Friday, May 18, 2012

Spectrum Crisis Impact on Data Caps

The uproar over major wireless carriers capping data usage is getting louder. This week, a major carrier announced it will be ending unlimited data plans even for customers with “grandfathered-in” status when they introduce tiered shared plans this summer.

Data caps may frustrate customers, but they shouldn’t blame wireless providers. The caps are the natural result of the government’s inability to make more spectrum available quickly. The spectrum crisis requires measured controls on the volume of data-use to ensure a carrier’s network can provide fast and reliable LTE for as many consumers as possible.

Even as carriers spend billions of dollars to build-out their network capability, demand has greatly out-paced supply of data, especially in high-density population centers like New York or Washington D.C. Smart phones and tablets sales continue to rise. According to a recent Mobile Data Traffic report by Cisco, smart phone data usage tripled from 2010 to 2011 and mobile data grew 2.3 times in 2011, marking the fourth consecutive year it has more than doubled. The report also notes 4G connection generates 28 times more traffic than non-4G connection.

These products are designed and marketed on their ability to use LTE for broadband services that require an exponentially greater amount of data than email, text messaging, and basic web browsing. Just a few years back, low bandwidth services were enough to satisfy the on-the-go customer. But with new services and content from providers like Netflix, YouTube, Hulu and ESPN, the public’s expectations and habits have changed. New patterns of consumption are straining network capacity today, and will be unsustainable in the very near future without significant amounts of new mobile spectrum.

Until the FCC moves ahead with new spectrum auctions, data caps are necessary to deal with network congestion. Continuing to provide unlimited data is not a viable option today, and would not be in the best interest of wireless consumers as a whole.

1 comment:

Anonymous said...

Well reasoned, mature explanation. It's often easier to complain that you are not getting what you want without understanding the reasons underpinning the situation. Bandwith, like many other commoditites, should be managed prudently. That may include a degree of rationing, such as data caps, so that all have access, rather than making it purely market based with the result that only those who can afford the the higher costs will consume a hugely disproportionate share of the bandwith. Well done.