June 5, 2006 11:10 AM PDT

RIM chief cautious about unlimited wireless data plans

CHICAGO--The president and co-CEO of Research In Motion, maker of BlackBerry devices, warned the industry Monday that allowing people unlimited wireless data use will have a devastating effect on wireless innovation.

In a keynote address given at GlobalComm, a telecommunications trade show here, Mike Lazaridis told attendees that carriers need to be very careful how they roll out wireless Internet services.

"No matter how you slice it, bandwidth is not free," he said. "If we don't set up economic incentives now, research and innovation for new networks won't happen for the future. We want companies to be encouraged to make efficient use of the network, so we don't cross over and use up all the capacity of the networks."

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Wireless operators have spent billions of dollars over the past several years upgrading their networks to 3G, or third-generation networks, so they can handle more voice calls and advanced data services. Carriers have already begun offering new applications, such as mobile Internet browsing, e-mail downloads and TV viewing to drive revenue.

Currently, all three of the major mobile carriers--Verizon Wireless, Cingular Wireless and Sprint--offer all-you-can-eat wireless Internet usage plans for a set price of about $80 per month. Sprint and Cingular also offer plans that charge people for the capacity they use each month.

But Lazaridis warned that as wireless data usage becomes more pervasive, these unlimited plans could have a devastating effect on the industry, since even the most basic data applications eat up more bandwidth than voice calls.

Photo: Spleaking at GlobalComm

For example, an average voice plan that includes 500 minutes of airtime uses about 45MB of capacity per user per month, he said. By contrast, a user with an unlimited data plan who watches 15 minutes of video per day, reads at least three articles from a mobile Web site such as CNN.com, and checks e-mail using his company's virtual private network uses about 1.6GB worth of capacity per month. Translated into voice minutes, this amount of data usage would require roughly 20,000 minutes per month, he said.

"How do you handle pricing of these services?" he said. "The voice network was built for efficiency, and as a result, it's been properly priced and has predictable business models. We need to encourage conservation of spectrum and encourage users to use the network more efficiently for data, too."

He used Research In Motion as an example of how application developers could achieve this goal. He said roughly 90 percent of BlackBerry users use less than 2MB of data per month, which translates to about 22 minutes of airtime per month.

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From GlobalComm 2006: The pace of innovation in the telecommunications industry continues to accelerate.

But some experts disagree with Lazaridis' contention. Jeff Pulver, the founder of Pulver Media, said that unlimited bandwidth use in the wireless world is needed because access to the network is what spurs innovation.

"I appreciate what he is saying," he said. "But he is discounting the future and the natural evolution of technology to provide more wireless bandwidth."

But Lazaridis said that unfettered use will destroy the economics of offering wireless data, discouraging carriers from future investments in new technologies.

"You have to let the industry grow by allowing the carriers to make money," he said. "The message here isn't that we shouldn't do new things, but that we need to have incentives for efficient usage. When you have a fiber running into your home, it is its own little universe with dedicated bandwidth, but wireless spectrum is something that we all have to share."

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8 comments

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Lack of unlimited wireless use will also have a devastating effect
Most people I know have not signed up for wireless data because it
is already too expensive. If you can make money with business
users only, great.

But if you want regular consumers to use your network be prepared
to drop your prices, not increase them.
Posted by rcrusoe (1305 comments )
Reply Link Flag
Prices=ridiculous
I feel the same way. My next phone is going to be the Motorola Q
and I would love to have unlimited data, at $15/month but I refuse
to pay more for a data plan than for my voice plan.

One day these wireless prices must come down... Even $50 for
450-500 minutes is outrageous...

That is just my random rant
Posted by (12 comments )
Link Flag
Fear, Uncertainty, Doubt
Oh yeah, research and innovation for new networks won't happen for the future... Riiiiiiiiight.
Posted by ajx1 (14 comments )
Reply Link Flag
stop inovation for to much usage, dont see it
Same arugment different technology.
AOL dialup and other companies employing dialup connections in general warned about the dangers of unlimmited internet usage in the past. (rember mid 90's)

Funny how the internet it self continued to be innovated with the now expected connection to be 24/7 and 100 times faster than the dialup.

At present there are lots of cities launching thier own wifi networksand other companies developing simmilar services with differnt technologies.

To make a valid point Vonnage has a cell phone that works on non secured wifi networks.
Its only a matter of time before something better comes out of inital device.

Overloading the cell phone internet network might happen, but unless the cell phone company wants to lose thier customers to other companies who are able to deliver the connection, they will keep ahead of the game.
Posted by reustle (37 comments )
Reply Link Flag
excuse me?
Is this guy asking us to go back when we need to go further for the sake of inovation?
Who is paying this guy to be a ceo?
Posted by xtreme999 (6 comments )
Reply Link Flag
You got to be kidding! Myopia!!!!
You cannot scale yesterday's model to future requirements and demands. The challenges must be met but not by limiting and constraining capabilities. This is difficult of legacy supplies and incumbants as they see it as killing their own babies. Think out of the box, the world is global (FLAT) some one else will take the market opportunities. Have'ny we learnt anything from the ATT scenario. Adapt or be lost.
Posted by (3 comments )
Reply Link Flag
MOBILE PHONE DIRECTORY
MOBILE PHONE DIRECTORY
is totally free!
getPhone.com works on all mobile devices,
Really cool!
Posted by getcell (2 comments )
Reply Link Flag
 

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