It is not the iPhone, it is the network you stupid!

Interesting comment found in today’s FT; simply the best piece of paper on earth! Arguably, the points being made for the US cellular networks also apply here in Europe where large cities face overcrowded cells in which the real bandwidth is very different from the theoretical one and the overall user experience still an unpleasant one. I especially like the analogy with the car industry… it is right to the point 😉

Stylish devices in search of a network.
June, 25th 2007, John Gapper
Copyright The Financial Times Limited 2007

Apple fans are preparing to camp outside its US stores to get their hands on an iPhone this Friday. They are lining up to be disappointed.
The first buyers will find that their new device is a wonderful mini-computer and a great repository for songs, music and videos. It is probably even a good phone. As a communications device, however, the iPhone will be a letdown.

No matter how fine its software and elegant its physical appearance, it is connected to a painfully slow data network. AT&T’s Edge network is a souped-up narrowband affair that works as slowly as an old-fashioned home dial-up connection.
Even if Apple’s Safari browser looks good, it will be frustrating to use unless the owner is in a WiFi hotspot (the iPhone has a WiFi card). Apple has not even bothered to link its iTunes music service to the cellular network: iPhone owners must download songs at home.

John Gage, a co-founder of Sun Microsystems, coined the phrase “the network is the computer” in 1984, when the personal computer market was young and widespread use of the internet was a decade away. He was on the money, if premature. A lot of the utility of a computer lies in the network to which it connects.
The mobile phone is now moving to the position the personal computer was in more than a decade ago. It has become a very powerful device – the iPhone runs on Apple’s OS X and is faster and smarter than a desktop computer back then – but the network is still stuck in the past.

The problem is exacerbated by the fact that Apple is launching the iPhone first in the US. AT&T has a third-generation network but it is still being rolled out. Competitors such as Verizon Wireless are further advanced with 3G but the US lags behind Europe and Asia overall.
Apple will presumably launch the iPhone elsewhere on 3G networks: it would be eccentric not to. That will improve things but the network will remain the bottleneck. Even the best cellular data services are far slower and costlier to use than those found at home or in the office.

Only two mobile data applications have yet taken off: texting and push e-mail on devices such as BlackBerries. Both require tiny amounts of data to be sent over the air and so can work speedily – and be offered cheaply – even on slow networks. Conversely, listening to songs or watching videos is expensive and slow. It takes up to a minute to download a song from the V-Cast service offered by Verizon Wireless, an AT&T competitor, even on its 3G network. It costs Dollars 1.99 compared with 99 cents if it is downloaded at home over a cable connection.

Cellular networks are getting better, but the devices that use them are improving at an even faster rate. Research in Motion’s BlackBerries and Palm’s Treos are decent computers and the iPhone stretches the performance gap between device and network to absurd levels.
So far, people have responded by boycotting non-text data services offered by mobile operators and using phones to talk, text and e-mail. Analysys, a consulting firm, estimates that between 80 and 90 per cent of mobile revenues for AT&T and T-Mobile in the US and Vodafone in Italy still come from voice.

By designing the iPhone to work with AT&T in the way he has, Steve Jobs, Apple chief executive, seems to expect it to be used in a similar way: Apple will make its money from selling devices and AT&T will profit from voice. Browsing, live downloading of songs, video streaming etc will have to wait.
It is akin to a carmaker selling an expensive vehicle that is capable of going very fast and fixing it so that motorists have to pay more to get into fourth gear and cannot shift into fifth gear at all. Drivers would not tolerate that and I do not think that iPhone users should.

So what happens now? One possibility is that other data networks will come along to rival cellular technology and beat mobile operators on both price and performance. This has started to happen with the spread of free WiFi hotspots in public places, particularly in cities.
It could go a stage further with WiMax, a successor to WiFi that can blanket a large area – even a city – with a high-speed internet network. Sprint, the US mobile company, and Clearwire, a start-up company, are building WiMax networks in US (and some European) cities.
WiMax’s future is uncertain, although Clearwire aims to have WiMax on offer to more than 16m people by the end of the year. The vast expense of building networks over large areas in which phone and cable companies already operate worries some Sprint investors. But the threat of WiMax, together with competition from other cellular operators, is pushing down prices for mobile data in Europe. Both T-Mobile and Vodafone in the UK are offering flat-rate plans allowing internet browsing over 3G networks that are close to DSL and cable rates.
Price pressure is breaking out all over – Verizon Wireless has already dropped its insistence that its customers have a subscription to V-Cast in order to download songs. It is a good thing too. If mobile operators offer an inferior service, they ought not to get a premiumprice for it.

This may be the ultimate benefit of the iPhone for everyone, not simply those who shell out for one this Friday. When they plug the next generation of mobile device into the last generation of cellular network, they will be disappointed. I hope they will demand something better.

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One Response to It is not the iPhone, it is the network you stupid!

  1. Pingback: iPhone: when the co-marketing content deals turn into viral marketing « nBlog

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