Tiered pricing for wireless plans could mean mobile apps are going to get squeezed down to size by their developers.
As unlimited mobile data plans become a thing of the past for many wireless smartphone subscribers, developers will have to think more carefully about how efficiently their apps use network resources. For the past couple of years app developers haven't had to worry too much about whether their applications consumed a lot of data resources on wireless networks. Cell phone carriers, such as AT&T and others around the world like O2 in the U.K., offered smartphone users, especially iPhone customers, unlimited data plans.
But just as the most data-hungry version of the iPhone is about to hit store shelves, wireless operators are pulling the plug on all-you-can-eat data plans. Earlier this month, AT&T announced it would eliminate its unlimited data plan. Instead it will offer new smartphone subscribers a choice of two plans: a $15 a month plan for 200 megabytes of data per month or a $25 a month plan offering 2 gigabytes of data per month. O2 in the U.K. followed AT&T's lead and on Thursday announced that it will also get rid of its unlimited data offer.
The change from unlimited to capped data plans will likely make users think twice about the applications they download and use. It could also heighten consumers' awareness of applications that consume a lot of resources versus those that do not. As a result, some developers will have to change how they create applications.
"Developers creating apps for the U.S. market typically don't pay attention to bandwidth consumption at all," said Dave Grannan, president and CEO of Vlingo. "You can't really fault them for this. Capacity was viewed as free. But I think the usage caps will change the game for app developers. And people will have to develop good apps that are optimized for bandwidth constraints."
iPhone as a game-changerSince the iPhone came on the market three years ago, data consumption on wireless networks has skyrocketed . Wireless operators say the large majority of their customers use less than 2GB of data a month. But unlimited data plans allow a tiny proportion of users to gobble up much of the network resources, which degrades service for everyone.
"Nearly a third of our data traffic is accounted for by just 0.1% of our customer base, for example; a stark imbalance by any conceivable measure, and one which often affects network performance for the rest of our customers," O2's CEO Dunne wrote in a blog post. "We don't think it's fair that the many should subsidise the behaviour of the few, and we think that we have a responsibility to our customers to address this kind of imbalance."
Some app developers say they understand the carriers' conundrum. And just as other industries have been forced to think about using fewer resources the mobile app market will likely have to adapt as well.
Take the automobile industry as an example. When gas is $2 a gallon people drive big SUVs. They take multiple trips to the grocery store. They don't even think about how often they drive their cars. But when gas goes up to $4 a gallon, people start considering buying a Toyota Prius. They carpool to work. To keep up with changing customer demand, car makers make more hybrids and fewer SUVs. The same thing could play out in the mobile market, said Grannan.
"It's a pretty basic economic principle," he said. "When there's a perception of unlimited use, people use the resource in less than efficient ways."
The only way to get app developers and even device makers to think more about using network resources more efficiently is to put a cost on usage. And that's what carriers are starting to do with the usage caps.
Grannan said there are some tweaks that app developers can make to lessen the load on the network. For example, he said developers can use better compression technologies. They can tweak the client server architecture so that more data is cached or stored on the devices to limit data refreshes.
"The good news is those things aren't hard or mystical," he said. "But it takes time to think about the client/server architecture. That means it might cost the developer a little bit more. But it's not rocket science."
Grannan said his company has always developed its applications with these things in mind because it serves a global market. While O2 and a few other carriers in Europe have offered an unlimited tier of data service, most do not.
"We've been ultra-conscientious about this from the beginning," he said. "Most of the worldwide market doesn't have unlimited buckets of data."
Coping with mobile videoWhile some of these techniques can help, the reality is that streaming video and audio are huge data hogs. Mobile video is still in its infancy, but it's expected to grow over the next few years, especially as new devices, such as the iPhone 4 and the HTC Evo 4G make viewing video on tiny screens with high resolution much more enjoyable.
For example, the new iPhone 4 will have a 5-megapixel camera that records high-definition video. It has a new high-resolution screen designed specifically for watching HD video. Streaming video services, like Netflix, have already announced plans for apps for the new device.
Kavin Mittal, founder of U.K. start-up AppSpark that makes a movie ticketing app that streams trailers called MoviesNow, said that his company is rethinking how it rolls out video for its service.
"It's definitely something to keep in mind if you're planning on streaming a lot of video on the go," he said. "For developers, the switch to capped usage means looking at ways to be smart about streaming."
Mittal said that the 2GB cap that AT&T has set would allow for about 15 hours of lower-quality YouTube video, but only a few hours of higher-definition content. The solution MoviesNow came up with is to stream lower-quality video to subscribers based on which network they are using. This means that users on a 3G network get a lower-quality video, while those on Wi-Fi get the higher HD quality video.
Mittal recommended a video-streaming solution for developers called Adaptive Bitrate Streaming, which allows a video to be served in small chunks and the quality of the video adapted depending on the amount of bandwidth available due to whether the user is on Wi-Fi or 3G.
"Viewers watching something over a Wi-Fi network who then switch to 3G will see a quality drop," he said. "But the bandwidth usage goes down to keep the video streaming smoothly."
He also said that developers can incorporate caching on the device so that a user can re-load previously seen or favorite videos without streaming them again.
Still, some developers say the new data service caps will likely mean that people simply use fewer apps. Noam Bardin, chief executive of Waze, real-time traffic app based on crowdsourced data, said that in countries with limits on data service, consumers use the Waze application less frequently.
"Unlimited data plans takes the fear away for the user," he said. "Even if they aren't likely to go over their usage cap, they worry about it. We see huge increases in usage when data service is unlimited."
Bardin said the biggest problem that developers face under a bandwidth-constrained model is communicating to consumers how much capacity an app uses. Grannan agreed. He said that in addition to creating applications that use the network more efficiently developers will also have to market this fact so that consumers are aware.
"Once the news stories of people getting $4,000 data bills start surfacing, people will be gun-shy about data usage," he said. "It will put the burden on developers to market their apps and come up with some way of communicating how much data an app uses."
Even though the usage caps could dampen consumers' enthusiasm for apps in the short term, Grannan said that ultimately it will be a positive for the industry.
"When the perception is that data is unlimited, there's a real waste factor," he said. "As an industry, this could move mobile apps from simply being a toy to providing real services and entertainment. Consumers will be more discriminating and that could mean that quality apps will rise above all the noise that is out there now."