I Don’t Buy It


On the verge of the announcement of iCloud, Lion, unicorns, iOS 5, and magic fairy dust, there’s an issue I wanted to dig into a little bit, something that the increasing use of cloud services is going to come into direct contact with: bandwidth.

I came across this article on TechCrunch and felt like I was in some sort of twilight zone. Here are a couple highlights:

The report encourages mobile networks to offer integrated rate plans, while “providing a wide range of segmented postpaid and postpaid tariffs”. It also puts stress on the potential for escalating revenues in the cloud, machine-to-machine, and mobile financial services where networks can leverage their existing assets

and

The cause of the impending crunch? The report indicates that the dire situation is caused by market saturation and falling average revenue per user, which is causing core revenues to flatline, while the cost of handling mobile data traffic is skyrocketing. As one might expect from the growing use of smartphones (Nielsen predicts there may be 100 million by the end of the year), cellular data traffic doubled in 2010. And it’s expected to increase thirteen-fold by 2015.

If you’re half as confused as I am, then you’re plenty confused. What is all this jibba jabba? The rhetoric pitched to us by data providers (I’m lumping everyone together here, not just the mobile providers) is that “Bandwidth is getting more expensive, guys! You’re using a lot of data, and that’s really expensive! I don’t buy it. The thing is, all these internet providers, whether they’re mobile or otherwise, have seen this coming for a long time. The writing was on the wall back when WAP was the only way to get up-to-the-minute weather and MOVIE TIMES IN YOUR AREA. All these carriers and ISPs knew that people were hungry for more information, and so they started developing new ways to deliver bits and bytes to people’s eyeballs. The problem is that, as the number of subscribers grow, they aren’t making as much per person because people are getting wiser. Coffee shops offering free wifi and libraries with computer access have become the de facto standard. Even grocery stores offer free wifi these days. As in, I walked into a local Jewel and was greeted with a giant sign telling me that the whole store was blanketed in sweet, sweet 802.11b/g. That’s fantastic! I got the same thing when I walked into Nordstrom’s. If offering internet access was so expensive, you can bet that these businesses wouldn’t be offering it for free to anyone who wants it. “Come in and get you some interwebs here” has become this decade’s “FREE TOASTER” promotion. The toasters, as we all know, were cheap. Dirt cheap. People felt like they were getting a good deal because, hey, free toaster. Who doesn’t like toast? I don’t know of anyone. Who doesn’t like free wifi? *crickets*

Then there’s this regarding a recent dig into internet pricing in Canada:

Assuming an inflated cost of 10 cents per gigabyte, it means that Bell, Shaw and Rogers are charging consumers between 10 and 50 times what it costs them to deliver data. This on top of their regular monthly Internet pricing! While I agree that heavy users should be prepared to pay more once they have reached their bandwidth caps, a fair price would be much closer to 10 cents per GB than the inflated $1-to-$5-per-gigabyte charge sanctioned by the CRTC.

followed by:

The argument that the exponential growth in Internet usage as the primary reason for higher prices is a seductive one. However, it ignores the fact that the technology that drives the Internet has become more powerful and much cheaper in the past decade.

So, exactly what I’ve been saying. Our infrastructure is evolving incredibly rapidly, and companies continue to use outdated arguments and backwards-facing data to justify rate hikes and consumer-hostile practices. Now, this isn’t a problem. I talked to a friend recently about mobile internet usage, and how my internet usage is astronomical each month. He couldn’t understand it. Read my previous post “The Cap’s the Limit” on one of the possible models for Apple’s “music locker” service, and you can see how this is incredibly consumer-hostile. Not on Apple’s part, mind you, on the carriers and ISPs. They’re the ones that see the future of media being cloud-centric, and they want to sink their teeth into more money, despite the fact that they’re already making plenty. Correction: they want more profit. Even so, I have a hard time believing that ISPs will be hurting from the profit angle.

At any rate, this is going to come to a head sooner than later, and I hope we have some strong government officials on our side to help us fight off the behemoth businesses that clearly see themselves as big enough to make whatever rules they want at the expense of the consumer.

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Back and Forth

For a while now, I’ve been using an app called Audiogalaxy to get back to my music library at home and essentially have access to my library with over 100 gigs of music to supplement whatever tracks I have synced to my iPhone/iPad. It’s fantastic, mostly because I know two things:

  1. I have music on my iPhone that I can listen to anywhere, regardless of whether I have a data connection or not.
  2. I can, with a data connection, get access to my huge music library.

The recently-uncovered Apple patent application is simultaneously awesome and horrific for a few reasons, all of which have to do with #2.

One of the most explosive and formative things to happen to America recently is the widespread adoption of mobile data and internet usage. As I’ve discussed before, the mobile telecom providers have used this to push their agendas and create an awful dystopian future that the American wireless subscriber is going to end up paying dearly for. It’s going to be ugly, folks. Get ready for a future based on as-yet-unwritten disgusting rates based on AT&T’s greed.

