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Bandwidth is wealth

In an economy, anything useful that’s scarce becomes valuable. So is access to mobile data the new wealth? If you look at some of the recent numbers coming out about data use on cell phones and tablets, you might be able to make that case.

In an economy, anything useful that’s scarce becomes valuable.

So is access to mobile data the new wealth?

If you look at some of the recent numbers coming out about data use on cell phones and tablets, you might be able to make that case.

A new study by Arieso, a British company that analyzes mobile traffic, said that one per cent of all users generate 50 per cent of all traffic on mobile networks.

The top 10 per cent of users consumed 90 per cent of mobile bandwidth, which includes phone calls. But most of this bandwidth is devoted to data, which includes Internet, audio and video.

The 99 per cent vs. the one per cent — “Occupy Bandwidth?”

These figures are not so surprising when you consider that only about 13 per cent of the world’s cellphones are smartphones. In other words, 87 per cent of the world’s cellphones can only make calls. They cannot receive data.

The penetration rate of smartphones exceeds 30 per cent in North America, Germany and Britain.

Although it seems transparent that wide-open data plans and smart devices are privileges of the wealthy, or those living in the wealthy nations, Arieso says the heaviest bandwidth users didn’t break down along socioeconomic lines.

The biggest bandwidth users had 3G modems hooked to laptops; this serves as an Internet connection when Wi-Fi is not available.

Some people and businesses prefer to use this kind of connection rather than public Wi-Fi for security reasons.

Sixty-four per cent of extreme users were using a laptop, a third were using a smartphone and three per cent had an iPad.

According to a study by phone maker Ericsson, the heaviest mobile data users were watching video 40 per cent of the time and surfing the Net 20 per cent.

There also is an indication that newer and more powerful phones encourage heavier bandwidth usage.

Users of the iPhone 4S, the newest iPhone, download 2.76 times as much data as the average user of the older iPhone 3G, according to Arieso.

One factor might be Siri, the voice-activated “personal assistant” available only on the 4S, because the tool makes it easier to access services that require server contact over a data connection.

Another reason might be apps that are frequently hitting a server.

So what does it matter? Why should the average person care, as long as their latest gadget is working?

Well, for one thing, the price of the right to connect will certainly rise. But to most users, if the cost of data service remains reasonably affordable, it doesn’t matter.

But to the carriers, it presages a possible crisis — or an opportunity to freeze out competition and accumulate vast fortunes by “owning” access.

Mobile broadband use for data has been exploding. But that bandwidth is by no means endless.

In fact, it is getting more scarce. The major carriers have bought spectrum licences from the government for billions of dollars. Since wireless is essentially a radio system, the more spectrum a provider has licences for, the more data it can transmit.

In 2008, the U.S. government auctioned off spectrum that became available when the conversion to digital TV was completed. Verizon and AT and T together spent more than $16 billion for licences.

Verizon has announced a plan to buy unused spectrum from cable companies in return for a deal to co-market services.

One proposal being considered in Congress would remove some FCC flexibility in managing the spectrum auction, and another would prevent the FCC from designating any new spectrum as unlicensed.

The FCC has overseen 80 auctions and needs to continue to have the flexibility to do so, Genachowski said.

Blocking more unlicensed spectrum (essentially by licensing and selling it all)would prevent some pretty important innovations in consumer technology. Wi-Fi and Bluetooth, for instance, both run on unlicensed bands.

So as mobile data use grows for things such as streaming video and more people worldwide get devices capable of receiving data, phone carriers will need to provide much more data service, which means more spectrum.

Speeding up devices, so they can transmit more data in a short time, thus freeing up space for other users hasn’t worked. Data users don’t share.

Just the opposite; faster downloads means more people downloading more data — watching HD movies on their laptops and cellphones, simply because they can.

Cheap access to wireless technology has been a great global equalizer. Women in poor villages in developing countries can get microloans to buy a cell phone which they can rent to their neighbours on a per-call basis. Online data sharing has helped topple cruel dictators.

But if mobile data becomes scarce, it becomes more expensive and then only the wealthy will have access to it.

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