The 7 Wireless Data Cap Losers

We are in uncharted territory when it comes to mobility as this year we will see a slew of productivity-boosting 4G, quad-core smartphones like the Ascend 4D Quad from Huawei which I saw at Mobile World Congress 2012 in Barcelona, Spain. Moreover, while devices get more powerful, we will only want to do more with them and quite often this means relying on wireless networks from carriers.

The only problem is these providers are rapidly running out of bandwidth and this means they have decided the best course of action is to cap users and slow their connections once they hit a certain threshold. Their other strategy is to just charge for bandwidth being used.

This latter method of charging will eventually lead to data use bill shock. This means we can expect to see the viral spreading of news related to parents being faced with a $5,000 bill because their child viewed 2,000 YouTube videos in a month.

There is nothing worse than that nail-biting feeling you get when you try to end that important video call before your carrier starts to throttle your bandwidth


So without further ado, here are the top 7 losers who will be hurt by wireless bandwidth caps:

  1. Cloud vendors – all of them. Regardless of business model, you will soon start to lose one of the fastest growing markets you have – mobile users. The carriers will tell you that a small fraction of users are hogging most of the bandwidth but that just may be because the majority of users have slower devices and/or haven’t discovered the really bandwidth hungry apps which they will rely on in the future. And we know that most users aren’t on 4G yet – when they do migrate they will use more data, more quickly. You want me to name names of companies who will be hurt? OK, Amazon EC2 – as so many other services rely on the leading ecommerce and cloud hosting site as well as Dropbox and of course iCloud.
  2. Desktop sharing companies like OnLive Desktop, GoToMeeting, LogMeIn, etc. Much of the appeal of using these service has to do with working remotely and having the full functionality of being in the office. To some degree, these services actually minimize bandwidth use because if you download a huge photo and view it – you only see a compressed rendering of the photo on your tablets screen. This of course will all change because as screens get more resolution, the amount of bandwidth use will grow.
  3. Video Streaming companies such as Hulu, YouTube and Netflix are obvious casualties – and as more tablets are sold, the problem gets bigger. And yes, video is a huge bandwidth hog.
  4. Audio Streaming Companies like Pandora, Spotify, etc. Sure audio consumes less bandwidth than video but with streaming radio – users have a tendency to just set it and forget it.
  5. Social networking sites to some degree have an issue but for many functions such as tweeting and/or posting status updates which don’t include video, limited bandwidth shouldn’t be an issue. But one has to wonder about how the ecosystem of apps which enrich social networks – let’s say Twitpic for example could feel a slight pinch because users may be afraid to do anything which bandwidth-hungry because they may exceed their monthly allotment of bits. Graphics-rich Pinterest may see some pain as well.
  6. Apple could potentially have a problem as well but the company does seem to be immune to most challenges which should hurt it like the advent of $199 tablets. The challenge for Apple is newer devices tend to have advancements screen resolution – in fact the next iPad is rumored to be called the HD, not the iPad 3. Guess what? All those pixels need to be filled with information and the more pixels you have, the more bandwidth you suck. The same is of course true for Google, Motorola, Samsung, HTC and the rest of the market. Smartphones aren’t immune to this problem either so a Samsung Galaxy Note just went from a device which can straddle the smartphone/tablet market to one which could cause users to go over their data plans more quickly.
  7. Finally, corporations have the most to lose as they purchase all these fancy tech tools for their workers with the expectation of ROI which is usually calculated based on stable metrics. And now users are going to be in a situation where at a certain point, their telepresence calls start to have jitter and latency because they are over their bit allotment for the month. And the issue will be difficult to predict in advance as a Slingbox user could eat up a month’s worth of bandwidth in a week or even a few days.

In short, bandwidth caps may cause great pain for users over time and wireless carriers should be very careful as their policy changes begin to change end-user behavior.

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