Wednesday, February 23

Who You Calling a Data Hog?

Wireless data is a finite resource. Data moves from a tower to a cell phone over electromagnetic spectrum, which carriers buy at auction from the federal government. Each carrier has a limited amount of spectrum, yet that limited amount renews itself, moment after moment. Think of electricity: The power plant runs all the time, but on hot days everyone turns on an air conditioner, straining the plant's capacity. Utilities are experimenting with smart meters that encourage customers to move their power use off-peak.

Wireless carriers, responding to a similar challenge, have chosen not to treat data like a commodity. Rather, they've carved off 5 percent of their heaviest users and stigmatized them. This is a business choice, not a natural economic consequence. Imagine that a power company, to prevent blackouts, has informed its customers that its heaviest users will be penalized with unpredictable brownouts two months running. Why do wireless customers tolerate this from carriers?

Some people do use a lot of data. This month, Cisco Systems (CSCO) reported that the top 1 percent of wireless data customers account for 20 percent of traffic.

Read more at Business Week