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News about wireless bandwidth hogs, new session-based pricing from Leap Wireless (s Leap) and the appearance of a new web site aimed at helping consumers understand their data caps and the limits those impose, all point to a growing problem in the wireless industry. And that problem isn’t congestion. Rather, unless the industry figures out how to give people connectivity at a reasonable costs, wireless will always be luxury access technology and ubiquitous connectivity will be a pipe dream.
The problem isn’t congestion, it’s a stagnation.
A study Friday noted that the top one percent of wireless users consume half of all the data. Meanwhile, Public Knowledge on Friday launched a web site designed to help consumers understand their data caps. On Thursday Leap Wireless’ CEO said the company would begin offering data sessions in addition to its regular tiered data plans. Under that scenario a user might buy a data plan just like he would buy pre-paid minutes on an as-needed basis after reaching his cap. All these bits of news are linked by one key problem: wireless data is in high demand, but it’s also expensive to deliver.
And the tension between what consumers want from their wireless networks and what operators want to give them is leading to stories that harp on congestion, new pricing models and consumer advocacy around high-priced plans. But it’s time to stop trying to address that tension solely with new types of rate plans, and customer education. If we want wireless data to become ubiquitous and deliver on the promise of connectivity, the industry needs to address its costs and educate consumers on those costs in a transparent way.
Part of the problem is just a matter of physics — airwaves can only carry so many bits per hertz — but other aspects of the high cost are related to policy and the reluctance of the industry to embrace, or even talk about, technologies that will help them deliver wireless at a lower price per bit. Right now, sending a bit over the cellular airwaves costs a lot more money than it does to send that same bit over fiber or even DSL. How much more depends on if you are in a populated city or out in rural America (it also depends on if you are in America) as well as the type of network the bit is sent over (i.e., LTE, CDMA or HSPA). But broadly speaking it’s at least 200x more expensive to use cell networks according to analyst Chetan Sharma. He estimates that number will drop over time to 100x, but clearly that’s still a huge disparity.
Not all bits are equal (or as expensive). So let’s rethink the network.
Fortunately, not all data has to travel over the gilded cellular pipes. Smart consumers already use Wi-Fi networks for streaming video and movies, but ideally this will become more automated. This means operators must include Wi-Fi in their networks, and actively shunt certain types of traffic to those networks when available. In short, we need application-aware wireless networks that send traffic to the cheapest, but most appropriate network the application can use and the consumer will accept.
This means when I stream YouTube (s goog) videos, my carrier routes me over to Wi-Fi if it’s available but my email and voice calls stay on 3G if the Wi-Fi is weak. As a consumer I would advocate Wi-Fi as the default network with carriers switching me over to a cellular plan only when absolutely necessary, much like upstart Republic Wireless tries to do. Buying cell phone plans becomes a little more complicated, perhaps involving a short questionnaire that a consumer fills out ranking what types of traffic he needs to get instantaneously versus the traffic he is willing to compromise on.
This new type of plan also means that consumers may have to accept lower quality service for streaming video, might end up paying for access to a carrier Wi-Fi network and will need to accept their operators monitoring the applications they use. There’s a role for developers here in building tools that help consumers see exactly what their operators are doing, and the FCC should stay active in enforcing the spirit of the network neutrality rules. I have a hard time believing that carriers could behave well enough for me to trust them with something like this — just look at their historical stances on Wi-Fi, or the recent questions around Google’s Wallet service on Verizon’s network, but something has to give and I don’t think it will be the operators.
We want what we want. Until we have to pay for it.
Despite the cost of wireless plans, we want and will use wireless data. On Friday, the CTIA put out a study noting how women use the wireless network for an increasing amount of stuff. And articles offering a word of caution about viewing the Superbowl on your mobile phone get that while it may make you bust through your data cap, people will watch bits of a big game on the go. That very idea was unthinkable a few years ago, but mobile has changed our surfing, shopping and even our TV watching habits.
Carriers have moved forward in delivering faster networks that can deliver between 5 and 12 Mbps down — enough for video, voice and even the most demanding web services — but their current cost models don’t match up with the usage expected and advertised on the networks they’re building. Consumers look at carriers’ pricing, their marketing (which shows customers streaming video on their phones) and their comments in the press about high costs for mobile data and congestion, and recognize that carriers are not telling the whole truth. If network resources are such a precious commodity, then why not price data so it costs more at peak times? Or why even encourage video on the LTE network?
But when will that disconnect between the ease of using a service and the high cost of that service start to change or curtail consumer behavior? In short, when will a user suddenly think, “Maybe I shouldn’t use my phone for this, right now?” In a mobile-first world, will wireless become a second-class access technology, or will carriers adapt their networks and their cost structures in time?