Thursday, June 15, 2006

All-you-can-eat 3G may not last

ComputerPartner writes that unlimited, all-you-can-eat 3G data plans in the U.S. might not last, if the network operators have any say in the matter. The carriers would like to rein in wireless bandwidth hogs and move back to the days of pricing based on usage.

The article talks to the major network operators about the issue and the potential impact of unlimited usage on the networks. IDC analyst Godfrey Chua noted "a 3G crunch could be caused not just by too many users reaching the service on a single base station, but by overloading of the wired "backhaul" that connects the wireless cells to the Internet."

Chua said, "We don't really know what the condition of the transmission network is right now." He remarked that the "existing backhaul was built to carry voice calls and simple data services offered over 2.5G networks such as GPRS (General Packet Radio Service), both of which demand far less capacity than 3G can."

Chua added, "My sense is that it will be a bottleneck, but the question is, 'How much?'"

According to Gartner analyst Michael King, "the service providers are shooting themselves in the foot by being so generous in order to pull in users. Going from all-you-can-eat plans to per-bit charges effectively would represent a price increase."

King said, "Never in the history of wireless and mobile communications has a carrier succeeded in bringing prices back up."

In-Stat analyst Allen Nogee commented that "the technology is there to detect and stop terms-of-service violations, doing so could tarnish the image of 3G and lead to a backlash."

Forrester Research analyst Charles Golvin believed that "if heavy usage isn't reined in, it may even affect mobile phone conversations if EV-DO (Evolution-Data Optimized) carriers such as Sprint start putting voice on the network with the next version of the technology."

Golvin suggested that "one solution may be to offer more flat-rate monthly plans that allow for a large, but still limited, amount of data traffic." However, he thought that "it's harder to use up a lot of capacity on a handset with a keypad and a tiny screen than on a PC, so the shift toward phones may temper growth in demand."