One should be ever booted and spurred and ready to depart - Montaigne
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Mobile operators signal the end of innovation
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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oh, and I forgot to say:
there used to be O2 3g coverage where I live, and when I enquired why there is no longer a 3g signal, O2 customer services said that a transmitter site had been moved away
they say the nearest O2 3g site to me is now about 4 kilometres away, and I can't expect any 3g signal at all
perhaps they should edit their published coverage map to accord with their internal one
Mr Dunne's article stopped publishing any more comment responses before mine.
I said it was highly patronising for the boss of a mobile phone company to say this was not predictable, when it could be predicted more than 20 years ago
Also, if a network defines an access point with the name O2 Video, what did they intend it to be used for?
eventually what happens is consumers purchase their respective modge-podge of componants and hook em up into one big webby - call it internet3 - its already in production in some places but essentially, if i can just buy a device to get more connectivity to peers thats all i need.
Considering that the o2 network coverage map thinks I should be getting 3G where I live, and it's completely and utterly wrong. It doesn't even pick up the Edge network. In fact, my 20 mile bus journey to Belfast city everyday is a rollercoaster of very dodgy coverage, often dropping completely let alone be able to browse websites.
It would be utterly impossible for me therefore to even come close to 500mb of data, simply because the o2 3g network coverage is so utterly rubbish.
What's the point of having a smartphone if the network can't even provide half decent coverage?
Truly, it's a joke.
So he's saying "Things are going good, only 0.1% of the people actually use what they pay for leaving us with tons of free cash, so of course we will now make a move against those 0.1% just because we are unpleasant idiots that think we can sell even more to even more suckers and screw the customers who dare to use what they paid for"
Company adviser: (We have all this network stuff for internet and we're not using it much right now, why don't we off it as an additional feature?! especially cause no one uses it!)
Company: "Hell sir, if you buy this phone you will get unlimited internet!!"
Customer: "Hmm, why do I need unlimited internet on my phone? the browser on this one sucks & the speed is just silly"
Company: "Well should you be an avid news reader, keep track of stock etc you could use internet on your phone as much as you want! amongst other great features of this great data plan..."
Customer: "Oh look! I have this new phone that supports good speeds and an awesome browser that will soon be able to do flash! I want that unlimited internet deal!"
Company adviser: (Oh darn, now everyone wants unlimited internet & have fancy phones. We have profited much & sold lots of internet capable phones but did not upgrade the network...hmm...we should start charging them for internet usage per GB now, cause well they're gonna use it now!)
Company: "Oh, excellent choice sir, but please note that 'unlimited' now has limits. We're sorry, but it would still be cheaper for you should you have bought our previous unlimited data plan if you jump through this hoop & stand on one leg on a rainy day!"
Customer: "Uhm, oh ok, I guess I should have seen that be stick being shoved up my ass, ha ha jokes one me I guess."
Company adviser: (Explain to the customer that they would not normally exceed our limited offer anyhow since they don;t have flash support yet, most of them & when they do, well, then they'll exceed but we're already prepared to charge them overages)
Company: "Oh no sir! don't say that! if you look at your usage you will notice you did not really use more than X amount of internet anyhow! this limited service is in theory unlimited to you, as we can provide you with greater limited service & err support."
Big companies screw users all the time.
Business as usual.
P.S.
You paid O2 £40/m for the HTC Desire?!?!
Carphone warehouse offer it for £25/m "unlimited internet"
It's the reason I left O2.
"Oh, and you can bet your ass this lack of 'network capacity' is because the governments and military branches have a priority segment which takes a huge chunk of the available capacity."
This is the biggest load of conspiracy/paranoid horsecrap that I have read here in a long time.
Also, of note to those talking about the iPhone and tethering: by default, O2 allows tethering with the HTC Desire. It runs like crap and you have to download an app from the Android Marketplace to get it to work without voodoo chants and all that, but it does work nonetheless. No rooting or ROM tweaking required.
so...what does this rant have to do with the end of innovation?
Oh, and you can bet your ass this lack of 'network capacity' is because the governments and military branches have a priority segment which takes a huge chunk of the available capacity. But of course companies aren't going to tell you their biggest customers are hogging what could be used for us commoners.
Anyway, the whole 3G/4G thing isn't worth what they charge, not to mention what the 'smart' phones cost.
I prefer using a cheap and easy prepaid service for a phone to speak on, and just use the wireless for net access, or even better, use a netbook or something similar.
As far as I was aware, O2 would send a nasty message if I exceeded 500MB on my 'unlimited' iPhone data plan. If I exceeded 1GB, I'd get a kick to the nuts.
The fact that you can't download more than some 20MB in one hit slaughters most things you'd do with the iPhone anyway. This was of particular importance when the subject of tethering arose. What difference did it make if I used the data plan I was already paying for and was supposedly unlimited to tether to my PC once in a while? Data is data, right? Apparently not.
Of course one of the first things you do is jailbreak the thing so you don't have to owe O2 any extra money for tethering. After all, why 'would' you owe them extra if you're already on an Unlimited data plan? Supporters of 3G data modems need not answer - the business aspect of it is understandable, but the principle certainly isn't. Unlimited, pfft.
