The Limits of Cellular Data

Carriers Want You to Use Less Bandwidth and Pay More for the Service

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Sometimes I think I just don't get some of the major business models. Here's how I see the model the major cellular phone/mobile data carriers in the U.S. are using: You develop a service; you heavily advertise the service; you accept customers for the service; you punish (and publicly scold) customers who actually use the service. Did I miss anything important?

Now, I'm with them right up to the last point. I just don't understand how you go to the trouble to build and advertise a service that's supposed to let you do wonderful things, and then are surprised when customers actually use the network to do those wonderful things. Earlier this month, though, Ralph de la Vega, head of AT&T wireless, scolded customers who use their iPhones to do all the nifty things shown in the commercials, and hinted heavily that, if they don't stop it, AT&T will be forced to charge customers more money if they want to, you know, use their smart phones for anything more than making voice calls.

While there haven't been any public pronouncements, I've heard through some back channels that Verizon is considering the same sort of arrangement, though the nation's largest cellular phone provider is apparently looking to tie the limits to the effort to force slow-to-move customers from 2G to 3G devices and networks. Since Verizon is rumored to be the next U.S. carrier to get the iPhone, the capacity planners are probably looking at AT&T's recent experience in horror, trying to figure out how to convince customers to pay for as much capacity as possible while using as little bandwidth as can be managed.

The real problem with both these companies' approaches (and, to be honest, the approach of the other cellular carriers) is that they end up treating customers as an enemy rather than a resource. The same mindset that worked so well for the music recording industry has taken hold of cellular carriers and could very well lead them into some very interesting business places.

It's not like this is new -- back in 2007 there were articles explaining that "unlimited data" plans had some very real limitations. The difference between now and then, though, is the explosion in data use due to devices like the iPhone and Android-based phones, and the willingness of many users to have their smart phone be a primary computing and communication platform.

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