Carriers seek new business models to afford iPhone bandwidth
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. 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. They could also charge content providers, and guarantee them bandwidth speeds as well.
Under the current business model, Colao said it is difficult for operators to invest in their networks.
With the new high-speed 4G long term evolution wireless standard on the horizon, things are only expected to get more expensive for carriers. The transition to LTE is expected to cost U.S. carriers an estimated $1.78 billion each in the first year alone. Last week, AT&T announced partnerships with Alcatel-Lucent and Sony Ericsson for 2011 commercial deployment of its 4G network.
T-Mobile on Tuesday revealed its own plans to introduce a nationwide "4G" HSPA+ network in 2010. Phones compatible with the network have not yet been announced, nor have specific cities or a timetable been revealed, though the program is currently active in Philadelphia, Penn.
Reuters also spoke with Mike Lazaridis, co-CEO of Blackberry maker Research in Motion, who said handset manufacturers need to do something to ensure their products use less bandwidth. He said if they don't, a global "capacity crunch" would emerge, which has already begun in the U.S.
"Manufacturers had better start building more efficient applications and more efficient services," Lazaridis reportedly said. "There is no real way to get around this."
Last December, Ralph de la Vega, president and CEO of mobility and consumer markets with AT&T, the exclusive carrier of the iPhone in the U.S., made headlines when he said it was inevitable that high-bandwidth users will be charged for what they use. Those comments led to speculation that AT&T was exploring tiered data plans for the iPhone — a rumor the wireless carrier quickly denied.
As smartphones become more bandwidth-hungry, the iPhone has lead the pack, causing major network problems for AT&T upon the launch of the iPhone 3GS last summer. One report said the average iPhone user consumes 10 times the bandwidth of a typical smartphone user. De la Vega, too, noted that 40 percent of AT&T's network capacity is consumed by just 3 percent of smartphone users.
93 Comments
Sounds like code for "charging more" as if the tons I overpay for my iPhone every month isn't enough for covering their costs.
3 percent? Ha. Yeah right.. Yet, they think Verizon Wireless would be a solution. Hahah, what-a-joke!
Perhaps a new 'Technology' model is required rather than a new 'Business" model. The billions spent on overlapping, competing and in many cases incompatible networks in the US seems wasteful IMHO. I realize competition accelerates progress in many cases but it seems to be a little wacky in this case. If the companies could agree on a world wide compatible standard system and pool resources to implement that strategy and share costs surely it would be a better scenario. I also realize this would require some oversight by watchdog groups (with teeth) to prevent the public getting screwed but there has to be a better way than this ludicrous waste going on now.
The guy has no clue of what his talking about. Sure 4G or LTE what ever you wanna call it, cost more money but it also gives networks 5x more capacity so I doubt carriers will wanna go with a different business model. When LTE arrives data plans will be dirt cheap since carriers will be able to compete more agressive cause a single carrier will have room to handle all the US customers for example.
I think AT&T is now in the enviable position of having learned quite a bit from its iPhone support so far, and of course to have profited in more ways than one from it.
Perhaps this experience was the basis for its announced iPad terms--that coupled with its recent and soon-to-be-implemented infrastructure upgrades, so that it can look forward to new higher levels of service and support, as well as the consequent higher profits it should enjoy from the iPad.
The other providers are understandably concerned as they most likely realize that they are about to be left out in the cold, so to speak, but that they've also been sleeping way to long in their complacent arrogance.
No number of assorted efforts with all the Windoze and Android gadgets is going to result in any lasting competition, as there're no CONCERTED efforts to compare with Apple and AT&T.