T-Mobile’s data cap reversal hints of 3G network uncertainty

T-Mobile dropped a data usage limit of 1GB a month over 3G networks used with the coming Android G1 phone, but said Thursday it still reserves the right to set restrictions and is working on the terms.

The turnabout might please some potential G1 customers for now, but the issue raises bigger questions over whether T-Mobile and other wireless carriers will have the capacity on their 3G networks to handle the demand from feature-rich cell phones that stream video, music, and other data.

[ InfoWorld’s Tom Yager got the nitty-gritty on the G1 Android smartphone | Yager also got a hands-on first look at the G1 |  Special report: All about Google’s Android ]

“The wireless carriers want everybody on their networks, and they want the data junkies, but they also seem to be saying [with their caps] that ‘We know you’re hooked on data but you are using too much, so screw you,'” said Kevin Burden, an analyst at ABI Research Inc. in Oyster Bay, N.Y.

In T-Mobile’s case, the network for 3G over HSPA (High Speed Packet Access) is in the early stages of buildout, with 16 cities on HSPA service today and a total of 22 cities expected to be ready by the time of the G1’s U.S. launch on Oct. 22. A total of 27 markets will have 3G HSPA service in mid-November, representing 80 percent of T-Mobile USA’s 31 million customers.

In addition to creating a “PR nightmare” for itself, Burden said T-Mobile’s earlier 1GB cap on data usage and its broader language saying it will set new terms eventually, “show that T-Mobile doesn’t have confidence in its young network — yet.”

The 1GB cap on T-Mobile’s Web site was noticed by an Engadget Mobile reporter, but was pulled back by T-Mobile after Engadget and at least one other blog mentioned the restriction, generating angry reader comments.

In the earlier T-Mobile language, the penalty for users exceeding the 1GB cap could potentially have meant facing network speeds reduced to 50Kbps, significantly lower than the 3Mbps of theoretical throughput on many early-stage HSPA networks.

The mention of the 1GB cap was removed on the T-Mobile Web site late Wednesday and replaced with language stating: “We may temporarily reduce data throughput for a small fraction of customers who use a disproportionate amount of bandwidth. Your data session, plan, or service may be suspended, terminated, or restricted for significant roaming or if you use your service in a way that interferes with our network or ability to provide quality service to other users.”

In an e-mail to Computerworld, a T-Mobile spokesperson said the carrier “removed the 1GB soft limit from our policy statement, and we are confident that T-Mobile G1 customers will enjoy the high speed of data access over our 3G network. The specific terms for our new data plans are still being reviewed and once they are final we will be certain to share this broadly with all customers.”

The statement also said “we reserve the right to temporarily reduce data throughput for a small fraction of our customers who have excessive or disproportionate usage that interferes with our network performance or our ability to provide quality service to all of our customers.”

Burden and other analysts said T-Mobile and all the major carriers are wrestling with how to charge for usage of fast 3G networks for feature-rich devices, such as the G1, the iPhone from AT&T, and the HTC Touch Diamond from Sprint Nextel.

“The problem of dealing with capping usage will only get worse with the release of more feature-rich phones,” said Jack Gold, an analyst at J. Gold Associates in Northboro, Mass.

Burden said he has been told by carriers that if too many customers started downloading video or other rich content over a 3G network at the same time it would degrade service and result in customer complaints. But they have not shared data on how serious the problem could be, he said.

“I’d guess that if 50 college kids converged on the Boston Common and started streaming YouTube to their new smartphones at once, it would cause problems,” said Gold, noting that it’s not clear how many users would be needed to cause a disruption because every area served by a single cell tower is unique. If video slows, it is hard to watch, and the 3G experience is lost, he noted.

Newer 3G networks are no different than other wireless networks, which share service among all the users in a cell, the geographics area served by a cell tower. So, the farther away a user is from a cell tower, the weaker the signal and the greater chance for disruption if many people are using it. The most dramatic evidence of this problem is how even robust cell coverage has failed in disasters when many victims try to call 911 at once and find they have no service, the analysts said.

Phillip Redman, an analyst at Gartner, said all the wireless carriers are managing the adoption of new devices using 3G networks through pricing. “They could drop the pricing down to$10 per month [for unlimited data], but then they couldn’t handle the traffic,” he said. “Higher pricing keeps the traffic down with fewer people willing to spend on it.”

Noteworthy in T-Mobile’s announcement of the G1 was a $35 monthly fee for unlimited e-mail and Web browsing capabilities, Burden said.

One of the realities of wireless networks is that they were principally designed for convenient mobile access, not as a primary means of access to data, Redman said. “Wireless networks were never designed to be a primary data access service,” he said. “If people use it as a primary access service because the new ‘broadband networks’ are positioned that way, the service will become unusable. I hope the operators learn the lesson early enough to promote mobility more, and not speed.”

Redman said the typical definition by carriers of unlimited data is within 5GB per month, although enforcement varies by carrier.

The T-Mobile position on data limits should serve as a warning to smart phone users and IT managers who work with employees using them to be careful about the terms within a service contract, analysts said. If a salesperson says one thing, it is worth checking the language in the phone service contract.

Even with a contract containing language about how a carrier might penalize a customer for excessive data usage, the carriers are not generally bound by any guarantees for service levels, meaning they could drop the speed over a network without having to pay a refund or offer a credit, analysts noted. Service level agreements are commonplace within wired network service agreements offered by carriers to large customers, but are generally not part of agreements with consumers on wireless plans, they said.