[the guardian] So the free lunch - otherwise known as the unlimited data tariff - is over. O2 said on Thursday that it will no longer be offering new or upgrading customers its "unlimited" tariff for smartphone users - principally, it's believed, the iPhone users, whose numbers connected to O2 have grown from 1m to 2m in a year.
O2 isn't the first: Vodafone ended its "unlimited" offering last month, and Steve Jobs had barely sat down after delivering his WWDC speech before AT&T announced that it too was ending its "unlimited" offering, replacing it with a tiered set - $15/month for 200MB, $25/month for 2GB. Orange is expected to follow suit in the next few weeks, though when asked the company simply says that it "constantly reviews its pricing". However the noises we're hearing from parts of the company suggest that a review will see it follow O2 to dump the "unlimited" offering.
Why? Because a tiny number of users are slurping huge amounts of data. And because the mass of users are demanding more and more data (though lots less than the real slurpers). There's all sorts of interesting information that we can pull out of this - especially with the help of O2's chief executive Ronan Dunne, who signed a lengthy post at the company's blog with a tortuous justification for why the company has changed its rules. The strange thing is why he hasn't come out with the simple reason - because it would make O2 a lot more popular at a stroke.
He goes over the points that were made in yesterday - that 97% of O2 smartphone users use less than 500MB, and that only a tiny number use more than 1GB. (Interesting to note that Apple-watcher John Gruber, someone who I'd expect to be a heavy user, says he uses about 500MB per month. So he's clearly just one of the 97%, even if an outlier there.) Even so, smartphone users are a problem:
"one streamed YouTube video has the same effect on the network as half a million text messages sent simultaneously, the equivalent of everybody in Newcastle sending a text at once."
Well, yes, but nobody made you offer the iPhone, Mr Dunne. You were the ones who wanted it so much. This makes it sound as though you like getting peoples' money, but don't like offering them a concomitant service to go with it.
However it's more complicated than O2 getting a bit whiney. What we're hearing here at the Guardian though is that Apple itself helped to kill off the "unlimited" tag, because it doesn't like it being used with services that call it "unlimited*" and then explain further down the page in tiny print that that actually * means "subject to 'fair usage'". (We understand that Apple vetoed Vodafone's initial pricing for the iPad data plans for just that reason.) It seems that just as broadband ISPs became addicted, when the race to sign up customers was on a few years ago, to the phrase "up to..." for their line speeds, so mobile data networks have gotten too comfy with the "unlimited*" word - where the asterisk is all-important. You could even call it Unlimited™ - which has quite a different meaning from unlimited.
Apple's weight isn't the real reason for the change, though. Stay with us.
There's other interesting stuff in that blogpost: O2 says there that the average user uses 200MB per month; that FaceTime, the video calling offering introduced by Apple with the iPhone 4, will only be available on Wi-Fi (at least from O2); and there will be regular texts to let you know how you're doing on your data allowance. And if you go over it without buying more, you'll see your data speed slow down.
Given those numbers, let's make some assumptions. There are 2m iPhone users (and even more if you add in Android users). That's a large enough population that you can treat it as a random sample. I'm told by one of the networks that data use follows the normal distribution (aka the bell curve - that mathematical prediction of where the members of a random population will be: it applies for things like height, for example). It's probably not a perfect normal distribution - there will be a low-end cutoff, because any device connected to the network will use a least a little data. But for modelling, it's a start.
So: 200MB average; 97% use less than 500MB. Plus those numbers into a normal distribution calculator and you discover that those 0.1% who are annoying O2 so much consume more than 690MB of data per month. That's about 23MB per day - roughly a megabyte every single hour. What, you think, are those folks doing? In fact, one network tells me that those people are downloading many gigabytes per month. That's quite hard to do on a smartphone.
