Landlines Are Dying
A year ago I killed my landline. Between local service, and long distance, I was paying close to $50 a month for a service that I wasn’t using that much. This shows that you can milk a customer for a while, but at some point they’re going to rebel. AT&T was charging me more than $8 per month just for the privilege of having caller-id, seeing the phone number of the person calling me. So rebel I did, but I still wanted to have the old phone number available for people to call the family. We all have our cell phones, but there are plenty of people that are used to calling our main number.
So I paid $200 for Ooma, and now I have free VOIP. Check it out, it’s good stuff. Landline use is on decline, and young people who move into a new dwelling don’t take the step that seemed crucial only twenty years ago of ordering a landline. This means that in another twenty years, landlines will be pretty much dead.
With 4G You Will Not Need a Home Internet Connection
Now, though, a much younger technology, your Internet connection at home seems to be in the same danger as your landline. It’s pretty obvious why you don’t need your landline: you have your cell phone with you at all times, including when you’re at home. Why have separate numbers for when you’re at home and when you’re on the go? Additionally, when calling the cell phone, you reach the specific person you were looking for. True, landline voice quality is better, but we’re willing to sacrifice some of the quality of the connection in exchange for the convenience that cell phones bring in. With the arrival of 4G and the policy changes that cell phone providers are making it looks like all the same reasoning will apply to your home Internet connection.
4G, in theory provides download speeds of 100Mbit. Sprint is already offering 4G, WiMAX, connections in more than 30 metros and keeps adding more every quarter. The other 3 providers in the US are not far behind, deploying 4G solutions based on LTE. Juniper Report is talking about 300 million mobile subscribers by 2015 but the focus is on mobile subscribers. There’s very little attention to the implication of 4G deployments on your home Internet connection.
In the short term, there’s not going to be much attention paid to this arena either by providers or by consumers for several reasons.
* It’s going to take a while for 4G to get deployed and be available in large parts of the country.
* As any new technology, it’s going to take a while to figure out the level of reliability of the service. Just as it took a while for consumers to feel comfortable enough withe reliability of their mobile phone service to drop landlines, we’ll want to make sure that 4G is stable enough and we’re not going to be without Internet service for days.
And Do You Really Need Cable?
And there’s an even more interesting angle to all of this. I sold my first company DNAI to RCN a company that raised over $3B in the late 1990s on the premise that delivering phone, Intenet and cable TV on one wire will be a winning combination. The idea made a lot of sense and both cable companies like ComCast and phone companies like AT&T have been chasing this “triple play.”
They didn’t though anticipate the migration of TV and Movie viewing from cable TV to the Internet. Youtube, Hulu and Netflix got us used to viewing anddownloading movies over the Internet. So now, your 4G connection can become the new triple play, all over one connection!
OK, it’s not quite an apples to apples comparison. Youtube has short clips, Hulu has commercials, and you need to pay for Netflix. All three have a limited library, and if you want to view a specific movie or a specific TV show, you’ll often have a hard time finding it on one of these services. But Youtube and Hulu are free, and Netflix is very inexpensive compared to cable TV. Still, AT&T, ComCast and their peers should worry about following Blockbuster, the movie rental chain, that is going into bankruptcy. I’m guessing that they have 4-5 years before their revenues decre significantly.
But There Are Technical Challenges On the Way
Now, I don’t want to give the impression that this is all a slum dunk with no technical challenges. The biggest problem right now is that the carriers’ networks are already over-burdened with 3G, it’s just going to get worse with 4G. I’m not too concerned about the back-haul challenge, getting data to and from the cell phone towers. That’s a problem that’s similar to the one we had when DSL was first deployed and the solutions are well understood. The bigger challenge is getting the data from the consumer to the tower. We’ll need more towers, and antennas, but that’s only part of the problem. Right now, I use my 3G connection except when I’m at home or work where I use Wi-Fi. Well, if my home network uses my 4G connection, it doesn’t make sense to switch to it. Which means that the 4G network is going to get a lot more traffic than the 3G network does. So the carriers are going to need additional spectrum to carry all this new traffic. With the revenue potential from fixed as well as well as wireless they have major incentives to move in this direction.
What do you think?
Am I crazy to think that you’ll give up your DSL or Cable Internet for something as unreliable as 4G? Leave a comment below and let’s talk.