Carriers look for new business models to afford iPhone bandwidth
As bandwidth-heavy smartphones like Apple's iPhone turn huge profits for handset makers, wireless carriers across the world have struggled to keep up with bandwidth needs. One executive said this week that new business models must be explored for carriers to remain profitable.
Vittorio Colao, CEO of Vodafone, said at the Mobile World Congress in Barcelona, Spain, on Tuesday that the demand for data in mobile devices has become a problem for carriers. According to Reuters, he specifically named Google and said the company should not be allowed to control the flow of money through dominating the search and advertising market.
To get their fair share, Colao said, carriers could charge customers more for greater bandwidth, or guaranteed high speeds. They could also charge content providers, and guarantee them bandwidth speeds as well.
Under the current business model, Colao said it is difficult for operators to invest in their networks.
With the new high-speed 4G long term evolution wireless standard on the horizon, things are only expected to get more expensive for carriers. The transition to LTE is expected to cost U.S. carriers an estimated $1.78 billion each in the first year alone. Last week, AT&T announced partnerships with Alcatel-Lucent and Sony Ericsson for 2011 commercial deployment of its 4G network.
T-Mobile on Tuesday revealed its own plans to introduce a nationwide "4G" HSPA+ network in 2010. Phones compatible with the network have not yet been announced, nor have specific cities or a timetable been revealed, though the program is currently active in Philadelphia, Penn.
Reuters also spoke with Mike Lazaridis, co-CEO of Blackberry maker Research in Motion, who said handset manufacturers need to do something to ensure their products use less bandwidth. He said if they don't, a global "capacity crunch" would emerge, which has already begun in the U.S.
"Manufacturers had better start building more efficient applications and more efficient services," Lazaridis reportedly said. "There is no real way to get around this."
Last December, Ralph de la Vega, president and CEO of mobility and consumer markets with AT&T, the exclusive carrier of the iPhone in the U.S., made headlines when he said it was inevitable that high-bandwidth users will be charged for what they use. Those comments led to speculation that AT&T was exploring tiered data plans for the iPhone -- a rumor the wireless carrier quickly denied.
As smartphones become more bandwidth-hungry, the iPhone has lead the pack, causing major network problems for AT&T upon the launch of the iPhone 3GS last summer. One report said the average iPhone user consumes 10 times the bandwidth of a typical smartphone user. De la Vega, too, noted that 40 percent of AT&T's network capacity is consumed by just 3 percent of smartphone users.
Vittorio Colao, CEO of Vodafone, said at the Mobile World Congress in Barcelona, Spain, on Tuesday that the demand for data in mobile devices has become a problem for carriers. According to Reuters, he specifically named Google and said the company should not be allowed to control the flow of money through dominating the search and advertising market.
To get their fair share, Colao said, carriers could charge customers more for greater bandwidth, or guaranteed high speeds. They could also charge content providers, and guarantee them bandwidth speeds as well.
Under the current business model, Colao said it is difficult for operators to invest in their networks.
With the new high-speed 4G long term evolution wireless standard on the horizon, things are only expected to get more expensive for carriers. The transition to LTE is expected to cost U.S. carriers an estimated $1.78 billion each in the first year alone. Last week, AT&T announced partnerships with Alcatel-Lucent and Sony Ericsson for 2011 commercial deployment of its 4G network.
T-Mobile on Tuesday revealed its own plans to introduce a nationwide "4G" HSPA+ network in 2010. Phones compatible with the network have not yet been announced, nor have specific cities or a timetable been revealed, though the program is currently active in Philadelphia, Penn.
Reuters also spoke with Mike Lazaridis, co-CEO of Blackberry maker Research in Motion, who said handset manufacturers need to do something to ensure their products use less bandwidth. He said if they don't, a global "capacity crunch" would emerge, which has already begun in the U.S.
"Manufacturers had better start building more efficient applications and more efficient services," Lazaridis reportedly said. "There is no real way to get around this."
Last December, Ralph de la Vega, president and CEO of mobility and consumer markets with AT&T, the exclusive carrier of the iPhone in the U.S., made headlines when he said it was inevitable that high-bandwidth users will be charged for what they use. Those comments led to speculation that AT&T was exploring tiered data plans for the iPhone -- a rumor the wireless carrier quickly denied.
As smartphones become more bandwidth-hungry, the iPhone has lead the pack, causing major network problems for AT&T upon the launch of the iPhone 3GS last summer. One report said the average iPhone user consumes 10 times the bandwidth of a typical smartphone user. De la Vega, too, noted that 40 percent of AT&T's network capacity is consumed by just 3 percent of smartphone users.
Comments
Perhaps this experience was the basis for its announced iPad terms--that coupled with its recent and soon-to-be-implemented infrastructure upgrades, so that it can look forward to new higher levels of service and support, as well as the consequent higher profits it should enjoy from the iPad.
The other providers are understandably concerned as they most likely realize that they are about to be left out in the cold, so to speak, but that they've also been sleeping way to long in their complacent arrogance.
No number of assorted efforts with all the Windoze and Android gadgets is going to result in any lasting competition, as there're no CONCERTED efforts to compare with Apple and AT&T.
Sure, we might have metered billing--but that will be better than 1000 minutes plus or minus 100 minutes around the full moon except on Tuesday evenings from 9pm to 3am with type N Motorola handsets.
Heck, now and then I might even pass on my bonus to put up an extra tower or two.
