The big, bad wireless carriers: 6-month update on my 2 year hypothesis

Six months ago, I wrote a few posts about why the biggest, meanest players of the new mobile internet aren’t Apple, or Google, or anybody else we think of as a ‘tech company’- they’re the wireless carriers. As our devices, apps, social networks and on-demand entertainment options get better and better every month, we often forget that this entire ecosystem is built on top of – and critically dependent on – the wireless spectrum owned by the carriers. Correspondingly, these carriers wield a significant amount of leverage over what we do on those devices; the question we should be asking is, when will they start to throw their weight around? And what will it look like when they do?

cisco mobile data traffic

In one post, I made a forecast (really just an educated guess) that within two years, the carriers will have established a dominant position whereby they strongly control consumers’ device choices and behaviour, by exploiting our dependency on data consumption as their critical weapon. Specifically, I forecasted that the rise of “preferred access plans”, whereby users can get higher speed access (i.e. not get throttled) if they comply with certain desired behaviours, like purchasing a specific kind of phone or contract. And finally, I suggested that Samsung might try to exploit this dominant position by allying with the carriers, in order to stay relevant and preserve its spot atop the Android pile.

It has now been six months since I wrote those posts. So how are those forecasts looking, one quarter of the way through that two-year period?

Let’s start with the phone side of things, where my predictions did less well.

The first thing worth pointing out is: over the last six months, it seems fairly clear that the selection of devices available for subsidized purchase from most North American carriers is essentially the same. Apple, Samsung, and LG are still very well-represented, along with a few others like the Nexus 5, Nokia’s Windows Phone offerings, and the surprising resilience of Blackberry (at least, here in Canada).

phone selections

It also appears that the ‘sub-platform’ part of my argument and forecast is no longer holding much water. (I had predicted that the rise of forked versions of Android would present a great deal of attractive options to consumers, and that this set of options would influence their purchasing decision process.) We now know that the Amazon Fire Phone was officially a disaster, and other companies have taken notice. We also see that the phones getting the best reviews (at least, in the Android universe) have been those tacking closer to Google’s stock Android offering, not farther from it. Meanwhile, Apple has entered the large-screen fight with the iPhone 6 and 6+, and is pretty much here to stay atop the premium phone market. And poor Samsung, more or less as predicted, looks adrift and lost. Although they can clearly still build beautiful consumer products, it remains unclear whether they have a coherent strategy to remain the dominant Android device provider. And, unless I’m missing something, it doesn’t look like any major deal is in the works between Samsung and any of the major carriers, at least that anyone from the outside can see. But we’ll find out soon enough.

How about on the carrier side?

Here’s where I get to award myself a pat on the back for good intuition. Although I got some details wrong (or it’s too early to tell), and a few specific items I predicted have failed to materialize, my overall thesis about the carriers leveraging our data dependence in order to steer our behaviour in sneaky ways looks to be right on the mark. I’ll talk about two significant things I’ve noticed:

Point 1: Reinforcing our ever-growing thirst for data.

I (and others) have already written about the carriers’ first major push into Mobile Net Neutrality warfare– the ‘Streaming Music from certain services won’t count against your data cap’ initiative from T-Mobile and others. So I’ll talk about their next new item in their bag of tricks: Rollover Data.

att rollover data

That’s right, on new plans from AT&T, T-Mobile and a few others, at the end of every month your unused data gets rolled onto your next month’s cap*. Sounds wonderful, and very consumer-friendly, right? After all, we all have some variance inherent to our data consumption, and it would be great to be able to purchase a data plan that can cover our average amount of data consumption, and not have to worry so much about our spikes of peak consumption. …Right?

Well, no. Once again, this is a tactical and deceptive move by the carriers that has their interests in mind, not yours. First of all, the notion that rollover data can shield you from peak data chargers only works of your data consumption varies around a fixed mean on a monthly basis. That situation applies for essentially no one. Although it’s masked by weekly or monthly variance, our data consumption is going nowhere but up. And up. And up.

t mobile rollover data

So rolling our data from under-used months will be a) less useful than you think, because you’ll rarely have them in any substantial amount unless you’re massively overpaying for your plan in the first place, and b) at any given point in time, the potential of rollover minutes will increase the barrier of you switching plans or carriers (or potentially devices), because it’s only at the end of every month that you know whether or not you’ll have anything extra. So in other words, rollover data has the dual effect of helping consumers think they have more freedom, while actually setting up a strong barrier to changing any aspects of our plans- other than purchasing more and more monthly data as our thirst for streaming music and video keeps growing. In the long run, the end result is to reinforce your dependence on their data pipeline- the more you need it, the more desperate you’ll get to keep on feeding the beast.

Point 2: Carriers wielding data consumption as a phone selection mechanism.

My original hypothesis stated that carriers would start rolling out plans and options where, in order to qualify for some essential data service, you had to own a certain kind of phone. I now realize that I was wrong- that strategy would have been far too ham-handed and obvious on the part of the carriers. Instead, they’ve pulled off something far more devious- once again, just like in the ‘free music streaming’ episode, by giving you something that you think is generous, but actually ties your hands and enforces compliance on your part.

It looks like this:

bell personal share plan

Once again, this looks like something very consumer-friendly: complete freedom to assemble-your-own-plan based on your own preferences. Want to share data among devices, or bring your own? Great? Just follow the formula to build the plan that’s perfect for you.

rogers share everything plan

But when you do the math, you quickly realize who’s getting hosed. A $10 discount to provide your own device (which is pretty typical), when the discount on a device that comes with a new contract is typically $3-500, is a bad deal. That’s the equivalent to the old-school 4-year contracts that consumers now realize were terrible. So, if you do insist in bringing your own device, the carriers don’t really mind- it means they’ll be ripping you off massively, all while giving you the comfortable illusion of customer choice and adaptability.

rip off

And for those who don’t want to throw down a substantial amount of money on an unlocked phone, and purchase a subsidized phone through a standard contract with term? Looks like you’re stuck with a pretty narrow set of options– the exact phones the carriers want you to be using, stuffed with native bloatware. Great. But if you DO bring your own device, and then need to upgrade at some point, guess what? You’re starting back at zero- all of those months you spent on a BYOD don’t help you subsidize a new phone. Pretty sneaky.

So that’s all for now- I’ll revisit this topic again in 6 months to see how we’re doing once more. In the meantime, enjoy everything you’re doing on your phone- but recognize that you’re doing so at the whims of the carriers. After all, an iPhone without data is a beautifully crafted brick.

*One interesting point about rollover data: although on the surface, rollover data looks a lot like the rollover minutes plans introduced a decade ago (you know, back when people talked on the phone), they’re a very different beast. Why? Because talk minutes are a) fundamentally capped – there are only so many hours in the day, after all – and b) because we can easily understand that 200 minutes is literally twice as much time as 100 minutes. Talk time increases linearly, and it’s something we can effectively measure and comprehend. And when minutes rolled over, they retained their value- a minute of talk time was the same last month as it is this month. Data consumption, on the other hand, isn’t increasing linearly- it’s increasing exponentially. It’s entirely possible to progress from 20 MB to 200 MB to 2 GB / month of data consumed without being consciously aware that you’re doing so. With this kind of growth, a rolled-over megabyte of data just isn’t worth what it used to: data plans from a few years ago would now get burned through in a few short minutes of HD video consumption on Vimeo.

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