Why iPhone Broadband Caps Aren't Actually A 'Good Deal'

from the trends,-people,-trends dept

There was a lot of attention paid recently to a study from Nielsen concerning how much data smartphone users consume. One of the things that some pulled from this report was the idea that AT&T's new iPhone usage caps were somehow a "good deal" for consumers, since many appeared to use less than AT&T's first tier cap. That's because of the following statement from Nielsen, which certainly implies that:

Usage-based pricing may be more fair. The top 6 percent of smart phone users are consuming half of all data. The vast majority of customers, 99 percent according to the 60,000 phone bills that Nielsen collects and analyzes every month as part of their Customer Value Metrics product, are better off with a pricing scheme like AT&T's new data pricing model than under flat-rate pricing where they are paying for much more than they ever use.

Of course, the reality is a bit more complicated. Thankfully, Broadband Reports explains why these claims ignore important trends and other factors:

While many people are applauding AT&T's new data pricing plans as money savers for light users today -- they're not looking at tomorrow's big picture. One, Nielsen ignores the fact that carriers are now making data plans mandatory for smartphone users who previously only used Wi-Fi. That's not "more fair," nor does it save money. Nielsen takes the stance that light users somehow need to be "educated" into consuming more data -- yet many of those users simply prefer to use their device's Wi-Fi functionality alone. That's no longer possible.

Two, the average user already consumes 298MB of data -- while AT&T's base cap is 200 MB. That cap's set just low enough to push today's average user to the higher, $25 a month tier (plus overages, ETFs, an endless assortment of fees). That average is going to quickly skyrocket and the heavy user of today will become the average user of tomorrow -- yet instead of having the option of a simple, unlimited data tier at a fair price -- they'll face heavy and often confusing overages just as smartphones begin seeing interesting video service integration (Netflix, Hulu). That's not about saving money, it's about making money.

Again, incumbent wireless companies are not in the business of making less money, and this new media meme that a shift to low caps and high overages is about saving consumers money, or fairness, or helping minorities -- is simply absurd. If telecom analysts want to analyze -- they should be noting that carriers and investors see the death of SMS and voice minutes heading their direction -- and are changing pricing models to compensate and cash in on an explosion in wireless video (or streaming wireless audio) use. But the suggestion that this shift is driven by altruism is bizarre and disingenuous.

There's also the fact that, with the new plans, if you want to use tethering, it'll run you an extra $20/month -- not to mention that tethering will increase data usage. It also ignores the mental transaction costs when you know you have a cap and potential overages that discourages usage, just as more apps are coming online to encourage usage. The really damning part, of course, is just the basic trend that data usage is increasing and that's not going to slow down any time soon. AT&T smartly set its caps so that it could get analysts to make these kinds of claims, ignoring that a couple years from the average data will be much higher and more and more people will be pushed to higher, significantly more expensive options.

What's kind of amazing here is how no one seems to look back at the consumer internet access costs for comparison. In the early days, when many people had AOL, there were caps and metered billing. And some people used it, certainly, but it was nothing compared to what happened when AOL finally dropped its caps and suddenly people could really embrace and use the internet without worrying about hitting their usage cap. Unlimited internet access is what helped drive internet usage, making it such a powerful and useful platform. Mobile operators seem to want to go in the other direction and are working hard to try to limit how useful many people find their phones, due to limiting data plans. That doesn't seem all that compelling or "fair."

