Seven Questions That Will Decide Mobile’s Future—Part One
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another 26 percent. (AdMob didn’t even try to count iPad and iPod touch users.) Thanks largely to smartphones and tablets, overall mobile data traffic is growing at more than 130 percent per year, according to Morgan Stanley.
The current standard for wireless voice and Internet access, 3G, has been around for nearly 10 years. It’s capable of respectable speeds—here in San Francisco, I usually get about 3 megabits per second on my iPhone or iPad on a 3G connection. But that’s barely adequate for bandwidth-intensive applications like streaming video or two-way video calls. Now think about how many people will be using such applications in the near future: analysts expect consumers worldwide to buy 60 million to 100 million iPhones this year, 30 million to 45 million iPads, and probably equal numbers of Android smartphones and tablets. Something has to give.
To deal with complaints of slow data connections and dropped calls, AT&T spent much of 2009 and 2010 upgrading the 3G equipment in all of its cell sites from 3.6 megabits per second to a standard called HSDPA, capable of 7.2 megabits per second. (AT&T also said it was adding more “backhaul” capacity—the fiber optic networks that carry data to and between cell towers.) AT&T’s main competitor, Verizon Wireless, uses its own 3G technology, EVDO, which peaks at about 3.1 megabits per second. But neither EVDO nor HSDPA is great for video or for simultaneous voice and data transmissions.
That’s why the industry is looking for alternatives. One may be to offload 3G traffic in densely populated locations to shorter-range but higher-bandwidth Wi-Fi networks. Back in November, I wrote about Ruckus Wireless, a Sunnyvale, CA, company that has a lot of ideas about how to do this, and they’re one of the companies that will be sending an executive to Mobile Madness. But the only long-term alternative is to move to the next-generation cellular wireless standard, 4G.
Both AT&T and Verizon have settled on a version of 4G called LTE, for Long Term Evolution. Verizon leapfrogged AT&T by rolling out LTE to 38 U.S. cities in December. AT&T expects to start field-testing its own LTE network later this year. Then there’s WiMax, which is technically very similar to LTE but divides up data differently; championed by Intel and Sprint, WiMax is being brought to market in about 80 cities by Kirkland, WA-based Clearwire. WiMax is technically capable of speeds up to 72 megabits per second, and LTE peaks at a mind-blowing 300 megabits per second, but in practice both technologies are far slower: Early Verizon LTE users are reporting speeds around 10 megabits per second, in the same range as a home cable modem. Clearwire says that its CLEAR service averages 3 to 6 megabits per second.
So LTE and WiMax are both faster than 3G, but their speed falls off drastically as you move away from the transmitting tower. Which means the operators have to build more transmitters—which means 4G service is pricey. Clearwire delivers unlimited data to USB modems and home and portable Wi-Fi routers for $35 to $95 per month. Verizon sells LTE USB modems for $100 and charges about $10 per gigabyte of data transmitted.
Considering that a single 43-minute-long standard-definition TV episode runs about 600 megabytes, Verizon’s version of 4G clearly isn’t priced to encourage mobile media consumption. Even if the iPhone 6 or the iPad 3 were to come with LTE chipsets, in other words, you’d want to be within range of your home Wi-Fi network before downloading a movie or a bunch of apps. Clearwire’s version of 4G doesn’t have caps or per-gigabyte charges, but then it’s not really mobile—it’s intended for laptops and home networks, and so far there’s no such thing as a WiMax mobile phone or a WiMax tablet.
So we’re in one of those in-between moments when our gadgets and the things we want to do with them have outstripped the old infrastructure they depend on, but the new infrastructure is incomplete and prohibitively expensive. Maybe 4G networks will have so much extra capacity in the early days that operators will be forced to lower their per-gigabyte prices to draw users in—but if mobile traffic keeps doubling every year, then even the 4G networks will soon be as clogged as today’s 3G system, and prices will go back up. There’s likely to be ongoing tension between the network operators, who have to ration the spectrum, and the platform owners like Apple, who just want to sell content. And we consumers will probably stay caught in the middle, no matter how many Gs we have.
Next week, in Part 2, I’ll get to questions 4 through 7. But here’s a preview:
4. How will physical, bricks-and-mortar commerce evolve in response to mobile technology?
5. How much of business IT can be “consumerized” and replaced with cloud services and employee-owned mobile devices?
6. What matters most about context and location data? Is it a business or just a feature?
7. What comes next? What’s beyond mobile?