Mobile’s Dirty Little Secret: The Threat Of Network Overload

It isn’t talked about much in the industry, but there is a serious downside to mobile data really taking off. If subscribers start embracing messaging, streaming video and Web browsing on cellphones, it will overload wireless networks. In a blog post today, Michael Mace, an industry consultant and former Chief Competitive Officer and VP of Product Planning at Palm (NSDQ: PALM), addresses the issue head-on. He writes: “It’s very hard to confirm exactly what mobile data is doing to the networks because the operators don’t like to discuss this sort of thing in public. But the number of data-capable phones is definitely growing faster than network capacity, so overload is just a matter of time. I’ve gotten several off-the-record comments from friends in the industry saying that the operators are worried about the problem and are quietly trying to throttle traffic, especially to online multimedia services that consume a lot of bandwidth.”

Mace dug up an old statistic from 2005, which predicted that the typical 3G network would be overloaded if only 40 percent of subscribers used video just eight minutes a day. I suppose the networks can say they are thankful that watching TV hasn’t taken off as anticipated because the same report suggested networks would be clogged in 2007.

The big question is what can be done about this?

More after the jump

In order to provide more bandwidth, a carrier needs better technology (4G), more spectrum, or a denser network in which each cell tower serves fewer people — all of those options are expensive. Mace doesn’t address any of those, and instead is a bit more practical about what can be done immediately. His first suggestion, which is does not really recommend, is to throttle back the usage by those who are using the network too much. A recent example of this was when T-Mobile USA started selling the G1. In the fine print, it said that data consumption would be limited to 1 gigabyte, and then usage would be throttled back. There was an immediate backlash by consumers, who claimed that a data-driven device like the G1, shouldn’t have a data cap. The next day, T-Mobile lifted the cap and said it was reviewing its policies. Mace advises against this approach: “The most damaging approach is that one that operators seem to be leaning toward now, covertly throttling traffic. They can probably get away with that for a while, but eventually people online will compare notes, figure out that network performance is being systematically distorted — and then the class-action lawyers (in the US) and government regulators (in Europe) will be unleashed.” Instead, he says honesty is the best policy, and that carriers should not try to advertise their networks as comparable to wired networks, and instead offer two-tiered pricing based on usage.

But are there other options worth exploring? What about compression technologies? Or what about alternatives to streaming video to the phone? For instance, Qualcomm’s MediaFLO technology uses broadcast technology to deliver TV to the phone. Likewise, with the switch to digital TV, broadcasters are looking at delivering TV to the phone, as well, which wouldn’t clog up the wireless network. But perhaps these solutions aren’t perfect either. The technologies provide live TV, rather than streaming TV, so users don’t have the choice of watching something when they want to. Of course, a lot of 4G proponents, such as Clearwire (NSDQ: CLWR) and Sprint (NYSE: S), are calling LTE and WiMax as the technology solution for the mobile Internet. However, the carriers will still have to have the spectrum to support it.

loading

Comments have been disabled for this post