Filed Under: broadband, broadband caps, growth, mobile, trends

Iran Sends Warning SMS Messages To Potential Protestors

from the big-brother-is-txting-you dept

Mobile phone service and things like texting are pretty popular in Iran, and we've seen how Iranian officials have struggled to deal with that in the past. For example, one politician threatened revenge against anyone who sent negative text messages about him, and the government has also announced that it will filter out text messages it deems inappropriate or immoral. But rather than just trying to block or condemn the technology, it looks like officials are now looking to use it to warn against dissent as well. On The Media points us to the news that the government has been sending text messages to mobile phone subscribers it believes are planning to take part in protests, marking the one year anniversary of last June's election protests, warning them not to take part:

The message, which has the Ministry's emergency phone number, 113, reads, "Dear citizen, according to received information, you have been influenced by the destabilising propaganda which the media affiliated with foreign countries have been disseminating. In case of any illegal action and contact with the foreign media, you will be charged as a criminal consistent with the Islamic Punishment Act and dealt with by the Judiciary".

You may remember, last year, many people credited text messaging and services like Twitter for helping to get the news out about what was actually happening during the protests. This bit of news is a reminder that two can play at that game, and governments can often use the same technology to try to stifle dissent. This isn't a condemnation of the technology, of course, but just a reminder that the technology can be used for a variety of different purposes.

Filed Under: iran, sms, text messages, warnings

Starbucks Finally Realizies That Free WiFi Is The Way To Go

from the took-'em-long-enough dept

Way back in 2003, we explained why fee-based WiFi almost certainly did not make sense for coffee shops like Starbucks. A year later, we had a discussion on how the program could be a lot more successful if it went free. But, for years, Starbucks insisted that the paid WiFi was a success. Except, if you watched, it gradually got more and more "like free." And that's because few people were actually using the paid version. And, now, finally, after all of these years, Starbucks is finally going to completely free WiFi. It's finally admitting that WiFi was always a complementary service to get more people to buy its high margin goods -- rather than a product itself.

Filed Under: free, wifi
Companies: starbucks

More People Recognizing That Media iPad Adaptations Feel Like CD-ROM Media

from the don't-recreate-paper dept

Earlier this year, we pointed to an excellent Danny O'Brien blog post comparing the media's mad dash for the iPad as a "savior" to the media's similar mad-dash to CD-ROMs as a savior. I'm reminded of that after Tom Teshima pointed us to Michael Gartenberg's review of Wired's well-hyped iPad app, where he, too, notes the similarities to CD-ROMness:

In the mid 90s, a friend of mine was involved in a project to recreate magazines like Time on CD-ROM for the multimedia PCs of the era. The results were pretty cool, but the CD-ROM versions of the publications hardly replaced their print counterparts. Content has since moved from optical disk to the web, and now the allure of tablet devices has created a market for specific newspaper and magazine apps -- the number one paid app for iPad is a digital version of Wired, which sold about 1,000 copies an hour the first day it was launched. While it's a much better effort than some of the other efforts, more than anything Wired for iPad shows the weaknesses of media apps and demonstrates how the tablet remains a still-imperfect medium to deliver this type of content.

Wired's efforts, like the CD-ROM efforts of the past, by has some cool features. A video clip of Toy Story 3 graces the cover and there are various interactive features, but more than anything else, it feels like a scanned in copy of the paper mag. Although navigation is better than most iPad magazines, it's still never clear when a screen should be scrolled down or just swiped horizontally.

Gartenberg notes that the iPad version is, in some ways, a worst of both worlds. It's not like the website, which is easily shared or emailed or discussed with others. Most of that functionality is effectively missing, which is really quite limiting for folks who are used to sharing the news as a part of experiencing it. Second, it doesn't allow physical notations or markup the way an actual paper magazine does -- or, again, the ability to easily share the magazine with others. You could share your iPad, but that's not quite the same thing...

He then goes on to point out the ridiculous economics. We've already seen other media publications come out with crazy pricing, but Wired unfortunately followed suit, and it makes little sense given the economics involved (which, Gartenberg points out is ironic, given editor-in-chief Chris Anderson's last book on "Free" in business models:

Even worse, the price point is hard to swallow. Charging the full cover price for a digital magazine makes no sense when I can subscribe to the paper edition of Wired for a year at a much lower cost per issue -- especially given that there's no paper, ink, shipping or distribution charges. Given the lack of flexibility, I'd assume there would at least be some incentive to get me to make the digital purchase, and even more so in light of the fact that the bulk of the content is already available online at Wired's website for free. It's ironic that Editor-in-chief Chris Anderson famously wrote a book called "Free" -- the Wired iPad app is the perfect case to try out some of those business models.

