Carriers look for new business models to afford iPhone bandwidth

Posted:
in iPhone edited January 2014
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.
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Comments

  • Reply 1 of 93
    Sounds like code for "charging more" as if the tons I overpay for my iPhone every month isn't enough for covering their costs.
  • Reply 2 of 93
    3 percent? Ha. Yeah right.. Yet, they think Verizon Wireless would be a solution. Hahah, what-a-joke!
  • Reply 3 of 93
    MacProMacPro Posts: 17,878member
    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.
  • Reply 4 of 93
    The guy has no clue of what his talking about. Sure 4G or LTE what ever you wanna call it, cost more money but it also gives networks 5x more capacity so I doubt carriers will wanna go with a different business model. When LTE arrives data plans will be dirt cheap since carriers will be able to compete more agressive cause a single carrier will have room to handle all the US customers for example.
  • Reply 5 of 93
    I think AT&T is now in the enviable position of having learned quite a bit from its iPhone support so far, and of course to have profited in more ways than one from it.



    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.
  • Reply 6 of 93
    All of this is just thrashing by an industry that doesn't want to admit its lucrative business models are dead. With 4G/LTE, voice just becomes another stream of data (albeit with QoS guarantees). Eventually, the consumer ideal would be Internet in the Sky--carrier agnostic and with none of these weird structures to artificially retain customers.



    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.
  • Reply 7 of 93
    I wish I had the business problem of so many customers I have to continually upgrade to serve and retain them to the tune of a couple billion dollars a year.



    Heck, now and then I might even pass on my bonus to put up an extra tower or two.
  • Reply 8 of 93
    Quote:
    Originally Posted by digitalclips View Post


    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.
  • Reply 9 of 93
    igeniusigenius Posts: 1,240member
    Quote:
    Originally Posted by digitalclips View Post


    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.
  • Reply 10 of 93
    I grew up in the days before personal computers and cell phones. Back then there was a phone in the house and if there was someone home to answer the thing you made contact and if not, then not. Most households paid roughly $100 to put up a TV tower and that was it. Movies were plentiful on network TV, albeit at the cost of having to sit through all those ads, or you could head over to the local theatre and pay to see movies commercial-free.



    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.
  • Reply 11 of 93
    MacProMacPro Posts: 17,878member
    Quote:
    Originally Posted by iGenius View Post


    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
  • Reply 12 of 93
    Quote:
    Originally Posted by iGenius View Post


    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.
  • Reply 13 of 93
    igeniusigenius Posts: 1,240member
    Quote:
    Originally Posted by digitalclips View Post


    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.
  • Reply 14 of 93
    Quote:
    Originally Posted by iGenius View Post


    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.
  • Reply 15 of 93
    igeniusigenius Posts: 1,240member
    Quote:
    Originally Posted by DanielSW View Post


    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.
  • Reply 16 of 93
    Quote:
    Originally Posted by AppleInsider View Post


    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>
  • Reply 17 of 93
    igeniusigenius Posts: 1,240member
    Quote:
    Originally Posted by 2 cents View Post


    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.
  • Reply 18 of 93
    MacProMacPro Posts: 17,878member
    Quote:
    Originally Posted by iGenius View Post


    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.
  • Reply 19 of 93
    I think changing their business model is a no brainer, despite all the carping about it. If something is scarce, charge more for it. People who use less bandwidth should pay less. People who use more should pay more. The extra proceeds can be used to invest in more capacity, leading to lower overall prices in the long run. It's absurd that the carriers think they should make money off of advertising or devices or services. They should make money from selling bandwidth, and do a good job of providing that bandwidth. Why is this so hard to understand?
  • Reply 20 of 93
    gazoobeegazoobee Posts: 3,754member
    Quote:
    Originally Posted by AppleInsider View Post


    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.
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