Is 3G Ready for the iPhone Stress Test?

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.

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