If you think this reaction is a bit overblown, let’s dissect the groundwork that needs to be in place for a person to listen to music with Apple’s new system. A person would need:

  1. A computer running iTunes (for syncing purposes). This is pretty much standard, and shouldn’t come as a surprise to anyone.
  2. An iOS device with a data connection. Not everyone wants to or can run a persistent data connection. iPod touch devices are reliant on wifi, and people with the lower-tier AT&T or Verizon data plan (250 MB for $15.00/month, in AT&T’s case) may not be comfortable with a service that sucks up data every time they wan to listen to a song.
  3. Possibly: the above computer with a persistent connection to the internet. This is a variable, and the future is hazy here. Depending on how the whole “Music Locker” thing will work, or how MacOS Lion home server is structured, this may or may not be necessary. We’ll see.

Let’s assume that a person has an iPhone, is using AT&T, and is using the $15.00/month data plan for 250 MB of data per month. We don’t know how much of each song will be synced to the iOS device, but let’s assume it’s about 30% of each song to allow ample buffering time. We can then “fit” three times the number of songs on the iOS device due to the reduced footprint of each song on the device’s memory. The remaining amount of each song would then be pulled from a cloud. I say “a” cloud because it’s unclear if that cloud will be the individual’s computer or this “Music Locker” service. Let’s assume it will be from this person’s computer, so as not to incur any additional fees (yet). The computer will have to be on in order to access the library data, which means an extra power demand and a load on the person’s internet usage (we’re also assuming that internet usage is capped, which, despite some companies claiming their data is “unlimited,” is most likely the case). Most likely, the data usage through a home internet connection is insignificant (especially relative to a theoretical cap of 50-250 GB). The proposed data usage relative to mobile internet connection with a 250 MB cap is significant, however, and listening to a day’s worth of music can potentially eat up all of a person’s monthly data before they have to pony up another $25.00 for the higher 2 GB plan.

Did you catch that? Let’s look at it again.

The folks who want to use this feature will be streaming data every single time they listen to music. The amount of data that will be used is unclear, but I predict that listening to music for a prolonged period of time (even a few hours a day) will cut deeply into or completely use up a person’s data for the month (again, assuming usage of a cheaper $15.00/month, 250 MB plan). Even on a 2 GB plan, monthly data usage can quickly skyrocket, shooting people dangerously close to the ceiling or their plan. I use about 1.5 GB/month right now with occasional usage of my Audiogalaxy service to get at my home library. If I were to switch over to a model that used data every single time I played a song, I’d find myself breaking that 2 GB barrier on a monthly basis, which would cost me more money.

AT&T and Verizon made a long-term move here, and we’re staring it in the face right now. Back when AT&T first introduced tiered data pricing, I could see the act as predatory. More and more services are being pushed online, to the cloud, and so forth. What AT&T did was squeeze the pipes before the water started flowing. Netflix is growing in popularity and capability, and their long-term dominance in the mobile media marketplace (I love alliteration!), while not guaranteed, is just shy of that. How are we going to watch movies on our mobile devices if we’re being pinched to do so? How will companies innovate if they know they’re going to be dealing with hamstrung devices? People are going to be paying for subscription services and the bandwidth it takes to use them, a double whammy. The outlook doesn’t look good.

Boy am I glad I got that unlimited Clear iSpot subscription while it was still around.


A New Way to Count

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Over the weekend, we got news that AT&T will be buying T-Mobile USA for something to the tune of $39 billion. That’s a hefty chunk of change, but I’m going to focus down on a few things that I read in GigaOM that caught my eye. GigaOM present a fairly decent argument as to why this is really really bad for customers, and I have a tendency to agree with a lot of what was said, namely in this piece, look at what they say about Android smartphones:

Don’t be surprised if you see AT&T impose its own will on what apps and service are put on its Android smartphones. I wouldn’t be surprised to see the worst phone company in the U.S.(according to Consumer Reports) tries to create its own app store and force everyone to buy apps through it.

Notably, the paragraph talks specifically about Android-powered handsets (which are “open,” mind you). Not only are a whole pantload of atrocities to net neutrality being committed due in large part to this whole “open” malarkey (which is another story for another day), I’m sure we’re going to see even more horrible stuff perpetrated by AT&T and Verizon as time rolls on. Having a choice between all of two carriers in the US is not a happy solution to me, which is why I’m looking forward to a future that doesn’t explicitly involve me having to fork over half a paycheck every month just to use my phone. As these companies become more powerful, they limit the amount of innovation that can occur in the portable computers and smartphones that are out on the market, mostly because they can then restrict what devices can be used on their network. There are always ways around this, but it’s a scary future, backed up here:

Phone Handset Makers. Before the merger was announced, the handset makers such as HTC and Motorola had two major carriers who could buy their GSM-based phones. They just lost any ability to control price and profits on handsets because now there is a single buyer that can dictate what GSM phones come to market. Even with LTE becoming the standard for the 4G world, it would essentially be a market dominated by three buyers (should Sprint go with LTE), which would place handset makers at the mercy of the giants.

