In the telecom industry, attention is being paid to a hockey-stick graph with serious implications -- rising demand for mobile network bandwidth thanks to the growing use of smartphones.
As AT&T is learning with the iPhone, it isn't wise to build a limited network and sell wireless devices that can consume unlimited network bandwidth. It is akin to using a 1200-baud modem with Internet Explorer 8 on a desktop computer -- while the technology probably works, it doesn't work very well.
The problem is likely to become acute for all US carriers deploying advanced, data-capable networks.
As Verizon contemplates its LTE rollout, slated to begin in 2010, it will probably face the same dynamic and the resulting question: Do you roll out services before your network can accommodate them? So far, that has been the approach of many carriers because, by and large, people have not expected high service quality for their wireless devices.
As a recent survey by Stratecast disclosed, consumers currently rate their cellular service very highly (see figure below). Yet, as noted in a previous column, they rate the overall value of their wireless telephone service lower than their landline phone service.
The reasons are varied, but the differences are sufficient to place a floor on the number of subscribers willing to cut the cord on their landline phone service. Overwhelmed networks are likely to have an even greater impact on the consumer perception curve.