As a matter of fact, you first paragraph is a complete load of tosh. O2 offered "unlimited" data packages on other smart-phones with no limit defined in the FUP. Not a full week before O2 changed their stance, I signed up for an 18 month contract with an HTC Desire at £40/month which included "unlimited" data-transfer. While I knew fine well it would never be truly unlimited, given that I wasn't born yesterday, their FUP also did not specify an actual cap.
Frankly, Lawrence has hit the nail on the head. Mobile tariffs are verging on hilariously over-priced as it is. What on earth DOES Dunne think I'm paying £40/mo for? A few hundred texts and calls? Whoopee, there goes a whopping couple of MB in data-transfer in a month. No, we're paying for mobile content. To then say we're using too much and charge even MORE to use the same is tantamount to extortion. 500MB is nothing short of an utterly side-splitting joke, given the content available on the Android marketplace, even before you branch out to the rest of the web.
One way to use mobile is to make money on Stuck Market. Readers sit helpless at local Coffee Bar. Hoping, Praying Price Hits QuadZilion. Must Be Germans' fault & Is.
When In US Army in 1953 Part of crew that Blew Manheim. why, Use people like gary Coleman, locked in rooms, designing for loaf of Bread. Poor Twarted adults lost growth hormone center thru surgery or antibiotics, kills cancer & You. leaving body stuck like that, frightened Children with Adult Minds,Now.
Now Manheim dosn't exist, except as RailWay stop & about 4 blocks of road.General Motors
comapny part Manheim, Part french,British Possession.
General Motors Has NO Stock, liquidation co, called motors is listed at .40 cents & going down from $1.36. Offers to buy Bonds for .50 cents on dollar, of actual original paid price. motors has potential to hit big .06 cents, when ALL Over.
Mobile could warn You.
AMD Flourish for those with Mobile varying every few months between $7.50 to $10. Done that many times in last half year. Investor makes cool 1/3 & just tracks AMD, At $8.90, so niether buy nor sell, yetoscilation will continue. AMD Has Much More Potential than flakey GM Company AKA Motors Liquidation. AMD is NYSE.
So Mobi Fans, Check Facts, often surprising & make Move. Sweep Up that Money.
drashek Trader.
£1mil a day investment, it's not much to spend on a network when that network is easily earning you 20x that = 7.3bil/year.
It's money for old rope. The network exists, they are spending sweet FA on it, and charging plenty to customers.
Who gets fast loading pages without stutter on 3G?
3G/HSDPA is not even close to a regular cheap 2mb adsl connection for internet pages. What are they spending that £1mil a day on?
before putting hand to keyboard? The only "unlimited" mobile broadband was on the iPhone, and only then for data that it used it's self, not tethered. The iPhone restricts certain types of data to WiFi, so you have to stream media like a looney in order to get much past 1GB of usage in a month, and despite what he seems to think O2 *actually* had a FUP of 3GB so it was never truly unlimited, just very hard to exceed in practice.
Unlike fixed line broadband, mobile broadband is a very much more limited resource. All you can eat plans are a bad idea. Making people pay for what they use in reasonable sized blocks (£5/500MB extra up to a maximum of 2GB (depending on the plan you're on) is one way of doing it. I suspect that Three will produce something like their iPad tariff (up to 10GB of data for £15). Buyers are free to pick and chose between the offerings for the deal that suits them best. If thee's demand for more bandwidth then the tariffs will be adjusted to meet that demand, or the other company gets the business. Not that hard to work out is it?
At some point. A broadcast TV station can beam to millions of receivers at once, but those internets "tubes" have wildly varied data, rarely even cache-able at the server.
Over-selling is another problem, but kind of handy overall, which is why I think it persists even though most users are over-charged, and some tiny portion under-charged. -- Actually, I doubt that my cable company loses money on even my high usage. -- But it's just too complicated for both users and companies otherwise.
By the way, no one matches M$ for bloated webpages, just look at:
http://blogs.msdn.com/e7/
Saved as complete: 16MB.
Pretty high for a page that hasn't been updated for months.
I think you over-react. In fact, I think this demonstrates true innovation in pricing models. Admittedly I am in the USA and use ATT (which has had issues with providing service). Nonetheless, I use 3G data everyday on my iphone. Emails (with attachments), web browsing, downloading documents using idisk app, youtube, weather app, stocks app, downloading music and apps. I was alarmed when ATT did the same thing to their data plan - replacing 'unlimited' data for $30 with 2 Gig data for $25, or 200 MB for $15. However, when I reviewed my 3G data use for the past 6 months it ranged from 120 MB to 300 MB. So though losing unlimited data sounds terrible, in fact it will:
1. Save me money (I could use the $15 plan but I'm sticking with the $25). Still that's $5 less per month.
2. Eventually make my data access faster, if ATT's policy dissuades the data hogs from sucking up all the bandwidth. I'll probably get flamed for that comment.
Clearly, the mobile operators made a mistake in their calculations of the long-tail use of data. I think it is hard to blame them for this. Data consumption has exploded in the past 3 years (10 fold increases). So I don't think it is reasonable to blame them for not predicting the immense data use of 0.1% of subscribers in 2010 back in 2007 when they set the initial policy. If this is such a bad idea, I would assume one of the multiple UK iPhone service providers in the UK will break ranks and continue to offer unlimited service.
In the USA ATT has offered to continue to honor their unlimited data contract to existing subscribers. That seems more than fair, and gives the high users time to adjust or find an alternative provider.