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Mobile operators signal the end of innovation

Rant Greed cancels out the greater good
Fri Jun 18 2010, 16:54

THE LOUD KNOCK that sounded as UK mobile operator O2 ceased offering 'unlimited' data might have been the death knell for mobile Internet in the UK.

Until June 2010, the mobile operator had done a stellar job of providing that rare thing, an unlimited 3G data tariff. Since the offer sounded too good to be true, The INQUIRER asked O2 whether there was a limit to the firm's 'unlimited' data claim, to which we were categorically told "no". That was until 11 June 2010 when the hopes of a nation were dashed, even before a penalty had been missed.

The move by O2 wasn't a surprise, rather its timing was altogether expected given that the firm, like other mobile operators was getting ready to welcome Apple's latest Iphone. However, the restrictions placed on users will undermine Apple's efforts to provide high quality data service to mobile users.

There was anger, rightly so, aimed at the firm for removing its unlimited tariff and replacing it with a mere 500MB limit. So much so that O2 wheeled out its chief executive, Richard Dunne, to explain the company's action

Under the misleading heading of "Offering fair and transparent access to mobile data", Dunne was clearly in no mood to offer a fair and just reason for crippling his customers' data access, instead adopting the offensive position of blaming the very people who line his pockets so handsomely.

Initially Dunne talked about how his firm underestimated the impact smartphones might have, a shocking statement given the amount of money its parent, at one time BT and now Telefonica, spends on research.

It doesn't take Alexander Graham Bell to realise that a device that is tantamount to a small computer would not only use more data than a basic telephone but also provide greater revenue opportunities for mobile operators. Apparently that brainwave missed the boffins at O2, even as the firm decided to shell out vast wedges of cash on 3G licences and networking infrastructure. Presumably Dunne was thinking his mobile customers would use tin cans connected by pieces of string to access the Internet.

Dunne claimed that 0.1 per cent of O2 users account for "nearly a third" of the firm's data traffic. He was trying to informally suggest something that has been widely observed in just about every aspect of life, including the Internet, a long tail distribution in usage patterns. With 3G reception far more common in cities, it's not surprising that there is some bias in usage figures. After all there is only so much pain one can put up with trying to use GPRS networks to view webpages.

Dunne added that this "often affects network performance for the rest of our customers". But his sob story wasn't over yet, with Dunne going on to say that the majority shouldn't subsidise the few, adding, "We think that we have a responsibility to our customers to address this kind of imbalance." You "think" Mr Dunne? What did you think your customers were paying £35 a month for? For you to be mesmerised by watching the flashing lights on the router at the datacenter?

When a company flogs something with the word 'unlimited' on it, why should users get rebuked when they take the company at its word? Call a spade a spade, Mr Dunne, you have, like your industry peers, oversold your network capacity and now are too proud to come cap in hand asking customers to cough up even more cash to bail you out. Like Fred Goodwin, your firm decided to pull the rug from under those who pay large sums of cash to be attached to your network and you have the bare-faced cheek to blame them for the mess your mismanagement led to.

Dunne tried one last time to paint a picture of a firm that cares by saying that it is investing "£1 million per day" on its network. It is true that a number of mobile operators including O2's parent, Telefonica, engage in research and development (R&D), something that makes Dunne's earlier claim of his firm's smartphone myopia sound even further from the truth. However if you think that only O2's customers are paying for the R&D costs then think again. Mobile operators work together with universities all over Europe on projects funded by the European Union, meaning part of your taxes are funding these companies regardless of whether or not you sign up with O2 or one of its competitors.

Clearly bandwidth as a commodity is not infinite, with O2 and other mobile operators unable to sustain full-throttle usage from the majority of users, so the question remains why do the firms decide to slap labels such as 'unlimited' on it?

One Deutsche Telekom employee in charge of an IP transit at the firm told The INQUIRER that his salespeople would simply flog network capacity regardless of whatever the firm's engineers told them. The people doing the hard sell have no clue about what is actually available to sell. Deutsche Telekom, the owner of T-Mobile, is by no means the only firm to oversell its network capacity. Nevertheless when it comes back to bite, it's shameful that marketeers like Dunne go all out to put the blame on customers.

If mobile operators had simply labelled their products and services honestly it would have saved them the trouble and ultimately the embarrassment of having to impose data limits. A system in which some minimum amount of data was guaranteed with the rest being on a 'best efforts' basis would be a more realistic and acceptable solution.

Leaving Dunne's pathetic pleas for mercy aside, the data quotas provide ample evidence that firms are still grossly underestimating the capabilities of smartphones. More worryingly, the limitations on data transfer pose serious problems for hardware manufacturers, content providers and ultimately the paying customer.

Far worse than Jobs' ban on Flash on the Iphone OS, this restricts all aspects of the Internet, perhaps in the hope that customers will be willing to hand over even more cash with 'bolt ons' or other extortionate charges. Devices such as Apple's Iphone and Google's Nexus One brought a host of new possibilities to content providers, but the mobile operators are seemingly doing their level best to take them away.

For all his foibles, Jobs is trying hard to line his own pockets by pushing more and more data to Iphone and Ipad users. Apple's devices are pushing for higher resolution content with the Iphone 4 screen having outstanding resolution and pixel density. To make use of the device's capabilities requires data, but actual delivery of data is being purposely choked by Dunne and co.

This will lead to content providers having to stick with low-rent design and content in the hope that users won't be scared off, worrying whether their bandwidth quota has been reached. Adobe, while focusing on Jobs killing Flash, missed the real threat, mobile operators.

It isn't just bloated websites that are in for the chop. How will Jobs' Iad software be received by punters when they find out that those interactive take-over ads will cost them a healthy chunk of their data quota? If adverts are being cut then content providers might be forced to follow Rupert Murdoch and go down the paywall route. Will that be the end of the free web? That never existed if you believe Dunne and his mates.

The depressing state of affairs is this. The hard work being put in by handset manufacturers to offer devices that are capable of streaming standard definition quality television will only be able to stream barely two hours of video within the 500MB cap. So why should punters shell out for the upcoming devices that are promising faster chips and higher resolution displays?

It is true that smartphones have come on leaps and bounds since the turn of the century. It is however not true that mobile operators had no idea that these devices would consume orders of magnitude more bandwidth than past devices, and to blame users for using the service as advertised is just shameful.

The worrying thing is that if the technology industry buys into the vision of the mobile operators such as O2 we might see the evolution of mobile technology halted. Devices and services will be forced to meet the demands of a bunch of companies whose primary aim is to operate a firewall policy, where each request for unlocking access has to be made with a fistful of cash. µ


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