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Summary:

In a few hours from now, there is a good chance that as part of The Steve Jobs Show, Apple will introduce a brand-spanking new, 3G iPhone. It has some folks I know in the wireless world not really looking forward to the big surge of […]

In a few hours from now, there is a good chance that as part of The Steve Jobs Show, Apple will introduce a brand-spanking new, 3G iPhone. It has some folks I know in the wireless world not really looking forward to the big surge of traffic such an 3G-capable iPhone will bring to their networks. Think of it as an iPhone-inspired stress test for their high-speed wireless networks.

In July 2008 June 2007, when Apple released the original iPhone, it ran on the 2G networks using a technology called EDGE. Despite the slower speeds, the data usage on AT&T’s mobile network ballooned. According to Chetan Sharma, our favorite mobile data guru, iPhone users used nearly five times the data used by average AT&T subscribers, and nearly twice as much as other smart phone owners. About 55 percent of the data was carried on Wi-Fi networks, while rest was on EDGE.

A recent study by M:Metrics shows that iPhone users are data junkies and do more stuff on their devices — surfing, social networking and even video — compared to other smart phones.

With the 3G iPhone, there is little desire to wait for a Wi-Fi connection and hitting the high-speed 3G connection directly for whatever you want to do. It has happened to me: Once I got EVDO, I stopped looking for a hot spot to connect my Lenovo X300, which has a built-in Verizon connection. Convenience took precedence over cost.

A flat-rate 3G data plan on iPhone would mean that the usage would start to shift from Wi-Fi to 3G. That would also boost the traffic, as lower prices could increase Apple’s current market share. At present it is estimated that Apple has sold just over 5.5 million iPhones, a number that could rise with carriers subsidizing the device to bring down the price to $200 from current $400-plus. And that could put the 3G networks under “stress.”

Most of the problem, if any, will crop up at the backhaul level. At present, the current 3G networks have a backhaul capacity of between 10-to-15 megabits per second, which is enough for the very short term, but it could become a big issue as more and more 3G iPhones and other new 3G phones go online. Bandwidth at the back end is going to start getting choked.

It’s already happening in Europe, where carriers are scrambling to add backhaul connections of either the microwave or the Ethernet kind to meet the growing bandwidth demand from 3G handsets. John Roese, CTO of Nortel, would describe it as the side effect of hyperconnectivity.

I asked folks from AT&T what they thought about the whole scenario. They didn’t seem to be worried, and pointed me to their plans to upgrade their networks and add capacity. (See Slide)

The company has recently updated its 3G networks speeds, just ahead of the release of the new iPhone. At the same time, it has partnered with Starbucks to offer Free Wi-Fi in the coffee chain’s stores. (It got Starbucks sued by T-Mobile USA.)

The reason I ended up writing this post is mostly because I have been seeing a whole slew of press releases around mobile video on iPhone. Mobile video playback wasn’t such a big issue on the closed 2G iPhone device, because it had slow connections that no one wanted to use to watch a limited number of YouTube video. This time around it’s different, and there is a huge interest in video on the iPhone.

  1. You definitely point out a valid issue that AT&T may be facing with the release of the 3G iPhone, whether or not it will be introduced by Jobs in under 14 hours.

    I’m ready to make the jump to a 3G iPhone considering everything will be okay hardware/software and network-wise. I would really hate to see AT&T’s network going down or lagging behind because they underestimated the use of the iPhone. Hopefully they learned from the current iPhone’s activity that iPhone users mean business when it comes to using the data network.

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  2. Hype or kool-aid – I’ve drank it. I think that the iPhone is going to blow it out now that Apple has given up on service revenue/exclusives and opened it up for pure device sales globally.

    The mobile web is upon us.

    I agree that there will be capacity challenges in the backhaul but there is another area that may be more significant and harder to remedy.

    In the case of backhaul, short term fixes can be quickly and cost effectively put in place using Ethernet microwave in many cases. The equipment is cheap and plentiful and it is commonplace to put up 10M microwave links in urban areas in 5-10 days if you have pre-assigned frequencies and antenna positions available on the towers/masts on both sides of the link. Of course, in situations where there are tower constraints, or landlord driven antenna placement constraints, or hop by hop spectrum licensing, this 5-10 days can stretch to a wireline based alternative interval.

    Greater challenges include the load on the IPv4 address pool as the number of end points on the web expands dramatically. IPv6 is available but most countries globally and the Internet globally are not routing IPv6 yet. There is some heavy lifting required to incrementally evolve the net to IPv6. The techniques have been identified but still a lot of work to do to execute without creating temporary islands of ‘Nets

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  3. In your article you have written July 2008 … Please correct it to July 2007…

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  4. Om,
    June 2007 was when the I-Phone was launched.

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  5. Dimitrios Matsoulis Monday, June 9, 2008

    Some times a kickstart is what is necessary, like with the 2G iPhone. A group of advanced 3G users would be great to convince companies to upgrade their networks. But Om what you mentioned about data plans is of the highest importance, especially in Europe where crossing borders -and paying mobile charges over the roof- is so easy. For this reason I think 3G data plans have at the moment a better future in the US where nationwide plans will be so convenient. Convenience has limits if the price to be paid is extremely high.
    Understandably a lot of people are waiting for the 3G iPhone but there is also other good stuff to arrive soon like Android, new Mobile Windows and plenty of smartphones from many companies.
    http://electronrun.com/

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  6. @amit and @petabro, thanks for pointing that out. I have corrected it.

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  7. I think you are overestimating the impact of the iPhone on AT&T’s network. A couple of points.

    – Europe is seeing some bandwidth constraints, both in backhaul and in the air interface. However, this is almost entirely from the huge growth in data card sales that they have seen over the last year. Traffic will increase dramatically with the new functions/applications enabled by 3G, but they will still be no where near the GB’s of data downloaded on data cards.

    http://www.theinquirer.net/gb/inquirer/news/2008/04/10/sees-sevenfold-increase-traffic

    – While 3G is going to discourage people from using WiFi when they are travelling, I still think most people will use their WiFi routers when at home. The process is easy to set up on the iPhone, and once set, is pretty much transparent to the end user. That is likely to still keep quite a bit of data off of AT&T’s network.

    I think the only stats I have seen about data usage over EDGE on the iPhone came from O2. They stated that 60% of users were using 25MB’s of data a month. I know the 3G version will see a huge jump to that number, but I’m doubtful that it will cripple the network.

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  8. [...] | Is 3G Ready for the iPhone Stress Test? – GigaOM Is 3G Ready for the iPhone Stress Test? – GigaOM: Om has good 3G data and insight into what 3G iPhone may mean from an infrastructure perspective. [...]

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  9. [...] use even more data-heavy features like streaming video and over-the-air downloading? Probably. GigaOM discusses this in more [...]

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  10. [...] use even more data-heavy features like streaming video and over-the-air downloading? Probably. GigaOM discusses this in more [...]

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