after an initial surge in popularity.

"These new iPhones will face high pricing and poor network penetration for their key LTE feature, which could slow down adoption a lot after the initial fourth-quarter sales wave," Enderle said. "If the iPhone 5 has any weakness, it is that LTE isn't where it needs to be."

To be sure, some LTE (Long Term Evolution) users love the faster service, which can offer a dramatic 10-fold speed improvement over widely used 3G CDMA or GSM networks. LTE speeds at up to 10 Mbps or faster hasten downloads of videos and Web browsing, as well as interactions on games.

The biggest LTE provider globally, Verizon Wireless, is based in the U.S., which would seem to give Verizon an edge in attracting LTE iPhone customers. But Verizon in June also implemented its Share Everything data service plan with free voice and texting that is now required for new customers. With the plan, data services can be shared over 10 devices and sold in several different monthly data tiers that subject users to an overage charge should the upper limit be exceeded.

If Verizon sells the next iPhone, as expected, the Share Everything Plan could be a deterrent to new iPhone customers, some analysts said. "Buyers have already been balking at Share Everything and iPhone 5 customers will be forced into that plan," Enderle said.

AT&T, which has also rolled out LTE service but is not as far along as Verizon in its deployment, launched a Mobile Share plan in August that is similar to Verizon's plan, but voluntary for receiving free voice and texting with shared data plans.

AT&T also touts fast service over its HSPA +42 network that it calls 4G. The company claims its 4G network has a bigger footprint than Verizon's LTE.

Sprint, the third-largest U.S. carrier, still offers unlimited data service plans, and has shown a strong interest in attracting LTE customers with its new service launched July 15 and now available in 19 cities.

On Monday, Sprint announced plans to expand its LTE coverage in 100 more markets "in coming months," including major markets such as Boston, Chicago, Los Angeles, Memphis, Miami, Nashville New York, Philadelphia and Washington. The timing of the announcement was viewed by analysts as a clear attempt to woo next-generation iPhone customers, even though Sprint hasn't said when those 100 markets will have LTE service.

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