No mobile service provider wants the attention AT&T is getting about how unhappy iPhone users are about their ability to use their devices, and the industry as a whole does not need such attention at a time when it faces possibly major reregulation by the Federal Communications Commission that could affect industry revenues right at the point that the industry is racing to upgrade its broadband capabiltiies.
One can argue one way or the other about the state of AT&T's 3G network, but there seems little question that Apple iPhone user behavior is so strikingly different from that of other smart phone users that every carrier has to be concerned about what happens as more devices like the iPhone are sold to end users. If most of them start to behave like iPhone users, carriers are likely going to have serious bandwidth problems.
Apple iPhone users consume two to four times as much network data volume as other smart phone users, according to traffic measurement company Comscore. And it also appears that users of the 3G version use 100 percent more data than iPhone users on the 2.5G networks.
So the business problem is fairly clear. An AT&T data plan of $30 a month for just about any smart phone has dramtically different revenue implications. Most smart phone users put light loads on the network for that $30, while Apple iPhone users put heavy load on the network, for that same $30.
Some think the mere expedient of building new 4G networks will solve the problem. It will help--a lot. But even that is not a permanent solution, in and of itself, if other smart phone users start to behave as iPhone users do, and all of them start consuming more video.
Alcatel-Lucent studies show that Web browsing consumes 32 percent of data-related airtime but 69 percent of bandwidth, while email uses 30 percent of airtime but only four percent of bandwidth.
One suspects this situation cannot continue. Either there will be changes to unlimited data plans, such as higher prices, as well as other ways of better matching network load to service provider revenue. Customers won't be happy about that.
But carriers might have to resort to plans that differentiate between the load different applications--especially video--place on the network and charge accordingly. Mobile networks simply do not have the ability to supply the same amount of bandwidth that wired networks do.
As more users switch to smart phones, and start to consume video and Web applications more intensively, push will come to shove. Some observers think many users will start to use their smart phones more than their wireline-tethered PCs for Web application access. Something has to give here.
And one way things could change is if significant shifts of market share were to occur, spreading the iPhone demand over more networks than AT&T's. All the carriers will keep investing in their networks, and all will be under competitive pressure to keep access costs as low as possible. Despite all that, demand might outstrip supply. So change is inevitable.
http://www.nytimes.com/2009/09/03/technology/companies/03att.html?_r=1&hp
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