Are people rational when they spend money? If they are, then mobile service providers may have additional tools to match user bandwidth demand with capacity constraints. Republic Wireless, for example, provides voice access using any available Wi-Fi network first, then defaults to mobile access only if Wi-Fi isn’t available.
The ultimate solutions could include providing incentives for users who don’t want to use video, extra charges for users who want better video performance or other packaging that matches video demand with user experience, peak consumption and pricing.
One might ask whether any of the leading mobile service providers, especially those who own their own networks, want to risk the “user experience” dangers, even if doing so will help avoid congestion on the wireless networks, despite the addition of new fourth generation capacity.
In many cases, though, service providers are half way there, encouraging users to use Wi-Fi when they can.
The point is that “raw capacity upgrades” likely will never go far enough to match burgeoning end user demand, especially given growing user interest in consuming video on virtually every device.
Nielsen’s “State of the Media” shows the growing trend. The study indicates 288 million people watch traditional TV, on TV screens. About 143 million people report watching video online, using the Internet.
Some 30 million report watching video on their mobile devices. But that is destined to grow fast as penetration of smart phones grows, and fourth generation networks are used by a greater percentage of smart phone users.
The more important potential implication is the theoretical audiences on various platforms. Keep in mind that 288 million people now watch TV on televisions. But there already are 232 million mobile device users. In principle, the mobile audience for television is nearly as big as the at-home TV screen audience.
That is going to have huge implications for the design of mobile networks and incentives for using bandwidth in different ways.
To be sure, the sheer amount of time people spend with each medium are disparate. At this point, almost 145 million people watch video online in the U.S. market, compared to about 290 million who watch traditional TV. So the penetration of online video is already about half of the overall TV-watching population.
But viewership on the newer platforms is a fraction of the hours spent watching TV on television screens. The “typical” viewer watches more than 42 hours a week watching video on TV sets. Viewing on PCs represents about 3.6 hours, while mobile viewing is about seven minutes a week.
Online viewing on PCs and similar devices seems to account for about 27 minutes a week. So it is not simply a matter of how much people are watching, or even “where,” and “how,” but “how much.”
But there is an important caveat: the video business, like any other content business, is about the availability of content. Nobody yet can tell what would happen if every platform had access to roughly comparable content, on financial terms that were acceptable to most potential users.
And that is among the reasons mobile service providers might want to consider providing market incentives for users to use Wi-Fi and otherwise manage their own usage to minimize overall impact on the networks.
