On a rare cab ride to work a couple months ago, my driver, upon hearing that I “write about cell phones for a living,” proceeded to tell me about his great new 4G phone.

He waxed at length about how much faster it was than his old phone, and how excited he was about all the apps he could download, even stating that it was just as good as the “i4,” which I took to mean the iPhone 4. For him, the phone’s 4G capabilities were a big selling point.

That’s great, I thought, except we didn’t have any 4G service in Madison, Wis., at the time. Not from Sprint, not from AT&T, not from T-Mobile USA, not even from Verizon Wireless, which has since launched LTE here.

I’m not sure what my cab driver thought 4G was. He may have thought the device, which I discerned from my vantage point in the back seat was one of Sprint’s Android-based smartphones from Samsung, got 4G service in Madison, or he may have just thought the term meant the new handset was better than his old device.

One thing was clear, however: He was sorely mistaken if he thought he was getting connection to a 4G network.

Even if the handset he so eagerly demonstrated was the WiMAX-capable Samsung Epic 4G from Sprint, there was just no way it was running on a WiMAX network, or any other network marketed as 4G, since no such service had yet gone live in Madison at the time we had our chat.

I wasn’t surprised that my cab driver was confused about the state of his 4G service. AT&T, Sprint, Verizon and T-Mobile are all marketing different technologies as 4G. The availability of 4G service varies widely city to city, operator to operator, and it’s only available on a fraction of handsets. Add competing advertising claims to that, and it’s no wonder customers are confused.

It shouldn’t come as much of a shock that one-third of all iPhone owners think they own a 4G device, as recently reported in a Retrevo survey. Those misinformed consumers may have thought the “4” in iPhone 4 referred to 4G, not the fourth iteration of the device, an understandable mix up since the iPhone 3G referred specifically to a network technology.

BlackBerry users also appeared confused about the status of their handsets, with nearly a quarter reporting they owned a 4G-capable device despite the fact that no such handset exists.

With 29 percent of Android users reporting that they, too, owned a 4G device, there’s probably some confusion there as well, since 4G-capable devices account for a small portion of the Android smartphones currently on the market.

Even more worrisome than the apparent confusion about 4G handsets were consumers’ attitudes about the cost of the service. The survey also found that more than one-fifth of consumers don’t think 4G service is worth the cost; one-third don’t think 4G service is worth the cost; and another fifth don’t know enough about it to consider buying it.

The push to get out service that could pass as 4G – even if it’s just a network upgrade – has left consumers bewildered about what 4G is, which devices are compatible with it and why they should pay a premium for it.

Slapping the 4G label on nearly every network upgrade and new smartphone has diluted the term’s definition to the point of uselessness. By encompassing all network upgrades, 4G means nothing. How will AT&T explain to its subscribers why they should be excited about its new LTE network when it’s already marketing its HSPA+ service as 4G?

Your average subscriber probably doesn’t know the difference between the various network technologies, and many don’t bother reading the fine print about their service. I’m guessing most consumers associate 3G with faster service, and logically assume 4G must be faster – until they learn that the service is just a repackaged version of their 3G service and become confused.

Wireless operators need to make it clear to their customers exactly what they’re offering. They need to explain exactly where their service is available and which devices are compatible with it. If the Retrevo survey is to be believed, consumers are reticent to pay for 4G and will continue to be so until they understand why it’s an improvement over 3G.

It might be asking too much of corporate culture here, but perhaps it’s time for the wireless industry to ditch the hype and be straight with its subscribers, for the sake of their bottom line, if nothing else. If we want consumers to pay premium prices for 4G service, we need to prove that it’s worth the cost.

It’s tempting to single out AT&T and T-Mobile to blame for this fiasco, since they’re marketing upgrades to their respective 3G networks as 4G, but everyone’s to blame. There isn’t a single U.S. wireless operator with ubiquitous nationwide “4G” coverage, but you’d hardly notice that in their advertisements.

Verizon’s 4G network, while impressive, won’t reach its entire 3G footprint until 2013; MetroPCS’ 4G network is slower because it runs in narrow spectrum bands; the coverage of Sprint’s 4G network is limited and its expansion has been stalled because of Clearwire’s financial problems. AT&T is apparently about to deploy a second 4G network in the form of LTE to complement its 4G HSPA+ service, and T-Mobile is making its 4G network faster, even though it already advertised it as fast.

For many consumers, this is a bit too much to get a handle on. Throw in the added complication of tiered plans and some level of confusion is almost guaranteed.

If 3G was fast, then services marketed as 4G should be considerably faster. End of story.

When my cabby proudly informed me of his mythical 4G service, I decided to just smile and nod instead of going into a lengthy explanation of how Clearwire’s financial problems would indefinitely delay Sprint’s expansion of WiMAX into the Madison area.

He seemed like a happy Sprint subscriber and I didn’t think it was my place to dampen his enjoyment of his new phone. But now I wonder how he’ll feel if someone else informs him that his slick new handset doesn’t really have the high-speed network connection he thought it did. Perhaps he’ll feel deceived, and won’t feel so happy about his decision to sign up with his operator for two more years to get the smartphone.

I have a feeling he won’t be the only one.