AT&T's tough talk on data use seen as part of struggle with Apple
As AT&T this week said it may charge more to bandwidth-heavy iPhone users, one firm believes the wireless carrier has been stung by Apple's new found control of its subscribers through the App Store and iTunes.
iSuppli Corp views the comments from Ralph de la Vega, head of consumer services for AT&T, as part of an industry-wide behind-the-scenes struggle between wireless providers and hardware makers. As growth opportunities in voice service revenue have disappeared, cell phone carriers must turn to revenue from data.
But services like iTunes and the App Store, the firm said, have allowed Apple to usurp control of subscribers from AT&T. In other words, customers are now more tied to their phone than they are their carrier, which results in lost revenue for AT&T.
"Apple has generated major revenue and margin growth based on its iPhone business -- while AT&T largely has been unable to cash in on the growth in data services beyond monthly access fees," said Jagdish Rebello, PhD, senior director and principal analyst for iSuppli. "This is making it difficult for AT&T to make the required investments to upgrade its network to support greater bandwidth. The net result is a deterioration in the mobile broadband user experience."
So much of the iPhone experience is tied to transactions made between the consumer and Apple on the App Store that have no relationship with AT&T. iSuppli believes that the issue of subscriber control is a battle that will be waged across the entire wireless industry.
In addition to Apple, Google, Nokia, Research in Motion and Microsoft have created their own comparable software download destinations. Each of them are attempting to "muscle in" on wireless carriers through offering premium content, service and applications, the firm said.
"Regardless of who wins, this battle will alter the balance of power in the mobile value chain," Rebello said.
Huge sums of money are at stake. The firm has forecast wireless data services, excluding messaging, to grow by 26.2 percent and amount to $87.7 billion in 2009. Into the future, iSuppli has forecast it to be a $188 billion revenue generator by 2013.
Apple has found tremendous success with the iPhone App Store, achieving the milestone of 100,000 applications available for download less than a year and a half after its debut. In September, the company revealed that over two billion applications had been downloaded from the store.
This summer, the iPhone was referred to as the "Hummer of cellphones" after AT&T's network struggled following the launch of the bandwidth-heavy iPhone 3GS. The average iPhone user is said to use 10 times the bandwidth of a typical smartphone user.
De la Vega revealed this week that 40 percent of the network data capacity for AT&T is used by just 3 percent of smartphone users, with most of that going to activities like streaming audio and video. Those types of services are made possible through software available for download on the iPhone App Store.
iSuppli Corp views the comments from Ralph de la Vega, head of consumer services for AT&T, as part of an industry-wide behind-the-scenes struggle between wireless providers and hardware makers. As growth opportunities in voice service revenue have disappeared, cell phone carriers must turn to revenue from data.
But services like iTunes and the App Store, the firm said, have allowed Apple to usurp control of subscribers from AT&T. In other words, customers are now more tied to their phone than they are their carrier, which results in lost revenue for AT&T.
"Apple has generated major revenue and margin growth based on its iPhone business -- while AT&T largely has been unable to cash in on the growth in data services beyond monthly access fees," said Jagdish Rebello, PhD, senior director and principal analyst for iSuppli. "This is making it difficult for AT&T to make the required investments to upgrade its network to support greater bandwidth. The net result is a deterioration in the mobile broadband user experience."
So much of the iPhone experience is tied to transactions made between the consumer and Apple on the App Store that have no relationship with AT&T. iSuppli believes that the issue of subscriber control is a battle that will be waged across the entire wireless industry.
In addition to Apple, Google, Nokia, Research in Motion and Microsoft have created their own comparable software download destinations. Each of them are attempting to "muscle in" on wireless carriers through offering premium content, service and applications, the firm said.
"Regardless of who wins, this battle will alter the balance of power in the mobile value chain," Rebello said.
Huge sums of money are at stake. The firm has forecast wireless data services, excluding messaging, to grow by 26.2 percent and amount to $87.7 billion in 2009. Into the future, iSuppli has forecast it to be a $188 billion revenue generator by 2013.
Apple has found tremendous success with the iPhone App Store, achieving the milestone of 100,000 applications available for download less than a year and a half after its debut. In September, the company revealed that over two billion applications had been downloaded from the store.
This summer, the iPhone was referred to as the "Hummer of cellphones" after AT&T's network struggled following the launch of the bandwidth-heavy iPhone 3GS. The average iPhone user is said to use 10 times the bandwidth of a typical smartphone user.
De la Vega revealed this week that 40 percent of the network data capacity for AT&T is used by just 3 percent of smartphone users, with most of that going to activities like streaming audio and video. Those types of services are made possible through software available for download on the iPhone App Store.
Comments
For the wise backbone provider, this is the beginning of an opportunity to roll out the best networks in the country. Whomever puts the money in now, will be assured a majority of the subscribers in the future. For the most part, our networks are behind other countries for this sole reason.
