3G usage offers a business case for 4G

iPass released a new survey that measures both enterprise WiFi usage and 3G broadband usage. The findings shed some light on how much enterprise users are relying on 3G. According to the findings:

  • Monthly usage increased steadily throughout the year, growing from an average of 152 MB per user in the first quarter of 2007 to 190 MB in the fourth quarter. Of those more established users who had been on the service since January 2007, monthly usage averaged 188 MB in Q1 and 225 MB in Q4, indicating that usage seems to rise with experience.
  • At the extreme, a small number of users exceeded 2 GB of usage in a given month. These heavy users accounted for less than one half of one percent of all users in the sample and were offset by the 32 percent of businesspeople who used on average less than 50 MB in a month.
  • Users tended to access their mobile broadband capability quite regularly. More than 90 percent of established users were active in any given month.

The results should give Verizon Wireless some justification in putting limits on its data plans. The operator recently introduced new data plans that have a hard stop at either 5GB or 50MB of data depending on the plan. Those who go over, spend extra per MB.

"Roughly 97 percent of our customers are well within the 5GB level so the plans meet the needs of what customers have told us they wanted," said Brenda Raney, spokeswoman with Verizon Wireless.

But what happens when demand continues to grow as it is expected? In the 3G world, voice is still the revenue generator of the business. That means voice capacity is being sacrificed for high-speed data services. As such, it's difficult for some operators to offer a truly unlimited high-speed data plan. That's why operators have not positioned 3G as a competitor to DSL or cable.

Moreover, as usage increases on flat-rate mobile data pricing plans, revenues are threatened, operator executives speaking at a CeBIT NGMN meeting recently lamented. Usage is increasing at a far greater rate than operator revenues.

Hamid Akhavan, CEO of T-Mobile, said that this could lead to a complete decoupling of traffic and revenues. "It is only a matter of time before we lose all profitability on mobile data. In the past, user experience has been driven by the average traffic on a cell site. Today it has to do with how much peak traffic you can carry in a cell."

Doesn't this offer a business case for a transition to an all-IP 4G infrastructure in the next few years? By then, with the help of WiMAX, expectations will be a wireless broadband experience any place at any time with no limitations. People have always questioned the need for next-generation technology. In the analog world, folks wondered whether digital was necessary when usage wasn't spiking on analog networks. In 2001, the industry wondered if we really needed 3G because there was uncertainty around user demand for wireless broadband services. What we are witnessing today, leads me to believe that yes, there is a market for 4G and soon.--Lynnette 

And to learn even more about 4G, check out the agenda for our "Path To 4G" seminar at CTIA Wireless 2008. Fierce will be hosting the day-long seminar on April 2, which will feature speakers such as Kris Rinne, CTO of AT&T and Barry West, CTO of Sprint Nextel and president of  Xohm. Click here for details. You can register for this event when you register for CTIA.