“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.
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.
What ? the business model of “rape and pillage the end users for all their money and not invest it in anything but our personal bank accounts” isn’t working for them ?
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.
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.
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.
Telcos have been raping the American consumer for ever. Time for us to drive a truck up theirs
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.
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.
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.
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.
@ET – there is some logic to your proposal. How about a pay as you go, $X per Gb, no sliding scale, no packaging that forces you to guess how much you’ll use and kills you if you go over.
I have another. Let me have an iPhone with the same data contract proposed for the iPad. Similar calling plan. 10¢ a minute, no games, no $1 for each day you use it, just 10¢ a minute. Charge only for sending SMS messages, no charge for receiving. I could live in that environment.
PS – Cellular networks ARE dumb pipes, they just haven’t figured it out yet.
…this is why ubiquitous 802.11 is the only way…..let the telcos keep their puny cell networks for voice……they can’t seem to keep pace with anything else
Hughes reports, “Under the current business model, Colao said it is difficult for operators to invest in their networks.”
AND
at the same time, keep on making their obscene bonuses.
The real story here is the part about google. They want a chunk of any ad revenue generated on their network. They may couch it in terms of data shortage and they may talk about having to change unlimited data plans, but they just want to scare Apple and Google into this plan.
I understand about tiered pricing, but I don’t think they will do create a consumer friendly system where the light data users pay anything less than they are now. They would simply add premiums for every MB over and it will not be pretty. What “ET” outlined seems like a nice plan, but I just can’t wrap my head around telecos and “consumer friendly”. In that context, smartphone consumers, for whom unlimited data seems a necessity, could be frightened off by the predictably punitive and draconian tiered plans the telecos would roll out. At least I suspect that is their game.
Sorry guys – you just provide the plumbing.
Those of you calling others who actually use what we pay for data hogs are idiots.
I pay my $30 a month for unlimited bandwidth-I’m sure as hell going to get my 30 bucks worth.
You don’t want to get your moneys worth from what you pay for, fine-but shut up about “data hogs”.
They just need to charge by the gig. Even $10 per month, per gig. If someone has the need to stream 10gigs of Youtube, let em pay $100/mo. They will figure out what’s important and what’s not real fast.
@nekogami13
In some places, and not so long ago where I live, water rates were fixed no matter how much you use(d).
Based on your logic, everyone would turn on there faucet and just let the water run down the drain to make sure they get their moneys worth.
Sorry, but that logic is idiotic…
Water, and broadcast bandwidth, are both limited resources and should be respected as such. That will become increasingly obvious as wireless data use explodes… at least until technology catches up, or more accurately until implementation catches up with technology.
If you want to leave the faucet on, consuming mass quantities of a resource, that is ok by me as long as you pay your own way and don’t expect me to subsidize you the way I am now.
http://www.exaltcom.com/Backhaul-Alternatives.aspx
If I get an iPhone and sit it on a table and do nothing but let it sit there for a year, I will still have to pay $1200. Just for it to sit there.
@ ET
while i agree with your point towards nekogami’s comment, (i certainly don’t leave my phone consuming data just to get my $ worth) and i see the logic in pay-for-use, i don’t think it’s necessarily fair to call high data users “hogs” simply because they are saavy and ambitious enough to use their technology to the fullest. Their technology is (how ever incongruously and unfortunate for telcoms) further ahead of the market that implements it, and they’re using it for what it’s for.
sound like a bit of “Future-shock”
Comparing a natural resource to bandwidth is stupid.
They are no where near the same, nice try for an idiotic strawman.
@ theioniousMac
“If I get an iPhone and sit it on a table and do nothing but let it sit there for a year, I will still have to pay $1200. Just for it to sit there.”
Exactly, and if you could get a data plan with a minimum of say 250MB of data for say $10 per month or $120 per year, and then payed for what you used beyond that at a fraction of a penny per MB, would more people sign up for a data plan? If the price per MB got higher the more you used, but not at an outrageous rate, wouldn’t you be inclined to be more aware of when you were using WiFi versus Cellular when consuming mass quantities of data, yet not be afraid of getting hammered?
At $0.01 per MB a 5GB plan would run you $50 per month. My informal poll shows that most of my friends use less than 250MB of cellular data per month. Those people consuming 10GB should be paying at least $100 in a fair world. If they are using even more they should be paying a lot more because at 10GB/250MB that one user is using as much data as 40 average users.
Heavy users are clogging up the system and damaging the experience for average users. Everyone who is paying for an unlimited plan at $30, but only using an average of 250MB, are subsidizing those folks who use large amounts of data….. doesn’t make sense….
I bought an “unlimited” plan with a 5 gb limit in the fine print.
If I use it as I see fit up to the limit, I am not a data hog-I am just using my plan.
Comparing bandwidth which is infinite(constrained by cost of new equipment) to a non-renewable resource is idiotic.
If you can’t supply the product you are selling- then by all means change how you sell it.
@ ET
per the point i was trying to make in my last post. you’re making these “heavy users” out to be the bad guys, careless and greedy. They are merely using their devices for what they are capable of. they are not the ones responsible for the experience of average users. the telecoms are responsible for the experience of ALL users. Telcoms are damaging the experience for everyone by either not being able to stay ahead of the curve or catching up fast enough.
they should talk to the RIAA.
The problem is the telcos based the unlimited plan on past smartphones that used a pathetically low amount of data per month.
So they probably figured the iPhone “might” double or triple the data use.
Two years later, the iPhones are using 10 times as much as they thought. So the unlimited plan is now getting hammered in a way they never thought possible.
I don’t want to see it, but unlimited rates probably need to go way up, and cheaper limited plans as alternatives.
Anyone who took a marketing class in college understands “supply and demand”. The telcos just haven’t pushed back yet on prices for the unlimited plans.
@ET – Agree with your thoughts.
@nekogami13
ET’s analogy is perfect. Doesn’t matter that it is a natural resource, it just a good comparison being a pipe and something flowing thru it. Plus a limited resource does apply to both.
Obviously the wireless bandwidth has a limited amount of capacity, that’s why New York and other big cities had problems last year. It got maxed out and the network slowed way down or flat out stopped working.
The telcos need to figure out what to do. Add more towers or charge higher rates for unlimited.