by Ryan Cole, Investment U Research Tuesday, March 1, 2011

The 4G wars have begun.

The winner may or may not receive a decided edge in the hearts and minds of telecom consumers. But one thing’s certain – it sure can’t hurt.

Before we try to predict a winner, though, let’s take a closer look. What exactly is 4G, and why – beyond marketing – should we care?

Technically Speaking, There is No 4G

According to the UN’s International Telecommunications Union (ITU), the agreed-upon standard-bearer for telecommunications definitions, there is no 4G yet.

Huh? So what’s all the hype about then?

Well, it simply has to do with the ITU’s definition for 4G.

None of the technology currently available – or about to come online – fit the description.

According to the ITU, a 4G technology will be able to support over-the-air downloads of one gigabit per second to cell phones (and other hardware), along with a number of other specs that your broadband at home can’t achieve yet.

So, in a way, every time you hear a company boast “4G,” think “marketing speak.” That said, there are some new standards of communication coming out that are a good bit better than what’s available now…

A Flurry of Acronyms and Double-Speak… But Here’s What You Need to Know

Sprint-Nextel’s (NYSE: S) Wimax network and Verizon’s (NYSE: VZ) LTE network both are significant upgrades over the current 3G standard – and even the ITU has grudgingly decided to call these new communications standards a next generation.

But here’s where it gets confusing. Both T-Mobile and AT&T (NYSE: T) are using an upgraded version of the 3G technology HSPA+, which allows their networks to come pretty close to matching current 4G speeds.

They aren’t all the way there – but the difference between, say, the speed of HSPA+ and Verizon’s upcoming LTE network isn’t too different from the current speed advantage that AT&T has over Verizon’s GSM network.

But don’t get lost in the acronyms and double-speak. Here’s the important takeaway: When you hear 4G, think “not really” for Verizon and Sprint and “really not really” for T-Mobile and AT&T.

The competition breaks down further when you consider that AT&T is working on an LTE network. Trouble is, it just won’t be available for a few years. And T-Mobile doesn’t have the money to invest in the next generation. It has no plans to expand its network.

So, what does that mean for an investor?

There Are Four Major Players… But You Should Only Bet on One of Them

~ Verizon: The company looks ready to head the pack – but that shouldn’t make too big a difference to its cellular business. Verizon’s already the market leader – and should stay there.

One thing might change that, though. Verizon could bring broadband-like speed to rural parts of America, which currently don’t have the infrastructure to get high speed Internet access. That untapped resource is ripe for the taking – and Verizon looks to have the inside track. So while Verizon’s cellular business might not budge much, its ISP business could see a big increase.

Couple that with an ever-expanding FIOS network and Verizon looks like it could be the king of ISPs in a few years time. Now’s a great moment to jump on the bandwagon, before the concept of separate pipelines for Internet and cable becomes obsolete (and it will).

~ Sprint and AT&T: Sprint will have faster 4G speeds for a few years. But AT&T has better phones and, believe it or not, a better service. These two companies will be duking it out for the #2 spot.

Who will win? That’s anyone’s guess at the moment. Until the picture becomes clearer, steer clear of AT&T and Sprint and buy Verizon

~ T-Mobile: Steer clear with as much prejudice as you’d avoid a typewriter manufacturer. Without a major cash injection (and unless its European parent company, Deutsche Telekom, decides to pony up, there’s nothing on the horizon) T-Mobile is destined for the dust-heap. There’s only so long you can compete with yesterday’s technology and it looks like T-Mobile’s days are numbered.

Follow these guidelines, and you should do well over the next few years.

Good investing,

Ryan Cole

View original at: Investment U

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