iPhone 3GS – 1 Million & Counting – Where’s the Bandwidth (Beef)?

In the 1980’s, the Wendy’s commercial, “Where’s the beef?” became extremely popular. This commercial helped Wendy’s catapult its position in the market as a fast food restaurant delivering the “beef.” Fast forward to Father’s day (June 21, 2009) when more than a million iPhone 3G S were sold on the 1st weekend of its debut. Adding to more than 139 Million Smartphones sold worldwide in year 2008 (Gartner), Smartphones have now attained a stable 12% proportion of all mobile device sales worldwide. Not to be left behind, cloud computing is also quickly gaining momentum with worldwide sales of “Netbooks” – devices that are expected to be “always-connected” and rely on the “cloud” for business applications and storage approximating 15 million units in year 2008, expected to reach about 27 million units in year 2009 (Displaybank).

While the Smartphone and Netbook sales are great news for the device manufacturers, one has to question how are all these devices going to be supported on the 3G networks? In other words, “Where’s the bandwidth?” Wired.com published a study on worldwide user experience on 3G networks and found that in metropolitan areas such as San Francisco, 10 out of 30 respondents reported very slow speeds, barely surpassing the speed of the EDGE networks. (Wired.com).

Somewhat in anticipation of increased demand, AT&T is rolling out HSDPA 7.2 to support the newer, higher speed devices; however, that rollout is expected to continue through year 2011 (Gearlog.com). But, it is a classic case of demand far outpacing the supply.  Operators such as AT&T, T-Mobile and Sprint clearly have a challenging situation on-hand. The increasing broadband data bandwidth opportunity for maximizing ARPU needs to be balanced with pricing/delivery models that provide the best consumer experience.

So, what are the possible options for the operators?

  1. Network Optimization – Vendors such as Openwave and Bytemobile provide solutions for data compression for efficient Bandwidth Management for the Wireless Networks.
  2. Policing the “Power Users” or “Abusers” – To maximize customer adoption of the wireless broadband services, operators provide unlimited usage for Smartphones. However, such “unlimited” packages can become resource sinks for the operators. Initiating policy that reduces the speed down to 2G speeds for abusers may be helpful in permitting the profitable users to continue to receive a great user experience. TelephonyOnline.com reports that Vodafone, Hungary is trying this approach.
  3. “Quotas” for data – AT&T already has quotas for its DataConnect plans for connecting PCs to the Wireless Internet – limiting total bandwidth usage to 5GB per month. Such “quotas” can also be extended to the Smartphone data plans
  4. Use creative limits or tiered pricing based on (Kevin Fitchard, TelephonyOnline.com has mentioned this approach)
    • Speed – For example, several tiers of services can be offered based on maximum data speed, while still providing an all-you-can-eat pricing for overall bandwidth per month
    • Quality of service – For example, guaranteed VoIP service for an extra price
    • Application – For example, video streaming or online games can be offered separate pricing
    • Subscriber profile –  For example, triple play subscriber may be eligible for different pricing
    • Subscriber usage history – For example, occasional heavy user may be eligible for different pricing
    • Device being used – For example, High-speed 3G (HSDPA 7.2) devices may be priced higher
    • Time-of-day – Off-peak users may be offered lower pricing
    • Other attributes

Clearly, the increase in Smartphone sales even during such recessionary times indicates the consumers’ insatiable desire for rich information on-the-go. The easier it gets to browse the Web, create and consume social media (Web 2.0) from sources such as Facebook, Twitter, etc., create and consume news, entertainment from a mobile device, the more the consumer is hooked on to become an “always-connected” person. However, it is very clear from the demand and supply curves for bandwidth that the demand is expected to continue to outstrip supply for the next 2-5 years.

One can easily draw comparisons to several other mature markets for services where a tiered/restricted pricing and delivery model has been well-accepted by consumers:

  • Wireline DSL – Pay more for higher speeds
  • Automated Teller Machines – Consumer pays when using an “out-of-network” machine
  • Electric utilities – Opt-in for lower off-peak rates if you agree to use major appliances during off-peak usage times

In conclusion, as many more Smartphones come online, the consumers will be asking the question, “Where’s the Bandwidth?” Operators can more than prepare themselves for this eventuality by adopting Network Optimization, Bandwidth Policies, Quotas or Tiered Pricing or a combination of these solutions for pricing and delivery of services to help consumers get the best user experience for their buck.  These solutions provide faster time-to-market, a value-driven user experience and significantly better ROI as the build-out of long-term, capital intensive infrastructure for 4G starts taking place.

Update:  Sept 30, 2009 – The lack of consistent bandwidth on the network brings down AT&T’s customer satisfaction ratings. (iPhone Actually Hurting AT&T Customer Satisfaction). See also (AT&T Is A Big, Steaming Heap Of Failure).

Update: June 2, 2010 – Finally, one year later, at&t cancels the “all you can eat” plan in favor of plans with bandwidth limits. $25 plan for 2gb and $15 plan for 200mb. at&t claims that the $15 plan is suitable for 65% of current users and the $25 plan is suitable for 98% of its users (2 sigma and 3 sigma on a bell curve). At least the announcement timing is right – just before the new iphone comes out. (AT&T caps phone data usage with new plans)


  1. Joey says:



  2. oliver says:


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  3. edward says:


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  4. Clyde says:


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  5. Guy says:


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  6. Manuel says: