Tuesday, May 26, 2009

Broadband: Video essentially is at the root of why 3G data plans are not broadband replacements (In-Stat)

[wirelessdesignasia] There is a big, ugly elephant in the broadband room known as video. It is hard to handle. It takes up a lot of space. It makes everyone very uncomfortable when looking at it from the business end. It can be difficult to control. If you do not believe me, just ask Comcast. Its efforts to throttle peer-to-peer traffic (aka “shared” video files) are fairly well documented in the news.

Video essentially is at the root of why 3G data plans are not broadband replacements. Sure, 3G is a fine technology for providing some broadband services to a mobile user, augmenting fixed solutions. However, 3G data cannot really be used as a primary broadband technology for many users due to the bandwidth caps implemented by the carriers, often in the 5GB range. Let’s face it: video eats bandwidth caps for lunch.
It should not be misconstrued that I am advocating that the carriers eliminate those caps. High bandwidth usage would be unprofitable for the carriers and could bring a network down to it knees in places. Imagine what a group of college students in a dorm could do to the local cell tower by “sharing” some HD content with their friends.

AT&T seems to have recently recognized the problem that video causes. It recently implemented a network policy that encouraged Sling Media to remove 3G access from the iPhone edition of its SlingPlayer Mobile app; the app is now Wi-Fi only folks. The argument is that the app would consume too much network capacity (or consume too much under monetized network capacity). It seems that AT&T has identified the fact that slinging or sharing video is bad for a 3G network.

The fundamental problem is that a consumer’s expectation of unlimited broadband has been conditioned from a cable, DSL or enterprise broadband experience. Unlimited is unlimited. There is no restriction, at least not a restriction that exists in the perception of the user.

This is why the recent product announcement by Novatel Wireless of the MiFi on both the Sprint and Verizon Wireless networks is a very scary proposition. For those that are unfamiliar, the MiFi is a mobile hot spot that uses EV-DO Rev. A as the broadband conduit of choice. The product can be carried around in one’s front pocket and plopped down on a table to provide Wi-Fi access for up to 5 client devices – an instant hot spot if you will.

In our testing of the Verizon Wireless MiFi device, it worked well when "activated." Activating it was more cumbersome than we would have anticipated. You first have to connect it to your PC or Mac with the included USB cable. After you do that, what appears to be a CD will appear on your desktop. You "open" the CD, then install the Verizon Manager on your computer. You then use this program to activate the device, after which time you can remove the software you installed. This is overly complicated in our opinion.

Once activated, the MiFi was pretty easy to use, although no device we used seemed to find the SSID automatically. Conveniently, the SSID and password are on the back of the device, so you cannot forget them. We’re still testing the device, but we were getting about 550 Kbps download speeds with the one or two bars at our location.

Here is the problem. Individuals can sign up for a $40 monthly plan for 250MB of data, or a $60 plan for up to 5 GB of data on the Verizon Network. Just think how fast our HD “sharing” college friends can blast through those data caps. At the end of the month, here comes the big “oh no.”

To aggravate the problem, the “oh no” for the carrier is bigger than a MiFi device as customer engagement is larger. The subscriber probably also has at least one cellular phone account. It is possible that they could have multiple accounts. The result is that the “oh no” is impacting a user with $100 to $300 worth of post paid monthly ARPU. These are users that are particularly valuable whom carriers want to treat with care.

Granted, this product is not aimed at college kids or general consumers. Verizon is positioning it at construction sites and other temporary work sites where users need to share a connection on a temporary basis. Sprint, which has been making great strides to improve its custom service, will probably also target markets that will minimize the “oh no.”

The result is that 3G data really has an identity crisis. Due to the scariness of video, 3G data should really not be intended to be a wired broadband replacement. A better use is to augment broadband services when mobility and location create the need.

This logic is what creates the compelling case for technologies such as WiMAX. WiMAX is intended to be “enhanced wireless DSL,” a mobile alternative to having fixed line service. As with other true broadband technologies, unlimited seems to be unlimited. Granted, with fiber from the telcos and DOCSIS 3.0 from the cable companies looming, WiMAX will clearly not keep pace bandwidth wise. However, it will provide a true mobile broadband experience.

Mobile Broadband Identity Crisis: Will the True Broadband Please Stand Up?

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