23 August 2009

Crystal ball: Data-only carriers to destroy the telco industry RSN

This is one of those random thoughts that fits in a tweet but deserves a little more explanation. Like most I currently pay around €100 a month for a mobile package that includes some texts, airtime (2+2 hours on and off peak), some data and usually some useless gimmicks (free calls at certain times or to certain phones, etc.). This of course makes it truly impossible to compare apples to apples and I almost feel like choosing the right plan should be a profession (I'm sure there must be businesses that do this for a living).

Under the covers though it's all just 1's and 0's and it's been that way for a while - Australia turned off it's analog mobile network (AMPS) while I was still there and like here in Europe uses the Global Standard for Mobiles (GSM). This shares the limited airwaves with timeslices (TDMA) and over in the US they do a similar thing with code (CDMA), probably because TDMA has timing problems when you get out to tens of kilometers (irrespective of the strength of the signal) and the US has a lot of land to cover. Point is that under the covers it's all data. Of course things have changed a bit since I was helping design Australia's first digital mobile network - now we've got 3G, LTE, WiFi, WiMax, etc. to play with too.

Traditional telephony was what we call "circuit switched", which means it was about creating a dedicated connection between two endpoints. First these were hardwired, then switched manually by operators, then clicks on the line would operate mechanical switches at the exchange, more recently tones (DTMF) would tell chips what to do and nowdays connections are set up out-of-band over data connections. But it all still revolves around circuits, even though these days we're not tying up a pair of copper for the duration of the call, rather sending as much data as we need to when we need it (silence often uses little or no bandwidth but then we have to simulate background noise at the other end so as not to confuse the human).

That is to say it's time we stopped thinking about circuits which tend to be billed by time (after all, the resource could not be shared when you were using it) and start thinking about data (which is typically billed by quantity transferred or bandwidth available). In other words we are paying (generally more) for our communications because of technological limitations that have long since been removed. Even Skype go to great lengths to identify which country you are calling from so as to impose the legacy billing system we are used to (so many cents per minute depending on the country) rather than take advantage of what the Internet has to offer in terms of being unaffected by geography.

Then there's texts which are an even bigger rort. These were basically an afterthought which are sent out-of-band over the relatively limited control channel - the one that's used to set up calls and so on (that's why they take a while to send and why you can jam a phone by sending/receiving too many). Knowing that everything is 1's and 0's anyway, did you ever stop to think about how many texts a minute of voice is worth (even using strong compression)? It's a *lot* but let's work it out. Full rate GSM consumes 13Kbps or just shy of 100,000 8-bit characters per minute assuming my maths are correct. Each SMS is 140 8-bit (or 160 7-bit) characters or around 700 texts per minute. In Australia those texts cost $0.25 each so we're paying $175.00 a minute to consume the bandwidth as texts when we'd pay around $0.50 to consume it as voice. You can see why they love them now, can't you!

The telcos have been on the gravy train for long enough at our expense and it's long since been time for the next generation of carrier to take over. There's a massive opportunity here for someone to enter the market with a data-only service and in doing so destroy the existing industry literally overnight. We've already got devices (iPhones, Android) that are more than capable of doing everything we need over data, but which are being deliberately crippled by hardware and software vendors in order to protect the legacy carriers. That's not to say that Apple and Google are to blame for contracts they are almost certainly forced into by the likes of AT&T, but seeing Google taking the high road while having to concede that "individual operators can request that certain applications be filtered if they violate their terms of service" is disappointing.

Why can't we have Google Voice on the iPhone? Or use Skype over 3G (without jailbreaking and installing 3G Unrestrictor)? Or open source/open standard SIP telephony for that matter? Why are we sending texts when we have instant messaging? Or dialing in to retrieve voicemails that could just as easily be translated and/or emailed? Why are we paying for silence on the line when we should be paying for bandwidth and/or quantity of data? Why do we pay for minutes at all?

The telcos will tell you it's to protect their networks, and ultimately to protect you, no doubt from the evils of illegal filesharing, terroristing and child pornography. There's an element of truth to this (it only takes a few greedy customers to ruin it for the rest and as always 10% of the users use 90% of the traffic), ut there are simple, effective solutions for this too. People will pay more for a premium/priority service and at the end of the day you can always reign in abusers with packet shaping. The fairest mechanism I can think of comes in the form of a logarithmic bandwidth policy whereby the more you use the slower you go, but the point is that there are solutions so this is pure FUD. My "unlimited" data connection was just throttled from 3G+ to 3G speeds at 800Mb and again at 1000 Mb (so much for unlimited), but I'd happily pay more for a more "unlimited" service if it meant I could say goodbye to minutes and texts forever.

It will happen - it's just a case of when (and where first). Australia's regularly used as a test market and capped ($99 all you can talk) style plans took over by storm a few years ago, so let's just help an existing innovative carrier like 3 or a new one altogether teach the incumbents a lesson, with any luck by the time I get back there.

3 comments:

  1. interesting post. point on FUD, packet shaping is somewhat illegal in the USA market. Obama admin is pushing net neutrality heavily, first at fixed broadband but now toward the mobile networks too.

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  2. The point is that it would be indiscriminate - if you're over your quota then all of your traffic will suffer. Net neutrality is more about futzing with one type of traffic while leaving another alone (eg throttling certain sites or traffic types and/or prioritising others).

    Mobile networks certainly do seem to be taking the piss when it comes to net neutrality though... it would be great to see them reigned in.

    Sam

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  3. The much sought Data-only carrier has little options to avoid huge costs, i am afraid. Either be a VNO on an existing network (the same guys who are to be beaten!), or to participate in frequency spectrum auctions organized by very greedy state institutions, and subsequently roll out of own infrastructure. The first option only offers very restricted data plans (probably also regulated...), the 2nd runs into the billion$ for even a country as small as the Netherlands where i live....

    BR, Willem (willem_boogers"this is @"yahoo.com

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