3G networks at breaking point, says WiFi provider The Cloud

[UK] This has vested interest written all over it but the claims made still seem plausible enough.

According to The Cloud, Europe’s largest mobile WiFi provider, 3G networks are at a breaking point. To blame is the rise in smartphone usage and the accompanying ‘unlimited’ data plans, along with social networking, online video and music streaming, all of which encourage data usage.

The result is “poor 3G connection in densely populated areas”, evidenced, says The Cloud, by Telefónica-owned O2’s own admission in the UK that they’ve not been able to cope with iPhone usage in parts of London. Ironically, O2 partners with The Cloud to provide WiFi access to iPhone and Palm Pre users in Britain, so I guess it’s a way of saying to the mobile networks: you need us more than ever, which is obviously the whole point of the press release. But it still raises an interesting question.

It’s the adoption of a flat rate data plans, made popular by the iPhone, which poses the biggest challenge to mobile operators, says The Cloud, in which customers are “consuming ever increasing capacity without the ability to raise prices.” If we’re to believe that the networks will reach breaking point this year with mobile internet users increasing mobile data consumption at a rate of three to five times per annum, how quickly before mobile carriers start to move away from their so-called ‘unlimited’ data offerings for smartphones (most of which are capped anyway via a fair usage policy) and start to charge different tiers for data or even offer a metered service as they did back in the dark days of WAP. Especially as new types of devices, such as Apple’s iPad, put further strain on capacity as new consumer habits are forged.

And what effect would that have on startups reliant on 3G to flog their wares?