Fanboys swoon, telcos cross themselves

Summary:Telecommunications carriers were already facing the difficult dynamics of a data-based mobile market where demand and revenues are following much different curves. Now that the new iPad has bowed, are telcos once-buoyant hopes for mobile broadband just going to end up sunk?

The ongoing cat-and-mouse game between hardware makers and telecommunications providers took a dark turn this morning as Apple's latest creation — the not iPad 3 — made it patently clear that the wireless broadband networks on which we increasingly rely are likely to become congested beyond belief.


The new iPad will do nothing to ease mobile congestion that's already pushing telcos to the wall. (July 4 crowd image by Ben Schumin, CC BY-SA 2.5)

That this was already happening became clear to me as I recently walked up and down Melbourne's Bourke Street — hardly an out-of-the-way part of Australia — and tried unsuccessfully to get a Telstra Next G wireless connection that would, you know, work. I even tweeted about it (on my mobile, not my laptop), and got the helpful tip from the lovely @telstra drone that I should contact Telstra technical support — as though the problem were really with my laptop (it wasn't).

The two hours I had set aside before a meeting were meant to be productive time, but ended up just being me cursing a lot while pacing up and down the road, open laptop held in the air like some suit-wearing, ranting yuppie street preacher as I tried over and over to find somewhere where there was enough bandwidth. Actually, make that any bandwidth greater than 5Kbps — which in inflationary terms is today's Morse code.

No luck.

Turns out I'm not alone: broadband speeds may be pretty good overall — an IDC survey this week found that in over 1000 tests, broadband speeds were sitting at anywhere from 2.6Mbps in Melbourne and 3.5Mbps in Sydney — but upload speeds have apparently declined 30 per cent overall since 2010.

This is no fluke: IDC analyst Dustin Kehoe suggested the change was because the carriers are re-allocating upload channels for use as download channels. And they're doing that for just one reason: their networks are clogged to capacity. It's similar to how road authorities allocate certain lanes of busy streets to change direction at different times of the day.

I have no idea how IDC compensated for the total lack of connectivity in apparent blackspots like Bourke Street — lots of zero scores would seemingly have dragged down the Melbourne average more — but if we've already gotten to the point where we're shuffling things around to keep the bits flowing, I'd say our mobile networks are indeed in trouble.

Things are getting cramped and they're not going to get any better ... data is doubling on the network every year but revenues aren't.

How could they not be? Telstra alone has over 13 million customers. I know some Indian telcos are adding that many customers every month or two, but they're only carrying voice and SMS for the most part. Our networks are supporting a data-devouring business and consumer culture that I'd suggest puts most other countries to shame. We love our mobile broadband something chronic, even to the point where we'll put up with this sort of patchy service for the convenience it provides.

Get used to it: a little something I like to call "reality" means the new iPad — for some reason, nobody is uttering the words "iPad 3", in the same strange way that the iPhone 4S really isn't the iPhone 5 even though it is — won't support Telstra's 1800MHz 4G network, which means that all the new models used in this country will fall back to conventional 3G frequencies.

As they say in the classics: oops.

All that means just one thing: as the iPad starts to sell here by the squillion, it will create further incursions into the already limited bandwidth we already have. Even though savvy users know to offload massive data transfers to Wi-Fi networks, the iPad is getting more and more cloud-hungry — which means near-constant communication even out in the field.

Things are getting cramped — which is part of the reason Telstra rushed ahead with its LTE offering in the first place — and they're not going to get any better. Indeed, one of the recurring themes at the industry's recent Mobile World Congress love-in was that telcos are racing to keep up with exploding demand but not really getting paid for it. Telstra bigwig Kate Mackenzie was open about the challenge: "data is doubling on the network every year but revenues aren't", she told the AFR.

Nope: the revenues are going to companies like Google, Microsoft, IBM and Apple, which are hard at work building bandwidth-sucking applications that ensure congestion everywhere from Bourke Street to Back of Bourke. Just when telcos think they've gotten it all under control through a bit of channel tweaking, a device like the iPad 3 — erm, "new iPad" — comes along and puts them back to Square One.

I and others saw this coming two years ago, when the iPad bowed and it was clear the networks were going to have to fundamentally revisit their strategies. Even at that point I referred to "coming 4G networks" as an important step; now that they're here (almost), the reality is something less ... well, less.

This is a platform, mind you, on which Apple is actively trying to replicate the desktop experience with video-editing apps that provide direct uploads to sites like Vimeo (which, if its financials are solid enough, I suspect Apple will eventually buy to compete with YouTube). It has enabled 3G support for VoIP applications like Skype that are great for consumers, but disastrous for telcos.

For telcos, these sorts of services are like that kind-of mate that drops in with his friends, interrupts your hot date, then orders a dozen pizzas — and begs poor before leaving you to pay the bill.

As if it hadn't already put the boot in, Apple is rapidly spreading its iMessage infrastructure to its desktops and beyond; it's set to become a ubiquitous messaging platform that is quickly annihilating carriers' billions in SMS revenues. Adding further insult to injury, services like Optus Now TV have threatened the ability of carriers like Telstra to try to lure customers to their networks. For telcos, these sorts of services are like that kind-of mate that drops in with his friends, interrupts your hot date, then orders a dozen pizzas — and begs poor before leaving you to pay the bill.

We all want more for less, but as the impact of those escalating expectations becomes apparent in slower mobile broadband services and impending threats from data-sucking devices like the Not-iPad 3, telcos are slowly and steadily running out of options. The business desire for growth dictates that they continue to work on attracting more and more customers to their networks, but if those customers can't even get connections in business centres like Bourke Street, well, what good is that growth going to do anybody?

What do you think? Can the carriers keep up? Or will the Not-iPad 3 and its ilk be the straw that broke the camel's back?

Topics: Apple, iPad, Networking, Tablets, Telcos, Telstra

About

As large as the US mainland but with a smaller population than Texas, Australia relies on ICT innovation to maintain its position as a first-world democracy and a role model for the developing Asia-Pacific region. Award-winning journalist David Braue has covered Australia’s IT and telecoms sectors since 1995 – and he’s as quick to draw le... Full Bio

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