AT&T should be focused on their network, not what's being transferred over it. If they could, say, have DSL like speeds next year, they wouldn't need to worry about App Stores and iTunes. They would get the subscribers based on their network integrity. No drops, full speed all over. That's the focus of a network provider, wireless or otherwise. The US sucks for this and it needs to change. The only way to get the Bells to change is through law, unfortunately.
the 3% are jail breakers who tether. there is even a thread on howard forums with someone claiming they used 30GB per month over a few months by tethering multiple PC's to his iphone
When customers take the meaning literally some will of course push to consume as much as they are technically within their rights to consume. The same thing happened with dial-up internet access; at a time when established providers charged by the minute, newcomers showed up and advertised 'unlimited' connection times. Most people could not stay online indefinitely, but when people started getting second phone lines exclusively for modem use they had no reason to disconnect. The ISP's modem pools became oversubscribed, and companies like AOL suffered the black eye of competitor's ads showing them to always have busy signals.
Now we're reliving this same lesson with the prospects of 'unlimited' data use on mobile devices. Something has to give...
EDIT: Replaced 'bandwidth' with 'data' for clarity
I'd never trust the telcos with anything. Didn't the gov't give them $15 billion earlier this decade to build out their networks? From what I understand try did nothing and pocketed the cash. Let them be the dumb pipes they were meant to be. I hope that Comcast/NBC deal never goes through.
As I've posted elsewhere, the use of the word 'unlimited' in marketing material is a dangerous practice. Like 'unique', it cannot be modified; something is either unlimited or it is not.
When customers take the meaning literally some will of course push to consume as much as they are technically within their rights to consume. The same thing happened with dial-up internet access; at a time when established providers charged by the minute, newcomers showed up and advertised 'unlimited' connection times. Most people could not stay online indefinitely, but when people started getting second phone lines exclusively for modem use they had no reason to disconnect. The ISP's modem pools became oversubscribed, and companies like AOL suffered the black eye of competitor's ads showing them to always have busy signals.
Now we're reliving this same lesson with the prospects of 'unlimited' bandwidth use on mobile devices. Something has to give...
the ISP's started to automatically disconnect people after a few hours. AT&T does the same thing
They decided to sit back and pocket the cash for two years and only decided recently to really upgrade their network.
That isn?t true. AT&T has been upgrading their network at a rate of billions per year since before the iPhone launched.
And of course users are more tied to their hardware. Who cares what the brand of the carrier so long as it is available in all desired locations and it is cheap?
Ehhh...I take that last bit back...I much prefer that cute Cingular logo to AT&T's...
for what I pay a month I don't wan to hear them cry about bandwidth. Someone's making money and for that Monthly bill rest assured Apple got paid off long ago.
All iPhone users pay extra every month to AT&T just cause it's an iPhone. In my opinion they can just deal with it. Unlimited is unlimited. If they wanna offerlower prices for limited accounts that's fine but don't charge me for unlimited then send me an overage bill.
....AT&T should be focused on their network, not what's being transferred over it...
Exactly. But the carriers still entertain the possibility of creating services people will actually pay for over services from the likes of Apple's App Store and Google. Delusional. Until they get over that we'll see more and more of this paranoid frantic behavior.
AT&T and all their formidable labs didn't come up with half the features Grand Central and Google Voice have - even with their massive head start. Instead they sat back and collected money on the same tired voice features.
Not surprising with an anti-technology dinosaur like Whitacre in charge for far too long.
This is stupid to suggest that Apple is imposing on AT&T's income. There are lots of apps that doesn't even need a network to run on your iPhone. Put the phone in Airplane mode and see what you can't do with your phone. Alot of the revenue made on the App Store goes to developers as well.
In Canada, Rogers has issues but no where near the issues that AT&T struggles with. 6GB was unlimited when the iPhone first came out in Canada. And to +90% iPhone users that is unlimited/overkill. They then now have packages like mine where I spend $80 CND a month with my "extras" (voicemail, caller ID etc) and I have a 500MB a month data plan included. I have more than I need and if you need the 6GB or more you can pay more.
AT&T needs to start charging those who use /abuse the network accordingly and those who don't less. This will allow them to gain more revenue and continue to upgrade their network.
AT&T needs to stop getting people to make excuses for them and smarten up already. You have had iPhones for how long? Why is Canada flourishing in the iPhone market (All major carriers now can have iPhones) and AT&T is killing the US market?
iSuppli are morons
the 3% are jail breakers who tether. there is even a thread on howard forums with someone claiming they used 30GB per month over a few months by tethering multiple PC's to his iphone
This gets to a separate but VERY real issue about advertising that the FTC needs to squash right now. None of the wireless carriers 3G network has an unlimited cap on it. None of them. But they NEVER advertise it that way. I mean, I don't get it; if you are complaining about people using too much data but it's advertised as "unlimited", what do you EXPECT people to do?
