Mobile Sands

February 2, 2010

Billing for Mobile Connected Devices

Filed under: 3G, LTE — Tags: , , , , — AJ @ 4:40 am

Imagine if every home appliance you own required its own electricity subscription, and the price of a light bulb included lifetime electricity usage!

Well, that is how mobile broadband connectivity is being priced today for “connected devices” ranging from tablet computers to electronic book readers. Apple iPad owners need to pay an additional $14.99/month to access AT&T’s 3G network even if they have unlimited data plan with AT&T. And Sprint 3G subscribers need to pay for the data charge bundled with their eBook purchases from Amazon, just like everybody else.

When Edison first started selling electricity to consumers in 1882, he priced it by the light bulb. At that time, the primary application of electricity was illumination. Edison promoted electric lamps as “the sun’s only rival” and often subsidized them. Tied to each light bulb was an unlimited usage plan.  Sounds familiar? It took another ten years before Chicago Edison Company (led by Samuel Insull) started charging for electricity consumed. Insull grew Chicago Edison into one of the largest utilities in America, and the pricing model he pioneered opened the doors led to a proliferation of electricity-consuming appliances, driving decades of rapid growth for the electricity business.

To get similar growth in the mobile broadband business, carriers need to offer plans that cover all devices owned by a single person (or family), and then, charge for bandwidth consumed. An AT&T subscriber who buys an iPad should be able to add it to her existing 3G plan and do the same when she buys a new PlasticLogic e-Reader or Isabella’s VIZIT photo frame. Not only will this make connected devices more affordable and palatable to consumers, it will increase make consumers more loyal to the wireless operators they chose.

Metered pricing is essential for such “converged” pricing to work. Today’s “unlimited” usage plans are often tied to particular devices and are  based on the premise that the device and how it is typically used will limit actual usage to a manageable amount. A typical user of an email device like Blackberry uses just 30-40 MB of data per month. iPhone users use thrice as much data but still, it is not a lot. All this changes when you have dozens of devices connected to the wireless network, soaking up bandwidth all the time.

Carriers are definitely thinking about metered billing, especially as they look at introducing connected devices.   Verizon’s CTO Dick Lynch talked about this topic in an interview with Washington Post last month, and said that metered billing is essential for both, reducing network congestion and to enable “open devices”. The move towards the pricing model that made utilities successful is on.

April 21, 2009

AT&T’s Investment in GSM/UMTS Delivers Subs & Easier 4G Uprade

Filed under: 3G, LTE, Uncategorized — Tags: , , — AJ @ 4:11 am

AT&T’s investment in GSM & UMTS is paying off.  Not only does it have an exclusive on the most desirable handset in the US market, it may also be able to upgrade to 4G at lower cost than its major rivals.

Almost 10 years ago, the different components of today’s AT&T (AT&T Wireless, BellSouth, SBC, others…) started migrating their 2G TDMA networks to 2G GSM.  They launched their first GSM/GPRS networks in 2001 and completed the migration by 2004. See this AT&T and Cingular milestones chart for more information.  Also, see this 2002 press release on the first TDMA-GSM handset

This was a period in which CDMA carriers had the lead. While Cingular and AT&T were migrating their TDMA network to GSM, Verizon Wireless was improving the coverage of its CDMA network and getting ready to launch 3G.  By the time Cingular completed nationwide 2G GSM coverage (07/2004), Verizon Wireless was ready to launch 3G EV-DO networks in over 30 major cities.  

Further, Verizon and Sprint – the two nationwide CDMA carriers – were able to rollout 3G relatively inexpensively. Both carriers just had to add channel cards to their existing CDMA base stations.  As per Verizon’s January 2004 announcement, it planned spend $1 billion to build out nationwide EV-DO coverage (compare this to the $7.2B for broadband in the stimulus package!).

Verizon may still have the best voice and data coverage in America,  but advantage has now shifted to AT&T.  With HSPA, AT&T can now boast of having the fastest 3G network and AT&T’s GSM network allowed it to get Apple’s iPhone device in 2007. As Verizon CEO Ivan Seidenberg admitted in a recent interview with the WSJ,  Apple never seriously considered building a CDMA device.  And it is the  iPhone that helped AT&T outpace Verizon in 2008.

Things get more challenging for Verizon (and other CDMA carriers) with 4G.  While Verizon and Sprint (Clearwire) invest billions on building their respective 4G networks, AT&T claims that it will be able to increase the peak sector throughput of its UMTS base stations from 3.6 Mbps to 7.2 Mbps via a software upgrade,  and then to 21 Mbps by upgrading to HSPA+ (the HSPA+ upgrade will involve upgrading antennas to MIMO).  These incremental base station upgrades, combined with backhaul upgrades, give AT&T the time to wait till LTE equipment is stable and cheaper.  Of course, Verizon and Sprint (Clearwire) understands the risks, and are taking aggressive steps to drive their network equipment and handset vendors to make their 4G migration as successful as possible. Still, the next two years will be very interesting.

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