That isn’t to say that this is the end of the road for handset manufacturers, however. Specifically, I think Apple has seen this coming for a while, and has been looking at things from all angles for some time now. On the one hand, they had to give a lot to be able to partner with AT&T, but AT&T gave in and netted themselves with millions of subscribers because they took on Apple’s revolutionary phone when no one else would. I imagine they also looked at the uphill battle they had to fight to get there and said, “What if we couldn’t partner with a carrier, what then?”. The answer came in the form of last year’s iPod Touch. In an article from Engadget:

…and it’s the most glaring sign yet that the next generation touch will flippin’ finally boast a camera (or just a way around that SMS-based activation?)…

Emphasis mine.

Also, from Apple’s support site:

What information do I need to call someone using FaceTime?

To call someone using FaceTime, you need their phone number or email address. Which one you use is determined by the device you are calling:
When calling an iPhone 4: Use the phone number of the person you are calling.
When calling an iPad 2, iPod touch, or FaceTime for Mac user: Use the email address designated for FaceTime of the person you are calling.

So, in short: Apple is trying to craft an ecosystem that is not reliant upon any single carrier to deliver the sort of innovation, creativity, and communication that has taken the world by storm. All you need now is an Internet connection, and that can be found just about everywhere. Think about it: instead of paying through the nose (in addition to losing an arm, leg, and first-born child) to use an iPhone, all you’ll need in the future is a cheap mobile hotspot, the kind that are available everywhere right now. The kind that you can get for $50/month or less. The kind that can have five devices tethered to them. The kind that enable face-to-face conversations with your friends through FaceTime. Brilliant.

When I stood in line for an iPad 2 and came away from the experience empty-handed, I started wondering why. After asking the Apple folks that were present, it became pretty clear to me that they had massive stock of wifi-based models, but very few 3G models1. I considered that for a moment as I ordered my new one online, and realized that this was Apple’s gambit. They’re trying to push their devices away from reliance on anyone or anything. (via)

The end result is still grim for most people, however, since the average person shopping for an iPhone isn’t going to be savvy to Apple’s future plans, they’re just looking for nice piece of kit to throw in their pocket or handbag. If control is taken away from consumers (control=choice), then the carriers will dictate how much and when people pay for each device. They’ll be able to perpetuate this madness with words like this:

Further, we recognize that there have been meaningful recent moves toward openness, including the introduction of open operating systems like Android. In addition, we anticipate soon seeing the effects on the market of the openness conditions we imposed on mobile providers that operate on upper 700 MHz C-Block spectrum, which includes Verizon Wireless, one of the largest mobile wireless carriers in the U.S.

In light of these considerations, we conclude it is appropriate to take measured steps at this time to protect the openness of the Internet when accessed through mobile broadband.

What a crock. Also: scary, because that’s where we’re headed. Now that AT&T and Verizon are effectively the only carriers in the US, you can bet your bottom dollar that they’ll be throwing their weight around in the government to try to get ignorant legislators to give them even more power.

AT&T points out that the combination of T-Mobile USA and AT&T “provides fast, efficient and certain solution to impending spectrum exhaust challenges facing AT&T and T-Mobile USA in key markets due to explosive demand for mobile broadband.” What we’re seeing here is AT&T using what some call a manufactured spectrum crisis — which the FCC has built to a fever pitch in the last two years — in order to shove this deal through the regulatory process. This is a deal that will ultimately be worse for consumers by reducing the number of nationwide wireless providers and consolidating much of the high-quality spectrum in the hands of the nation’s two largest carriers.

This is horrible for the consumer. Sure, AT&T will sugar coat the whole thing and make it look like they just handed you the world on a silver platter, but the bottom line is that they want to control what you get and how you get it.

Now I understand that carrier dependence is not the same as Net Neutrality, but there are certainly more similarities than differences. While Apple can’t necessarily fix the problems with Net Neutrlity, they can change the way people communicate around the world and create more alternatives for more people.

With iOS devices proliferating throughout the world at an amazing rate, it won’t be long until calling your friend in France and talking to them face-to-face from the palm of your hand will be commonplace and free. If you read the writing on the wall, you’ll see that it’s already begun.

1 I’d imagine that Apple also knows that 3G is reaching its EOL (end-of-life) soon, and doesn’t want its customers having a poor experience. If I were Apple, this would be something I’d be seriously considering, as well. The 3G versions are different from the wifi-only models in small ways, and it makes a difference to the overall experience. For the record, I do like the ease of the 3G model a whole lot more.

Thanks to Dazzie D for the picture.