Of course, the obvious retort is the damn thing sold like hot cakes when it was released. The real question, though is how sustainable will that really be in the long term? As more people realize how much they're paying, they may wonder why. And I'm still confused as to why publications like Wired hype up all these special features for the iPad... but don't offer the same functionality on the web -- which they easily could.

Filed Under: apps, cd-roms, ipads

After 46 Years Of Unfulfilled Hype And Promises, Is Video Calling Finally Ready?

from the and-here-we-go-again dept

With the recent launch of the HTC Evo and (more importantly) the announcement of the iPhone 4 -- both of which include front-facing cameras and video calling software -- lots of people are now asking (yet again) if video calling is finally going to catch on. Of course, everyone points to same things: it's been a long time since AT&T introduced the first video phone, back in 1964. Six years ago, on the 40th anniversary of AT&T's intro of the phone, I wrote a column that was skeptical of the 2004 hype around video calling. You may (or may not) recall that when various UK mobile operators were all rolling out their 3G networks, video calling was a big selling point. And, as I noted in that column, the only people who seemed to be using it, were guys calling up women to expose themselves (see? ChatRoulette users exposing themselves is nothing new...).

And, of course, lots of folks are pointing out all of the standard reasons why video calling has never taken off: people don't want to have to "look good" just to use the phone. They don't want to have to even think about it. Slashdot points us to a typical story about how people in the UK won't adopt it -- and that's no surprise. As I noted in that column six years ago, it was all the rage (from operators) in the UK, and almost no one used it. So the UK has already gone through this whole video calling craze.

Now, as someone who's been skeptical of video calls for ages, I'll admit that I'm still skeptical of this go around. But... I may finally be hedging those bets, and admitting that I can see some uses for video calling. I just don't think it's what most people think they'd use it for. I still don't see any real market for your everyday video calling, adding video functionality to the calls people make on a daily basis. There's just so little benefit, and enough potential downside that I just don't see people doing it. But I can see some interesting other uses, including opening up new possibilities. For example: tech support. I can't count the number of times I've had to call my home broadband provider to complain about downtime -- and the conversation almost always involves "what are the lights on the modem doing" or "where is this cable plugged into" or whatever. I could definitely see value in just being able to show them what's going on. Same thing with calls to doctors. Your kid has a rash? Why not do a video call with a nurse to see if you really need to bring him into the doctor? And, of course, as more and more people have discovered with webcams, you have a whole new world of communicating via video (it's becoming more important for families, for example) -- and people will use video phones to set up more mobile video services for broadcasting themselves live to larger audiences (rather than just one to one).

Beyond the standard "vanity" and "looks" reasons why video calling never took off, there was really an infrastructure problem. You had a serious "empty room" problem. No one would buy a video phone if no one else had one. But what's happening now is that smartphones are becoming advanced enough that people are happily buying them for a whole variety of reasons that have nothing to do with the video calling. And, because of that, the infrastructure to do more regular video calls is actually becoming more widespread. With ubiquitous built-in video for phones, I can actually see more people starting to use it. I still don't think most people will use it on everyday calls. In fact, I still don't think it will really be that big of a feature in terms of usage. But I'm not yet convinced that it will totally crash and burn this time around. Could it be... after 46 years.. that some element of video calling's time has come?

Filed Under: video calling

Let's Face Facts: Google Isn't So Open At Times Either

from the don't-play-the-open-card-too-much dept

There's a new battle brewing between Google and Apple over where the internet is headed next. At recent developer conferences for both companies, execs took very clear potshots at each other, and now they're directly sniping at each other over openness.

