The coming 3G network Armageddon

In the coming months, many of you who have experienced frequent 3G network blackouts should expect more, but not just from AT&T but from other operators as well. iPhone applications are bandwidth hungry and the recent uprising over the Slingplayer iPhone application not being able to use 3G (only Wi-Fi) is just a prelude to what will be a battle between users and cellular operators over which applications get permission to use the 3G network, how much uses should pay for 3G data subscriptions and more. Cellular operators have discovered that selling 3G data plans for smartphones and laptops can be quite profitable.

Check out this article about Orange UK from FierceWireless Europe: “Orange’s fifth Digital Media Index has revealed an over explosion in data usage across its UK network, with the vast majority of it coming from broadband dongle subscriptions which were up more than 500 per cent compared with six months ago. Paul Jevons, director of products, portals and services for Orange, said this latest Index indicated the mobile data era had truly arrived, and “an explosion in the number of mobile applications and new embedded laptops will boost mobile data demand even further in the coming months.” The company said its Q1/09 results revealed data now accounted for nearly 25 per cent of all of its revenues–up 3.3 per cent on last year.”

There are even rumors circulating that AT&T plans to reduce the price of its iPhone data plan by $10 to entice more users (clogging up the network even more). Cellular operators use to slap high prices data plans precisely because the network dies when too many people are on it using data-hungry applications. Recall the AT&T network outage during MacWorld 2009 in San Francisco. But the arrival of the iPhone as well as smartphones and netbooks has been too tempting for the operators to ignore — why not give the masses what they want? Lower the prices of data plans! Sell them netbooks and dongles!

Some people see an evil intent in AT&T’s desire to block Slingplayer from using 3G (i.e. AT&T is coming out with competing video offerings) but having witnessed a number of 3G outages in the US and in Europe, I can see AT&T’s point. This is why I continue to stay away from the iPhone. I have an iPod Touch and two SIM cars: T-Mobile USA prepaid card and a Dutch T-Mobile SIM for use in my Nokia phone depending on where I am. I use Wi-Fi which is already available in so many places and it has never given me any problems. I can’t see why I should pay AT&T $69 a month for their least expensive “unlimited” data plan (note: telco use of the word “unlimited” is highly suspect) which would not allow me to use applications that I normally use on Wi-Fi. Plus, I have Skype on my iPod Touch and this is what I use when I am traveling. No more roaming charges! Now if only I could have Wi-Fi everywhere in every city I visit at a reasonable cost.

Recently I spoke to a CEO of a wireless company in Hongkong and he told me that cellular operators were now starting to give away netbooks in exchange for 2-year contracts. So here we all are, accessing the 3G networks around the world with mobile phones, smartphones, iPhones, netbooks and laptops. How quickly are the cellular operators going to add capacity to their networks over the next two years? At a recent conference in Silicon Valley, AT&T admitted that many of their cellular base stations use DSL/copper for their backhaul. Here I was thinking all along that surely a major telecom operator like AT&T would be using an extensive fiber network as backhaul for all that voice and data traffic. Alas, I am expecting too much.

Let’s see what happens in France when Orange (France Telecom), SFR and Bouygues get enough people to watch TV on the iPhones they are selling. Unlike the US, Apple has no exclusive deal in France; they are required to sell the iPhone through any operator. See SFR ad below promoting their new service where you can watch 20 TV channels. Orange France has an offer with 60 channels. 3G disaster in France, too?


Gartner reports that although mobile phone sales worldwide in Q1 2009 dropped 8.6% from last year, smartphone sales are up 12.7%.
Motorola and Sony Ericsson are in big trouble with market share dropping rapidly. Among smartphone manufacturers, Apple’s market share doubled from 5.3% to 10.8%. RIMM is also doing very well, but Nokia still have 45.1% of the market.

Related articles:

iPhone users are bandwidth hogs

SFR launches prepaid mobile Internet access

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  1. It’s so interesting, for back in the days of 1X, carriers had weak business cases due to a near zero data penetration. And yet they continued to build out EVDO. While there’s also a voice capacity benefit, the focus was still on “if you build it they will come.” Well, now people want it and are starting to use it, and carriers can’t keep up…how ironic! 😉

  2. Yet another reason for Municipal WiFi.