paulplatt

When it comes to cellular bandwidth we have two trends on a collision course. On the one hand we have smartphones moving into the dominant position among phones. Furthermore, convergence is rapidly making the phone the dominant computing platform. Layered on this is the expansion of mobile connectivity into laptops, tablets and even automobiles. If you watch the ads you will see download speed sold aggressively. 4G is the new buzzword. It all sounds so very wonderful. In a few weeks we’ll have a 4G (LTE) enabled iPad. Later this year there will be a 4G iPhone. Wow! Times are great. Hidden in all of this, however, is a very dark trend.  Both ATT and Verizon have eliminated unlimited data plans. People who are grandfathered in have still been smiling. Recently, however, ATT and Verizon have quietly begun capping usage or limiting speeds even on unlimited plans. The most onerous example is the recent action by ATT. Some users are getting throttled down once they exceed  2GB. After reaching that milestone speed is reduced by about 10X for the rest of the month. The data connection effectively becomes useless. Surprisingly, a 3GB plan costs the same as the grandfathered unlimited plan and won’t get you throttled. Users on the unlimited plan are being treated worse than new users. Even Sprint has begun to slow down heavy users despite what their ads say.

The problem is that there isn’t enough bandwidth to serve users. The providers keep pushing the wonderful capabilities of smartphones and their new 4G networks all the while knowing that the capacity isn’t there. How did we get here? It’s partly because smartphones have taken off faster than the providers can keep up. They don’t want to lose customers so they can’t come out and just tell people to slow down. They pretend all is well. That’s the surface reason. There is a deeper issue at play. The two big providers, ATT and Verizon, are like Ford and GM in the 60’s. Both are content to make minor improvements while they rake in big profits. Wink, wink, nudge, nudge, and they signal each other to move at a pace that maintains profits at the expense of bandwidth delivery. ATT and Verizon form a duopoly much like Visa and Mastercard. Short term profits rule at the expense of a larger, longer term vision. The major players have settled into a comfort zone which protects profits at the expense of moving portable computing forward. Because of the nature of cellular service, this duopoly enjoys a protected status. Once you own the spectrum space and have the basic infrastructure in place, it is near impossible for a new company to gain traction. Customers have no place to run.

How do we solve the cellular bandwidth problem before it becomes totally devastating? That I will address over the next week.