Perhaps a new 'Technology' model is required rather than a new 'Business" model. The billions spent on overlapping, competing and in many cases incompatible networks in the US seems wasteful IMHO. I realize competition accelerates progress in many cases but it seems to be a little wacky in this case. If the companies could agree on a world wide compatible standard system and pool resources to implement that strategy and share costs surely it would be a better scenario. I also realize this would require some oversight by watchdog groups (with teeth) to prevent the public getting screwed but there has to be a better way than this ludicrous waste going on now.
+1
Betting on the scarcity business/technology model is a proven loser.
The billions spent on overlapping, competing and in many cases incompatible networks in the US seems wasteful IMHO.
This is typical of new technology and capitalism. We saw it with the railroads putting in redundant tracks, and then running price wars until one or the other went bankrupt. We saw it with companies laying fiber-optic cables. And we see it with competing cellphone companies.
One alternative is a planned economy, which generally has not yielded good results where it has been tried.
Capitalism is the worst economic system in the history of the world - except for all of the others.
Now we pay hundreds a month to be connected. Carriers want us to pay more and more and more. There has to be a limit. I'm sure many folks are cutting corners. I own a Touch and not an iPhone because data plans are an expense I'd rather live without. If service providers think us consumers are an endless supply of ever-expanding revenue, they are mistaken. I have a certain amount of cash I'm willing and able to devote to my connectivity needs and I refuse to go beyond that amount, regardless of what I have to do without to hold that line.
Then again, I grew up in the days before personal computers and cell phones.
This is typical of new technology and capitalism. We saw it with the railroads putting in redundant tracks, and then running price wars until one or the other went bankrupt. We saw it with companies laying fiber-optic cables. And we see it with competing cellphone companies.
One alternative is a planned economy, which generally has not yielded good results where it has been tried.
Capitalism is the worst economic system in the history of the world - except for all of the others.
lol, love the last line. I take your point though
This is typical of new technology and capitalism. We saw it with the railroads putting in redundant tracks, and then running price wars until one or the other went bankrupt. We saw it with companies laying fiber-optic cables. And we see it with competing cellphone companies.
One alternative is a planned economy, which generally has not yielded good results where it has been tried.
Capitalism is the worst economic system in the history of the world - except for all of the others.
What a pile of steaming crap! Your lame opportunistic attempts at propaganda only betray your profound stupidity. Every time I see your screen name I think, "NOT!"
Go upstairs and tell your mother she's calling you.
lol, love the last line. I take your point though
Thanks, but it s not original. A man much wiser than me said it about democracy.
Capitalism is the worst economic system in the history of the world - except for all of the others.
It really irks me that free market types co-opt every democratic principle and claim to be about markets. I'm sure you very well know that that quote is about democracy itself:
It has been said that democracy is the worst form of government except all the others that have been tried. --Sir Winston Churchill
The idea that capitalism and liberty are somehow interrelated, and that one cannot exist without the other is one of the great lies of the 20th (and now the 21st century). It will not take long for the Chinese to disabuse semi-literate, undereducated Americans this notion.
What a pile of steaming crap! Your lame opportunistic attempts at propaganda only betray your profound stupidity. Every time I see your screen name I think, "NOT!"
Can you tell me what I said that was not correct? If I've misunderstood history or economics or anything else, I'd love to learn the truth.
And BTW, swearing, insults and personal attacks have no place on this forum.
To get their fair share, Colao said, carriers could charge customers more for greater bandwidth, or guaranteed high speeds. They could also charge content providers, and guarantee them bandwidth speeds as well.
That last part is why we need net neutrality laws. If they start charging to guarantee bandwidth speed to content providers, only those that can come up with enough cash for the 'protection' will be accessible to end users.
<mob voice>"You got a nice website here, it would be a shame if nobody was able to access it..."</mob voice>
It really irks me that free market types co-opt every democratic principle and claim to be about markets. I'm sure you very well know that that quote is about democracy itself:
Yes, I know that.
And you should know that I am no fan of laissez faire. FWIW, I am a fan of regulated capitalism.
Free markets have good and bad points. One good point is that consumers might get cheap goods. One bad point is that domestic companies might have to compete with slave labor.
Planned economies have good and bad points too.
Something in the middle is likely best.
Yes, I know that.
And you should know that I am no fan of laissez faire. FWIW, I am a fan of regulated capitalism.
Free markets have good and bad points. One good point is that consumers might get cheap goods. One bad point is that domestic companies might have to compete with slave labor.
Planned economies have good and bad points too.
Something in the middle is likely best.
I have to agree with you. It is a shame getting to the middle ground in anything these days is almost impossible with extreme (dare I say nut job) view points on each side always hi-jacking every sensible notion and jerking it to their side either for power or greed.
As bandwidth-heavy smartphones like Apple's iPhone turn huge profits for handset makers, wireless carriers across the world have struggled to keep up with bandwidth needs. One executive said this week that new business models must be explored for carriers to remain profitable. ...
This goes completely against the facts that these same companies have been touting for years.
They've been charging ridiculously high prices for years and saying that they would *love* to get more people on the smartphone train. The prices were supposedly high, so that they could reap (rape?), the amount of money needed to "make sure the infrastructure was there" for the customers.
Now we find out that with users currently only using about tenth of the data they are being charged for on average, that the infrastructure is already "failing" and was probably never really there in the first place. Now they want to charge even more money to the users, so they can provide the things that they contractually promised to provide, and previously claimed to be already providing, in the first place.
It's totally corrupt no matter how you look at it.
They knowingly made contracts they could never fulfil, knowingly sold bandwidth that they knew they didn't have, and now are going to welsh on those contracts without even blinking, and raise the prices of the contracts. I bet the average consumer rolls over and licks their hand too.