Carriers explore new business models to afford iPhone bandwidth

“As bandwidth-heavy smartphones like Apple’s iPhone turn huge profits for handset makers, wireless carriers across the world have struggled to keep up with bandwidth needs,” Neil Hughes reports for AppleInsider. “One executive said this week that new business models must be explored for carriers to remain profitable.”

“Vittorio Colao, CEO of Vodafone, said at the Mobile World Congress in Barcelona, Spain, on Tuesday that the demand for data in mobile devices has become a problem for carriers,” Hughes reports. “According to Reuters, he specifically named Google and said the company should not be allowed to control the flow of money through dominating the search and advertising market.”

“To get their fair share, Colao said, carriers could charge customers more for greater bandwidth, or guaranteed high speeds,” Hughes reports. “They could also charge content providers, and guarantee them bandwidth speeds as well.”

Hughes reports, “Under the current business model, Colao said it is difficult for operators to invest in their networks.”

Full article here.

34 Comments

  1. To get their fair share,

    Any time the telecos use this phrase, run for the hills.

    carriers could charge customers more for greater bandwidth, or guaranteed high speeds,

    …while artificially slowing down the speeds of those who don’t fork over the extra dough. Why utilize the technology to its fullest limits, when you can create artificial pricing tiers instead?

    They could also charge content providers, and guarantee them bandwidth speeds as well.

    What’s that? Net neutrality? Never heard of it!

    Under the current business model, Colao said it is difficult for operators to invest in their networks.

    Yeah, because there’s no growing demand for wireless mobile service… idiot.

  2. What a load, how come 3g costs more than wire internet?
    The cost for infrastructure is infinitely less (No running copper to each home), usage is an order of magnitude less yet I get 6GB of 3G for 2/3 ($30) of what 65GB ($45) cost me on my Cable Modem.
    Even worse, in reality I use less than 1 GB on my iPhone and 30GB on my Cable Modem per month. Cell Providers would appear to be 30 times more greedy that the ultra greedy Cable companies.

  3. Bandwidth is a limited resource, at least using current technology. Just as with other limited resources, it makes more sense to use demand side management than try to use supply side management, when the supply is not there.

    The most effective way to do this, something I have a good bit of experience with is through pricing.

    Instead of charging less to those who use more, the model should be turned around. Charge a low fixed price for a conservative base package of data (250MB). Beyond that charge for every MB of data used (~1cent per MB) and increase the cost per MB at set intervals (1.5GB, 3GB, 5GB and beyond).

    In this way a low initial cost would enable more users to take advantage of “smartphones” and an increasing cost per MB of use would encourage sensible use of the limited resource.

    You would suddenly see a lot more iPhone sales too.

  4. Again, the Barcelona MWC is about apple iPhone even that the iphone is not there.

    Dam, have anybody ever see a product that makes such impact in the entire industry like the iPhone does?

    Can’t hear Steve Ballmer laughing.

  5. Price 25GB at $9.99 and $0.005 cent per MB beyond up to 1.5GB, then another increase….. say to $0.0075 cents per MB… and up…..

    Current pricing models that charge $1.99 per MB on per MB Plans, yet drops the price to less than $0.006 per MB (assuming 5GB usage) on unlimited plans does not make good business sense when it is those who use the most, requiring the greatest infrastructure expense, that pay the least.

    GB hogs are getting their services subsidized by the rest of us.

  6. I hate the high costs too. But come on folks, you too would charge whatever you could. Do you go to your employer and say you prefer to work for free? Or even less. How much it costs to make something has nothing to do with what people will pay. But I do think that heavy users should pay more than the rest of us.

  7. Create a lower cost option with a monthly limit. Let customers select it as a plan choice. If you give users an incentive to self-limit bandwidth usage (playing significantly less per month), they will voluntarily use bandwidth more efficiently. Carriers can set the rate and monthly limit as needed to maintain their profit.

    Apple managed to get ATT to do this for the iPad. Why not do the same for iPhone? I guess the carriers can’t bring themselves to encourage existing customers to pay LESS for their service.

  8. Face it. I’m already on the verge of dumping my iPhone. The cost of a smartphone just isn’t worth it. It’s handy, that’s for sure, but for over $1680 per year… screw it.

    I’ll just use Skype. That’s where my head is these days.

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