Google recently purchased AdMob, a mobile advertising platform, and AdMob execs are upset at Apple for prohibiting the use of other ad providers for the iPhone. Basically, you're locked into Apple's own iAds platform. This is a bit ironic, given Apple's recent claims that it won't support Flash because the platform is too closed. It seems that Apple is against closed platforms... unless they're Apple's closed platforms.

But, while Google plays the open card -- and very often is quite open -- some of the claims that Google/AdMob execs are making could be pointed right back at Google as well. Take this one, for example:

This change is not in the best interests of users or developers. In the history of technology and innovation, it's clear that competition delivers the best outcome. Artificial barriers to competition hurt users and developers and, in the long run, stall technological progress.

I agree with this point, wholeheartedly, but Google doesn't always act that way. Google's main product, its search engine, is still a very, very closed platform. If a developer wants to innovate off of Google's search, they currently have two options the AJAX search API and Google's Custom Search Engine (CSE) -- both of which have tremendous limitations. The AJAX API limits results to just 8, and really just keeps trying to drive users back to Google's properties. For CSE, the terms are quite limiting and only let you display Google ads on the results page -- not all that unlike Apple's limitations. At one point, Google had a SOAP API that let people develop on Google search results, but they killed that off. And, Google has never offered anything like RSS on search feeds.

If Google were truly "open" to "the best interests of users or developers" by encouraging more competition, why not let others build on top of Google's platform as well? If it were open, then Apple could innovate on top of Google's search and make money by selling its own ads, just as Google now wants to be able to run ads on iPhone/iPad apps. The reverse is true as well. If Apple were really open, then Google could innovate on top of the iPhone/iPad apps and make money off of its ads.

But the truth is neither company is that open when it comes to products it believes are core to its business. For many years, we've wondered if Google would make its search engine into more of a platform that others can build on, but to date, it remains very controlling on that side of its business, which I think is a loss for the wider internet. Now, obviously, this is Google's call to make, but to whine about Apple not opening its platform while keeping its own just as closed is a bit hypocritical.

Filed Under: ads, open, platforms
Companies: apple, google

Finland Plans To Decriminalize Using Open WiFi [Updated]

from the finally dept

Different countries have taken different approaches to the legality of "open WiFi." We've often heard about police going around and trying to shut down open WiFi networks, but that seemed silly: what if you actually wanted to offer open WiFi? Back in 2005, Finland freaked out about the concept of open WiFi, blaming open WiFi for the following scam:

The Helsinki branch of financing firm GE Money apparently was scammed recently. Here's how it worked: (1) the company's own head of data security (2) stole banking software from the company after which he (3) took confidential users passwords for its bank accounts. He then (4) stole money from GE Money's accounts by transferring it to a (5) secret account he had set up months earlier. Oh yeah, he did this last bit (6) via an open WiFi connection.

All those other things? No big deal. The problem here, according to many in Finland, was the open WiFi, the use of which was later outlawed (apparently via case law) (Updated to clarify that it was the use of open WiFi that was made illegal, not setting up open WiFi).

Thankfully, it looks like regulators there have now realized this was a total overreaction. Slashdot points us to the news that the Finish Justice Ministry is preparing to legalize the use of open WiFi (Google translation from the original Finnish) after realizing that open WiFi is both widely used and incredibly useful.

Finally, a side note, because this has come up before from commenters who think that I'm being inconsistent: supporting open WiFi does not mean that you support individuals not protecting themselves when using the open WiFi. In past threads, it was suggested that supporting open WiFi while pointing out how silly it is for people to complain about their own poor security habits was in disagreement. It is entirely reasonable and consistent to support open WiFi (at the access point level) while suggesting that individuals (at the user level) encrypt their own data. In fact, that's quite a useful situation: more open WiFi, but security at the user level, is really a situation that works best for everyone.

Filed Under: finland, open wifi, wifi