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Buying bandwidth in the app store
The search for revenue continues
Mobile operators are looking at application stores as a way to boost revenue, not by selling applications but by selling the bandwidth needed to use them.
We're going to have to start paying more for mobile data anyway if the operators are to maintain profits and invest in new frequencies and technologies, but operators and infrastructure providers are working hard to find ways of squeezing more money out of customers without pushing up prices - and the application store is the favoured option.
Data makes up the vast majority of the operators' traffic: 94 per cent according to 3, but that traffic accounts for less than 20 per cent of the operators' revenue, more than half of which still comes from punters talking to each other. So operators are desperate to find ways of making users pay more for their bandwidth, but are also terrified of being the first to alienate users with increased prices.
So rather than just charging more the operators are looking to charge us in more interesting ways, such as priority network access or subscriptions to applications, and there's a whole industry coming along to provide just that functionality, along with the standards needed to exploit it.
Billing for mobile data has always been a tricky issue. Early WAP services billed by the page, or even by the minute. These days most operators offer a combination of free access to operator-provided services (game downloads, news, advertising) and a flat-rate price for those wishing to access the rest of the internet - with some sort of cap beyond which users pay extra, or receive a stroppy note suggesting they upgrade.
But already 3UK has moved beyond that model to offer customers on the more expensive tariffs priority access when a cell gets congested. Originally that was going to include limiting YouTube streams to one per (non-premium) customer, but even that got rescinded as the bad publicity built and now it's just BitTorrent users who'll get hit when a cell is congested.
Which seems fair enough - 3 is keen to emphasise that when a cell isn't congested it won't enforce fair-use restrictions, so the swing goes both ways. The idea that those who pay more get a better service is hardly controversial, despite popular opposition.
Volubill, specialists in this kind of variable billing, reckons that 3 will be the first of many. The company has 10 operators actively looking to deploy tiered charging, with most planning three tiers of service, but it's application stores that have operators really excited.
The idea is that a customer buys an application through an operator-affiliated store at a price that includes the bandwidth needed to run that application.
To give a proper example: a customer wants to watch YouTube on the move. That customer could download the free client from YouTube, but might prefer to pay a quid a month for the operator-branded client that comes with priority bandwidth to ensure the best viewing experience.
Obviously that requires some network intelligence, and Volubill is hoping to sell that intelligence to operators. The GSMA's OneAPI should provide a standard interface for applications to request priority treatment, though it's going to be the best part of a year before that's widely adopted by operators.
So by next year we should be able to buy an application bundled with the bandwidth necessary to use it. Then we, as customers, will have to decide if that's how we'd like to pay for our next-generation mobile service. ®