Who Gives a Cap?

This week AT&T became the most recent operator to give its ‘all you can eat’ data offering the chop. The emergence of these cheap restaurant inspired offers originally signalled the end of 3G networks’ lean years and the beginning of the data boom. Their passing introduces the era of tiered offerings which mobile operators hope will restore some balance to their (er…) balance sheets. But are data caps the right way to do it?

Apparently nobody in the industry has escaped the dreaded mobile broadband capacity crisis without at least a few sleepless nights. It was only relatively recently that operators were desperately wishing their 3G networks could get a little action. The old adage, be careful what you wish for, has rarely seemed so apt and backhaul providers have been milking it ever since. We once thought a dazzling combination of fibre backhaul and LTE would save the day but it’s becoming clear that data usage is rising much faster than the wireless upgrades. LTE simply isn’t the knight in shining armour coming to rescue us from this crisis.

Naughty HTC Desire

So where does this leave operators? Well, scrapping the all you can eat bundles can only be step one of the strategy. Actually, the data caps aren’t designed to limit the rocketing traffic on mobile broadband networks, they simply allow operators to charge the bandwidth hogs more than the honest Joes who are terrified of being separated from Facebook during their journey to and from work. They actually allow operators to derive more revenues from those who are most responsible for their rising costs (ie. network upgrades). However, if network upgrades won’t resolve the capacity challenge they still have a problem. The likely solution seems to be, at least in a large part, traffic management. This allows operators to improve the consumer’s mobile broadband experience without having to add more capacity. Put simply, it prioritises certain traffic, such as time sensitive voice or video – nobody really minds if their email has a two second delay but that kind of gap in a multimedia session is unbearable.

The interesting thing is that the technology behind traffic management might also present a better solution than data caps. The problem with data caps is consumers don’t really know what, for example AT&T’s new 200Mb limit actually means. In the world of modern smartphones the situation is further complicated as your phone is frequently consuming data even when you’re not using it. Case in point – a friend of mine just got the much lusted after HTC Desire from 3 on tariff with ‘unlimited’ internet which in reality only covers 500Mb. Within one week she received a warning that she was about to exceed her monthly data allowance. She consumed no multimedia. None. She just downloaded and used a small number of apps all of which have been synching and pinging the network non stop. This isn’t an isolated incident either as the Android forums attest.

So what’s the solution? Either, subscribers are going to have to just suck it up and download a data counter app – something that may simply be anathema to the non-tech savvy – or operators could start charging by application rather than data. Traffic management solutions can enable exactly this. Operators could then offer an expensive tariff for the most time sensitive applications, and therefore most network intensive, such as heavy video and VoIP and then offer dirt cheap tariffs for email and basic browsing. Consumers would understand the tariffs (thereby increasing their appeal significantly) as well as receive a user experience tailored for their usage while operators would monetise their networks most effectively and ease the mobile broadband crisis. Trust me, traffic management and the whole issue of network intelligence is set to be the new IMS, WiMAX, UMA .. err rock and roll.