With bated breath, the world waited on pins and needles at the end of January for the latest and greatest invention from Apple. Speculation was high that Steve Jobs would roll out a tablet computer, but once he unveiled the iPad and people finished oohing and aahing over the thin form factor, big screen and compatibility with iTunes and the App Store, the real scrutiny began.
And I’m not just talking about its sometimes-ridiculed name, but about the ramifications of the iPad on the communications industry. The good news is we’re living in a time when it seems every other week some cool new device – like the iPad or the latest smartphone from Nokia – hits the market. The bad news is it’s mostly the communications service providers (CSPs) who are left holding the bag as all of these data-hungry devices chew up bandwidth faster than it can be added to the network.
It’s crunch time
You can see this battle intensifying over the next couple of years as prices come down and smartphones and other devices become much more accessible to the average person. A tipping point for the industry was when Apple launched the iPhone 3GS and at the same time dropped the price of its base iPhone 3G from $199 to $99 in the US. That seems to be the magic number for many consumers and really helped spur sales of the now-ubiquitous device.
But as a high-level executive at AT&T’s operations division said recently, his company has experienced a 5,000% increase in mobile data traffic in the past few years – with the iPhone largely responsible for driving that growth. Sure iPhone was great for driving customers to operators who had an exclusive deal in the early days, but now that many networks are providing iPhone it’s looking like it represents a lot of cost and not a lot of new revenue.
And this crunch is now accelerating faster than ever. We’ve gone from “having lots of mobile data traffic would be a nice problem to have” to being faced with overloaded networks for a relatively small percentage of users. And for CSPs, the options are severely limited – charge for mobile data by volume and users are scared of using it; charge a flat rate and people use it all day every day.