October 14, 2015
Data Usage = Unhappy Networks
If you’re a mobile phone user in the US, the chances are you’ve come across the term ‘data cap’ over the last few months, even if you’re on an unlimited plan. The good news is that you’re not the only ones – mobile operators and consumers all over the world are coming to terms that there has to be a limit.
We are using more mobile data than ever before. In the US, users are getting through 2.5GB per month on average, just fractionally ahead of the rest of the western world. It’s worth noting that this is purely mobile data – when you factor in WIFI, the figures jump to between 7GB and 9GB per month. But even these figures are set to rise dramatically, with some experts expecting this to reach 11GB by 2019. This puts an incredible strain on the networks, slowing things down for everyone. The same amount of data that accounted for an entire year in 2007 is now being used in under 75 hours in 2015.
There are two major factors for why this is becoming a problem. First of all, while most major cities are well-connected, there are vast rural areas of the USA without a fast broadband connection. Laying fiber-optic cable to service these regions is an expensive undertaking – one farmer in Nebraska was quoted a price of $383,000 for 36 months of broadband fiber internet. Users found that they could achieve the same result just by tethering a smartphone on an unlimited data plan and using it as a WIFI hotspot. This caused problems for the smaller operators such as Sprint and T-Mobile because they don’t have national coverage like the bigger carriers, and have to rent space on their networks. With customers using far more data than anyone expected, the associated cost to the network was much higher, leading John Legere, the CEO of T-Mobile, to brand some of his customers ‘data thieves’.
The other major factor are streaming sites such as Netflix. With 40 million users in the US alone, watching an average of 10 billion hours of video per month, it’s no wonder that our data consumption has sky-rocketed. Netflix is far from the only service of this kind – there is also HBO Now, Hulu and others. It is a dilemma for mobile companies, who know that their bandwidth is going to be affected by this, but who realize that this is what customers really, really want. It is said that in order to convince these companies to come on board their iPhones and iPads, Apple reduced the cut that they normally receive from App Store purchases from 30% to 15%. If Apple are offering a price cut, then you know it’s serious.
The problem for mobile operators is that they have a large number of users still on ‘unlimited’ data plans. These plans were created long before anyone realized just how much mobile data we were going to be using in the future, and had they known this, operators would never have created them. Only two operators still offer them, T-Mobile and Sprint. Unfortunately for the operators, many consumers still have these plans and the ‘unlimited’ nature of them is protected by law, as AT&T recently discovered when the FCC fined them $100 million. The only option for operators is to keep them running, and either make them as unlimited as they can (as in the case of AT&T who have increased the amount of data their unlimited users can use before their supply is ‘managed’), or by trying to price their unlimited users out of the market (in the case of Verizon, who have raised the cost of their plans by $20 per month).
Using these sort of streaming services abroad can be expensive, assuming that you can get them where you are. While Netflix is launching services across Europe as it continues its domination of the world (it already accounts for 20% of UK and Irish total web traffic), it’s not guaranteed that the show you want to watch is available in that country. However, geo-blocking is something that the European Union is looking at, and as well as abolishing roaming charges in EU Member States, they plan to create a single digital market that will allow users to watch what they want no matter where they are.