iPhone, Skype, and Dumb Pipes: The Future of Cell Carriers

Macworld has a great article up today about the arrival of Skype on the iPhone (and soon the BlackBerry) and what the widespread availability of VoIP (voice over IP) clients -- which eschew the traditional phone lines to send talk via data instead -- means for cell providers like AT&T, Verizon, O2, Rogers, etc. who've made tons of traditional money billing us all by the minute.

One common future seen for cell companies is that of "dumb pipes" -- like DSL or cable companies that provide bandwidth but few if any premium services. Verizon shows how far (and foolish) they'll go to avoid that fate:

“We have moved away from unlimited data plans,” Verizon Wireless President and CEO Lowell McAdam said at a question-and-answer session at CTIA. “The excitement of an over-the-top application like (Skype) in an unlimited environment means one thing to a customer. In an environment where you're paying for every byte, that means something totally different."

I wonder, tongue only partially in cheek, if McAdam used to work for the music or movie industry? Our own editor-in-chief, Dieter Bohn, freshly returned from CTIA shared his thoughts:

Dear Verizon: You always become what you most fear. To wit: dumb pipes. Love, the inevitable.

Sounds good to me. Let's make a deal, carriers. You supply the bandwidth, keep the bits open and neutral, and I'll pay for the service same way I pay for my electricity and plug in whatever gadget I want. Deal?

Ralph de la Vega, president and CEO of AT&T Mobility, the iPhone's US carrier, seems almost on a page with that already:

"The way the world is going, it’ll just be, 'How much data do you want to buy?’ and you do whatever you want over that data."

Check out the complete article at Macworld for more, and let us know what future you want for your data below...

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, Vector, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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iPhone, Skype, and Dumb Pipes: The Future of Cell Carriers

9 Comments

Probably data and speed like they do with DSL today.
Anyway, AT&T sees the world a bit differently than Verizon. They're selling or are planning to sell NetBooks in their stores. It seems like it will be a more popular option than offering network cards because you get a PC and card built into one. This new revenue stream opens the door to other networked devices on AT&T and while they become our mobile dumb pipes they will generate revenue to replace voice.
We'll see how Verizon responds.

quote
Sounds good to me. Let’s make a deal, carriers. You supply the bandwidth, keep the bits open and neutral, and I’ll pay for the service same way I pay for my electricity and plug in whatever gadget I want. Deal?
/quote
I transfer too many bytes in and out of my network to want a metered service...

“The way the world is going, it’ll just be, ‘How much data do you want to buy?’ and you do whatever you want over that data.”

Talks a good line, but he blocks Skype, Tethering, etc.
No, I don't think ATT is yet on board with their new status as pipesmith to the masses.

"You supply the bandwidth, keep the bits open and neutral, and I’ll pay for the service same way I pay for my electricity and plug in whatever gadget I want. Deal?"
I think carriers can take that deal, it won't be hugely profitable, but it'll be revenue maintained, and innovation for better wireless technologies will slow down, but end users will have choices of services.

I'm skeptical about this happening anytime soon.
I wish they'd also talk about doing something about minutes. I'd like a smaller plan than 450 per month. I think I have 2,000 rollover minutes that I'll never use (but I can't send a few texts without them charging me). :roll:
sigh

@Albert

I think carriers can take that deal, it won’t be hugely profitable, but it’ll be revenue maintained,

You are exactly correct.
Carriers are in an arms race now. And if you look at their 10Ks none of them are sitting on a pile of gold. Building infrastructure costs money.
Almost all of this money is last-mile money. (Handset to cell tower). Once your handset reaches the cell tower its all traveling on the exact same fiber that carries the internet traffic, and its packetized in the exact same formats as your web surfing.
So its really no skin off their teeth if they carry data or voice. Its all the same to them.
They give away mobile to mobile and evening and weekends (most carriers do any way) so they are not starved for revenue from minutes.
They are tight on (and trying to manage) carrier-to-carrier transfer and peak usage periods.
If they become more data-centric, they may have to impose some similar billing schemes for data.
But if they can now carry unlimited data in prime time (as ATT does) they can probably continue to do this, because once they get it to the tower they can just dump it on the internet, which still costs, but not as much as voice circuits, as the inter-carrier fees go away.
So in the end I would think the carriers would welcome things like skype. Its not as bandwidth heavy as most people think.

@The Reptile
I guess you did not get the memo, there are laptops being sold with Verizon technology built in. Also, Verizon plans to start directly selling NetBooks from their stores. Sprint has a similar getup!