AT&T's tough talk on data use seen as part of struggle with Apple
iSuppli Corp views the comments from Ralph de la Vega, head of consumer services for AT&T, as part of an industry-wide behind-the-scenes struggle between wireless providers and hardware makers. As growth opportunities in voice service revenue have disappeared, cell phone carriers must turn to revenue from data.
But services like iTunes and the App Store, the firm said, have allowed Apple to usurp control of subscribers from AT&T. In other words, customers are now more tied to their phone than they are their carrier, which results in lost revenue for AT&T.
"Apple has generated major revenue and margin growth based on its iPhone business — while AT&T largely has been unable to cash in on the growth in data services beyond monthly access fees," said Jagdish Rebello, PhD, senior director and principal analyst for iSuppli. "This is making it difficult for AT&T to make the required investments to upgrade its network to support greater bandwidth. The net result is a deterioration in the mobile broadband user experience."
So much of the iPhone experience is tied to transactions made between the consumer and Apple on the App Store that have no relationship with AT&T. iSuppli believes that the issue of subscriber control is a battle that will be waged across the entire wireless industry.
In addition to Apple, Google, Nokia, Research in Motion and Microsoft have created their own comparable software download destinations. Each of them are attempting to "muscle in" on wireless carriers through offering premium content, service and applications, the firm said.
"Regardless of who wins, this battle will alter the balance of power in the mobile value chain," Rebello said.
Huge sums of money are at stake. The firm has forecast wireless data services, excluding messaging, to grow by 26.2 percent and amount to $87.7 billion in 2009. Into the future, iSuppli has forecast it to be a $188 billion revenue generator by 2013.
Apple has found tremendous success with the iPhone App Store, achieving the milestone of 100,000 applications available for download less than a year and a half after its debut. In September, the company revealed that over two billion applications had been downloaded from the store.
This summer, the iPhone was referred to as the "Hummer of cellphones" after AT&T's network struggled following the launch of the bandwidth-heavy iPhone 3GS. The average iPhone user is said to use 10 times the bandwidth of a typical smartphone user.
De la Vega revealed this week that 40 percent of the network data capacity for AT&T is used by just 3 percent of smartphone users, with most of that going to activities like streaming audio and video. Those types of services are made possible through software available for download on the iPhone App Store.
139 Comments
In my mind, this is what net neutrality means. I have written Congress asking them to legislate separation of the content from the pipes. That would be true neutrality. A company like Comcast wouldn't then care what data was being passed around on their cable, they would just have to worry abut enough lanes to get it from A to B.
For the wise backbone provider, this is the beginning of an opportunity to roll out the best networks in the country. Whomever puts the money in now, will be assured a majority of the subscribers in the future. For the most part, our networks are behind other countries for this sole reason.
AT&T should be focused on their network, not what's being transferred over it. If they could, say, have DSL like speeds next year, they wouldn't need to worry about App Stores and iTunes. They would get the subscribers based on their network integrity. No drops, full speed all over. That's the focus of a network provider, wireless or otherwise. The US sucks for this and it needs to change. The only way to get the Bells to change is through law, unfortunately.
iSuppli are morons
the 3% are jail breakers who tether. there is even a thread on howard forums with someone claiming they used 30GB per month over a few months by tethering multiple PC's to his iphone
As I've posted elsewhere, the use of the word 'unlimited' in marketing material is a dangerous practice. Like 'unique', it cannot be modified; something is either unlimited or it is not.
When customers take the meaning literally some will of course push to consume as much as they are technically within their rights to consume. The same thing happened with dial-up internet access; at a time when established providers charged by the minute, newcomers showed up and advertised 'unlimited' connection times. Most people could not stay online indefinitely, but when people started getting second phone lines exclusively for modem use they had no reason to disconnect. The ISP's modem pools became oversubscribed, and companies like AOL suffered the black eye of competitor's ads showing them to always have busy signals.
Now we're reliving this same lesson with the prospects of 'unlimited' data use on mobile devices. Something has to give...EDIT: Replaced 'bandwidth' with 'data' for clarity
What BS! AT&T has made a ton of money from all the new subscribers the iPhone has bought in and is part of the reason AT&T is still afloat. They decided to sit back and pocket the cash for two years and only decided recently to really upgrade their network.
I'd never trust the telcos with anything. Didn't the gov't give them $15 billion earlier this decade to build out their networks? From what I understand try did nothing and pocketed the cash. Let them be the dumb pipes they were meant to be. I hope that Comcast/NBC deal never goes through.
As I've posted elsewhere, the use of the word 'unlimited' in marketing material is a dangerous practice. Like 'unique', it cannot be modified; something is either unlimited or it is not.
When customers take the meaning literally some will of course push to consume as much as they are technically within their rights to consume. The same thing happened with dial-up internet access; at a time when established providers charged by the minute, newcomers showed up and advertised 'unlimited' connection times. Most people could not stay online indefinitely, but when people started getting second phone lines exclusively for modem use they had no reason to disconnect. The ISP's modem pools became oversubscribed, and companies like AOL suffered the black eye of competitor's ads showing them to always have busy signals.
Now we're reliving this same lesson with the prospects of 'unlimited' bandwidth use on mobile devices. Something has to give...
the ISP's started to automatically disconnect people after a few hours. AT&T does the same thing