In today's issue it's interesting to see two stories that are beginning to demonstrate the issues mobile operators will face as 3G services proliferate in the U.S. Mainly, customers are beginning to do what they want with their broadband connections, despite the fact that they violate operators' restrictive user agreements.
In a letter to FCC Commissioner Robert McDowell last week, AT&T revealed that it doesn't allow its wireless subscribers to use file-sharing applications and will terminate service to anyone who tries. The carrier says that these types of applications can hinder network capacity and degrade the quality of the network for other users. McDowell apparently is a dissenting commissioner in the ruling against Comcast, which the FCC said wrongfully blocked P2P traffic on its network.
The other article talks about an iPhone application that allows Apple's iPhone users to share EDGE or 3G connections with other devices to create a portable WiFi hotspot of sorts. The app briefly appeared on Apple's App store but was pulled minutes later and then restored again the next day. Again, such an application violates user agreements.
The fact is, 3G operators will continue to face growing pressure over these issues as customers increasingly want to use these connections like they would their home connection, especially with devices that have user interfaces like the iPhone.
In fact, a new study released in late July by market research firm Pioneer Consulting says user-generated content looms as a source of serious discontent for mobile operators. Since a significant percentage of multimedia content on mobile devices is either user-generated or just stored on the device, Pioneer says that a growing number of subscribers are now exploiting alternative technologies like Bluetooth, WiFi and WiMAX to effectively bypass operator networks when sharing their content with friends, family and social networking contacts. The study suggests subscribers who circumvent the traditional content value chain could rob operators of as much as $16.4 billion in potential annual revenues by 2012, more than a quarter of the projected total revenue for the year in question.
The report argues that operators must re-evaluate the relevance of the traditional client-server content delivery architecture in an environment where a growing chunk of media originates from the device. Moreover, they must come to terms with the inevitable bandwidth bottleneck between the base station and handset brought on by an oversubscribed air interface. Most important, and most problematic, the study says carriers must embrace peer-to-peer sharing within their networks.
Of course, that creates all sorts of havoc on the network. Operators can't simply add more bandwidth. They need to add more spectrum and increase the capacity of their networks with more efficient technology. Does that mean everyone really has no choice but to accept these limitations on their wireless broadband ? They certainly won't do it voluntarily. Will IP-based networks such as LTE (Long Term Evolution) technology be the answer? In the meantime, if operators don't embrace new havoc-wreaking services like P2P, they miss out on lost revenue and anger customers along the way.--Lynnette [1]
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[1] mailto: lluna@fiercemarkets.com