Why Your Cell Service REALLY Sucks

Posted on: February 22, 2010
Posted in Mobile, Strategy

Why Your Cell Service REALLY Sucks

The above chart is a great depiction of why your wireless experience really sucks. Here are some stats:

The operators (AT&T, Verizon, Sprint…) entered a completely new usage paradigm when we shifted from voice to data. When that happened (circa iPhone launch – the dotted line), data usage took off, and revenues started to flat-line as a consequence of flat-rate billing & industry maturation.

Whenever an AT&T spokesperson talks to the media they brag about all their network investment. WRONG. AT&T has spent less on network construction every quarter since the iPhone’s launch – see article here. Financials are always very telling (and you can never believe marketing without numbers).

Also, the network demands on signaling from “chatty” applications such as check-in apps (FourSquare) and social networks (Twitter) actually bring the networks to its knees worse than data/bandwidth usage. I talked about this in technical detail here.

One main advantage that telecom carriers have is stable reoccurring cash flows i.e. subscription based revenues. Super stable. In exchange for this one of their responsibilities is to allocate some of that reoccurring revenue to network expansion (CapEx). Essentially they are not really doing this. Instead the operators are super focused on decreasing CapEx and OpEx in order to show best case results to wall street / shareholders.

If AT&T would quit complaining about customer usage – and instead realize that congestion is a good thing (hello AT&T – you have customers), then the problem may reverse. But the stats don’t look great for this to happen anytime soon, which means a lot more dropped calls and dead spots…

I don’t really have a business solution to this problem absent more competition in the space, but Google’s recent broadband announcement shows an emboldened approach to drive innovation in US broadband (a net positive). Also, wireless carriers are uniting in complementary areas (apps/services) in their attempts to be more than just a utility/pipe (positive since these upgrades would require massive upgrades in network equipment).

Comments are closed.

Tweet or Like this post.