This point has little to do with net neutrality (what's going over the pipe). This is just false advertising at it's worse (how much travels down the pipe).
Either AT&T should state that you have a 5GB cap and aren't allowed to go over it, OR make it unlimited. And if it is unlimited, you shouldn't complain that people are using too much bandwidth. It's like saying someone is eating too much food at a buffet. If you can't serve that much, DON'T CALL IT A BUFFET!
iSuppli are morons
the 3% are jail breakers who tether. there is even a thread on howard forums with someone claiming they used 30GB per month over a few months by tethering multiple PC's to his iphone
I?m usually in the 20-30GB range per month. Been tethering since the 3.0 Betas back in March or around then. Never had a call or notice from AT&T.
Either AT&T should state that you have a 5GB cap and aren't allowed to go over it, OR make it unlimited. And if it is unlimited, you shouldn't complain that people are using too much bandwidth. It's like saying someone is eating too much food at a buffet. If you can't serve that much, DON'T CALL IT A BUFFET!
They do state it in the contract. The contract is to protect them, not you.
PS: Simply calling it unlimited is descriptive enough since there are at least two area that the service can be unlimited. Even if they do cap the data throughput to a specific number of GB they can still call it unlimited if they don?t limit the timeframe in which you can use it within a billing cycle. Dial up ISPs used to cap your time but not care about how much data you consumed within a set time frame.
I waited for for the third generation iPhone knowing that ATT was working to deliver 3G in my area. They had been telling me it would be available (next spring, in a few months, by end of summer, blah, blah, blah). I actually called them numerous times over the last three years. They finally would not commit to saying anything.
Now the excuse is they are waiting for government approval to deploy 3G on cell towers that they acquired when they acquired Centennial Wireless in November 2008. Yet more delay ... and 4G is being deployed by some competitors. It's not like I'm in the boonies ATT ...
I complained to the Presidents office at ATT. They responded to my query of why am I paying $30 a month for mostly nothing (EDGE is useless even for checking email) with ... oh yeah, they didn't really respond.
I fault Apple some for partnering with ATT exclusively to start, and not delivering an iPhone with an alternate carrier, but ATT is the primary culprit here. They were lucky to land the agreement with Apple, and now they are scrambling to satisfy a lot of unhappy customers (especially those who live and work between the coasts.
I’m usually in the 20-30GB range per month. Been tethering since the 3.0 Betas back in March or around then. Never had a call or notice from AT&T.
They do state it in the contract. The contract is to protect them, not you.
PS: Simply calling it unlimited is descriptive enough since there are at least two area that the service can be unlimited. Even if they do cap the data throughput to a specific number of GB they can still call it unlimited if they don’t limit the timeframe in which you can use it within a billing cycle. Dial up ISPs used to cap your time but not care about how much data you consumed within a set time frame.
The problem is NOT the contract itself. It is the advertising of the terms in every flier and TV spot except the contract itself. I'm not arguing against the 5GB cap. I'm arguing against the claim that they offer "unlimited" bandwidth then the contract clearly states otherwise. That's 100% false advertising.
The problem is NOT the contract itself. It is the advertising of the terms in every flier and TV spot except the contract itself. I'm not arguing against the 5GB cap. I'm arguing against the claim that they offer "unlimited" bandwidth then the contract clearly states otherwise. That's 100% false advertising.
Could be the basis for a nice class-action lawsuit.....
Brasso
The problem is NOT the contract itself. It is the advertising of the terms in every flier and TV spot except the contract itself. I'm not arguing against the 5GB cap. I'm arguing against the claim that they offer "unlimited" bandwidth then the contract clearly states otherwise. That's 100% false advertising.
i've studied my usage and if you abide by the contract and don't JB or tether than hitting 5GB per month is very hard unless you stream porn all day long.
the unlimited is for people who use the service in accordance with the TOS. the people who will be affected and will complain are the usual spoiled children whiners
if they sue then AT&T has enough electronic gizmos monitoring their network that they will bring enough evidence to court to embarrass them
i've hit 2GB per month using pandora almost all working day for most of the month. anyone using 10GB or more is outside the norms of use for most people.
iSuppli are morons
the 3% are jail breakers who tether. there is even a thread on howard forums with someone claiming they used 30GB per month over a few months by tethering multiple PC's to his iphone
Agreed. So, as a result of these jail breakers who have to watch their "Glee" throughout the entire day (while they drive!), the Wireless Carriers will be forced to offer Data Plans with tiered bandwidth usage options on future contracts.
There is no such thing as unlimited bandwidth....there is not enough bandwidth to go around when these jail breakers tether all day. They are breaking the rules of their contract and hurting the rest of us. Yes, our current data contract is 'unlimited'....but it also says no tethering.