By Dieter Bohn and Nilay Patel

The Nexus 4 is an impressive smartphone that ticks off every modern spec checkbox you could ask for, save one: LTE. Instead, the Nexus 4 will only come unlocked with HSPA+ radios. It is a disappointing omission, driven by both Google's complex philosophical desire to build open devices as well as the fairly simple economics of building a halo product for a small niche of early adopters.

For Google, Nexus is a flagship brand that represents the best of Android, with Google leading by example to show other hardware manufacturers what Android can be. And though partners build the hardware, Google wants direct control of the software on Nexus devices with no carrier intervention. That alone means Google can't sell an LTE device, as there's simply no access to LTE networks without working with carriers in one way or another: Verizon and Sprint's LTE networks still require compatibility with their 3G CDMA systems, and there's essentially no such thing as an unlocked CDMA device. AT&T's fledgling LTE network runs on different frequencies than other LTE networks around the world, so Google would have to build a custom phone for just 77 markets in the US. Doing that without AT&T's financial assistance makes little sense.

Google would have to build a custom phone for just 77 US markets

Android head Andy Rubin calls the lack of LTE a "tactical issue," and cites cost and battery life as major concerns with devices that have to support multiple radios. "A lot of the networks that have deployed LTE haven't scaled completely yet — they're hybrid networks [...] which means the devices need both radios built into them," he said. "When we did the Galaxy Nexus with LTE we had to do just that, and it just wasn't a great user experience." But the reality now is that many LTE devices — including the iPhone 5 and the LG Optimus G, which shares common hardware with the Nexus 4 — use larger batteries and newer, more efficient chips to balance the power draw from LTE.

Verizon's LTE open access rules are virtually meaningless

That leaves the issue of control, and the politics of LTE network access tilt almost exclusively towards carriers. For example, Verizon has offered an "Open Development" initiative since 2008, offering other companies the ability to run devices on its networks, including the LTE network. "As long as the person follows our specifications and certification process as outlined on our open access website, they can get a device on our network," a Verizon spokesperson told us. However, that program — which to date has primarily been used in a business-to-business context — would still prevent Google from updating its phones in a timely manner. "Firmware pushed to devices over the air must be tested and certified," Verizon told us.

Ironically, Verizon's LTE network runs on 700MHz "C Block" spectrum which has FCC "open access" rules attached to it, which require that any compatible device be allowed to connect. Google fought vociferously to put these rules in place, even participating in the FCC's spectrum auction to ensure Verizon paid the minimum bid price that triggered the rules. But the rules have turned out to be virtually meaningless in practice, as Verizon uses 700MHz in conjunction with CDMA spectrum that doesn’t have similar open access rules — so while Verizon might be legally required to support an unlocked LTE device, the legacy CDMA network still effectively keeps all of Verizon’s phones locked.

AT&T will allow unlocked devices to access its LTE network

For GSM / HSPA carriers, the issues are primarily economic, not access. AT&T, T-Mobile, and international carriers all uniformly allow unlocked devices to run on their GSM / HSPA networks, and AT&T says it will allow any unlocked device to access its LTE network, although the carrier can't guarantee everything will work or that it would be able to provide technical support.

But building an LTE phone is an extremely costly undertaking with sharply limited potential markets. Although Verizon, AT&T, Sprint, Everything Everywhere, and other carriers are working quickly to roll out LTE networks, it's still a nascent technology with significant interoperability problems across many spectrum bands, requiring companies to create different hardware variants of their phones for each network. Profitably building all those variants requires either financial assistance from the carriers or a large addressable market for an unlocked device. So while Verizon has by far the largest LTE network in the world, covering over 400 markets and over 250 million people in the US, Google has no access to those customers. Other LTE networks are much smaller: AT&T currently has LTE in just 77 markets covering 135 million people, and Everything Everywhere in the UK has a goal of covering only 20 million people by year's end.

Nexus phones have never been bestsellers

In short, the number of people that Google could reach with any single unlocked LTE Nexus 4 is relatively small. And while the Nexus 4 looks like a solid flagship device, Nexus phones have never been bestsellers, shrinking an already-small potential market to virtually nothing. Google may be getting serious about selling hardware with the Nexus 4, but not so serious that it's willing to compromise with carriers, and compromising with carriers is the only way to make LTE work.

And there's precious little to suggest working with carriers is even in Google's best interests, or in the best interests of Nexus customers. The Galaxy Nexus was announced last year with a promised LTE version on Verizon, but the carrier held back releasing the phone for months to promote its own Droid RAZR instead. Google eventually grew tired of waiting and sent unlocked HSPA+ devices to reviewers. And software updates for Nexus phones sold through carriers have been problematic as well: it took the Verizon three full months to disseminate the Android 4.1 Jelly Bean update to its Galaxy Nexus, slightly longer than Sprint. That's actually better than it used to be with carrier-partnered Nexus devices, but still much longer what Google can achieve without carrier intervention — and far too long in a marketplace where Apple has set a standard for simultaneous worldwide software distribution across multiple carriers.

"Tactically, we want to make sure the devices are available for every network on the planet."

Andy Rubin put it this way: "Tactically, we want to make sure the devices are available for every network on the planet." For now, that means that the Nexus 4 will only be available as an unlocked HSPA+ device. Whether the fault lies more with carriers for forcing Google’s hand or with Google for refusing to work within the standard carrier model, the end result is a flagship phone that’s missing an essential flagship feature.