Does LTE Create New Revenue, or Only Displace 3G?

With every recent "next generation" of mobile networks, the hope and expectation has been that new revenue-generating services and applications would be created. That was true for 3G and now is said to be an expectation for 4G networks as well. 

It's a reasonable enough hope, even if it sometimes takes quite a long time for those new revenue-generating apps to be discovered and embraced. In fact, one might argue, it was until the advent of either mobile email and mobile Internet access that "new revenue generating services" became significant. 

That might logically be expected to happen for 4G Long Term Evolution networks as well. The issue is whether the "new revenue" is generated mostly by new retail policies, totally new apps, higher data consumption and therefore bigger data plans, or some combination of all of those possible trends.

Also, though it will be hard to quantify, users will simply shift from use of 3G to 4G, so LTE revenue cannibalizes 3G. 

Many executives say the "new revenue" will come in large part from an end to "all you can eat" data plans that are instituted with 4G. In that case, the "new revenue" does not come from "compelling new apps" but only from changes in charging policies. That is helpful for a mobile ISP, but perhaps not the same thing as arguing LTE will create brand new apps. 

So forecasts of "LTE revenue" have to be viewed with some circumspection. LTE might represent a third of revenue by 2017, Juniper Research forecasts, representing more than $340 billion worth of revenue. Other older estimates suggested faster revenue growth, but that isn't unusual early in the development of any new market. 

But the magnitude of the revenue stream is not the only, or most important, new fact. Aside from cannibalizing 3G revenue, aside from representing higher data consumption, and therefore higher access fee plans, will LTE actually enable the creation of brand new applications that generate revenue? That's the big question.