Is it because of music streaming services like Spotify or We7 or (in the US) Pandora? The networks say no: audio doesn't take up that much bandwidth (certainly compared to video), and they haven't seen much takeup. So those gigabyte users aren't listening to streams. (The iPlayer is only available via Wi-Fi on most networks.) Yet O2 says that while it has doubled the number of iPhone users, mobile data use is doubling every 4 months, equivalent to an eightfold growth every year.
So: lots of growth, but some real extremes. What is causing it? Closer investigation suggests that this is a sort of collateral damage from the rumblings that preceded the Digital Economy Act - that it's caused by peer-to-peer users who were perhaps worried about the "three strikes" talk, and figured that their landlines (if they have them) might be monitored or throttled if they download a lot of P2P data; or they might be surcharged. For as we've pointed out before, "unlimited" doesn't mean unlimited on landline broadband.
So those wary folk - put by one network as numbering "in the few hundreds" out of millions - have signed up on "unlimited" plans, taken the SIM out of the phone, and then use it in a 3G dongle to download stuff. Because it's unlimited, they can get what they want. And as they don't mind how quickly it arrives, the speed isn't a particular issue; they're just after volume. O2 says that 0.1% of its smartphone users - that's about 2,000 people - are consuming 36% of its data. Other networks indicate the same.
It's also a bit foolish on the part of the downloaders, because the Digital Economy Act does actually allow for measures to be taken over illicit filesharing over mobile networks. But possibly the people doing it don't think they'll be noticed.
Here's news: the mobile networks have noticed.
So it's not really down to the iPhone or Android phones, which are more of an annoyance to the networks, because they make multiple, frequent requests to the network - but those are small amounts; those aren't the reason why O2 is ending the unlimited package. It's because some people took it at its word when it said data access was unlimited.
At this point, your - and our - reaction is "so tell that 0.1% to stop being data hogs - shape their bandwidth, send them letters, that sort of thing. Because obviously you're not going to want to burden yourself with having to set up new billing for millions of customers just because you've got 0.1% who are a bit annoying. No, that would be silly."
It's certainly puzzling that O2 isn't being clearer about the reasons. But the networks say they don't want to annoy those big downloaders. That's because they want to keep them as customers; but as paying customers. Yet the unlimited contracts aren't being withdrawn; they'll simply not be renewed. "At some stage, people will want a new handset or a new contract," an O2 spokesperson said yesterday.
I wouldn't be so sure: someone who's using their iPhone SIM as a dongle really isn't worried about upgrading; they've probably got a PAYG SIM stuffed into their iPhone for their phone calls. They're not stupid. Unless O2 - and the other networks - start taking some aggressive action, such as throttling their connections, then the faux-iPhoners will carry on. It's a tragedy of the commons, mobile data-style. Just like spam and comment bots, the tiny number of P2P mobile downloaders are screwing it up for everyone else.
It's odd that internet evolution is going in reverse here: I thought that ISPs had learnt that offering broadband was far better for retaining customers than the penny-per-minute dialup nightmare of 1990s internet connectivity (yes, children, we used to have dialup modems, and paid per minute we were connected. And you couldn't use make a phone call while you did).
It's a retrograde move - and even though the networks insist that most people won't be affected, the fact is that we're data-hungry. Eventually, we'll all be over the limit. Will the P2P donglers still be on their unlimited contracts even then? One feels that it's time for the networks, if they're really serious about offering a good service to all their customers, to have a think about that "fair use" clause.
Meanwhile, the 97% get a little inconvenienced, plus the constant worry that they'll go over their limit. That's actually the worst thing about what's happening here: that the confidence that you can use the mobile internet anywhere is suddenly gone, replaced by a nagging worry that this page or that service will land you with a big bill. The mobile internet shouldn't be like that: it should be like the landline version, where you don't worry about the megabytes. It's not a free lunch - but it's not a system where the person in front is treating the buffet as an all-you-can-eat either.
Why file-sharing has killed 'unlimited' mobile data contracts
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