3G data networks being saved by WiFi

While the majority of operators have now withdrawn their unlimited data packages, they would seem to have replaced this with an equally unlimited array of mobile broadband tariffs.

O2 Telefónica UK has jumped at this new opportunity by recently announcing a 'market leading' tariff that only costs €6 for a one month contract. For this the consumer can access 500MB of data over the O2 UK network, and have unlimited WiFi access through hotspots delivered by The Cloud and BT Openzone.

Not a bad offer, you might think--and it might well be the 'market leading' tariff today.

But, the company, which has had very public issues with its 3G data network capacity, is quietly asking some of its subscribers if they'd stop using the data network when they're at home. Instead, O2 UK has suggested in a text message to these customers that they'd get a much better and faster mobile internet connection by using residential WiFi.

The company has explained this move as intending to "help customers get the most out of their handsets, and WiFi is often faster."

The more cynical observer might view this effort as O2 UK looking at every way possible to move subscriber data traffic off its network-- without it having to pay for the Wi-Fi router or residential internet connection.

Compare this to Vodafone which has at least partially recognised the problem and is offering a heavily subsidised 3G femtocell to its subscribers for in-house voice and data usage.

But, if O2 UK's data network is on the edge of collapse today, the situation looks bleak for tomorrow if a new report from MobileSquared is to be believed. This research firm claims that the number of iPhones in the UK is forecast to rise nearly 200 per cent from 2.17 million at the end of 2009 to 6.4 million by the end of this year.

According to the company, the iPhone comprised 2.7 per cent of total active mobile devices in the UK at the end of 2009, but will rise to nearly 8 per cent by the end of this year, and hit the 10 per cent mark around the end of 2012.

Given that O2 UK started selling the iPhone in November 2007, and has been a keen promoter of many other smartphones, the company should have become the expert in understanding how to adequately dimension its data network to manage this upsurge.

Cellular operators, with the exception of a few, have previously looked down upon WiFi as being a rather crude and limited technology. This reappraisal by O2 UK could see Wi-Fi hurriedly becoming a mainstream product, if only to save the company from further embarrassment. -Paul