Posted by Julie Ask on September 20, 2009
US as Traffic Cop in Web Fight (see WSJ article)
Ok, so there is a bit of wait and see until Monday when the FCC Chairman makes the anticipated announcement, but here's a first take:
Who, I ask, is on the side of the consumer? This WSJ article discusses how Obama is taking the side of Silicon Valley. Republicans seem to be taking the side of the carriers. WHO is on my side as a consumer?
Most consumers are NOT demanding the ability to stream unlimited video to their cell phones. In fact, very few are even looking for video capability in their next handset purchase. If you are a Forrester client, come ask me/us for the data - we can show you. Consumers are more interested in their battery lasting all day than streaming video ... which will kill it.
What consumers WANT from their wireless service providers is high quality, reliable voice services. Really, it is. We ask consumers year in and year out what it is they want in a wireless service provider. Quality of service and value always come out on top.
The carriers ... they've raised money in the stock and bond markets based on the assumption that they could generate revenue from selling wireless services - voice, SMS, data, etc. Why should Skype be able to undermine their ability to sell voice services? Why? The wireless service providers have taken all of the risks - they've raised the capital, they've built the networks, they carry the cost of customer service, etc. Wireless VoIP likely makes sense for some international calling given the roaming fees .... doesn't mean it has to happen on my cell phone over a non-Wi-Fi wireless network. There are probably more consumers who are shareholders in these companie with expectations of strong returns than consumers wanting wireless VoIP ... which by the way doesn't have consistently high QoS.
So, streaming video and other bandwidth hogging applications. Let me say it again ... quality of VOICE service. I DON'T WANT to be on a wireless network with a bunch of people trying to stream video. This is for the same reasons I don't count on using Wi-Fi in a Starbuck's or Panera Bread shop - I don't want to be on a congested network with QoS issues. Sometimes it's great, but you never know. It doesn't take many consumers streaming video within a cellular network to use up a lot of capacity, create congestion, and compromise the quality of the experience for the rest of us.
Wireless services providers can't simply flip switches and keep dialing up the capacity. There are backhaul issues from the towers. There are laws of physics. I live in SF. I tried to Tweet from my iPhone at an Apple event just a couple of weeks ago - even that was frustrating given how many of us are on the AT&T network with iPhones out here - and that's with rules. You want to download a movie or fat file? Guess what, do it over Wi-Fi or your landline.
Video can be a good service on cell phones. MediaFLO has invested hundreds of millions in a broadcast network. There is Wi-Fi ... how many places does one go these days where there is no Wi-Fi network available? Don't get me wrong - I like watching movies and TV shows on my iPhone. I live watching YouTube clips. That said, the wireless network is a bit of a shared resource. My interest in watching YouTube shouldn't trump the ability of paying consumers' ability to make phone calls. The carriers have a right to generate returns on their investment.
Yes, they could raise prices on data services .... but to what point? AT&T and Verizon each have upwards of 70 million or so customers. It's not clear to me that either one wants to hand over 35 to 40 million of them to Sprint and T-Mobile even if ARPU doubles.
Let's see what the FCC says on Monday ...
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