By Alan Skontra
The mobile app boom has great potential for growth but faces some serious hurdles, according to an expert panel meeting during the New Jersey Technology Council (NJTC) Mobile Application Forum, held at Princeton University on June 14, 2012.
The panel, the first of two that met during the forum, included Mung Chiang, professor of electrical engineering at Princeton University; Bryce Hunter, a mobile and gaming specialist at Canadian company DHX Media; Bert Navarrete, cofounder of Princeton-based Connected Sports Ventures; Paul Nolting, senior legal counsel at Verizon Wireless; Guy Story, chief technical officer at Audible (Newark); and Jordan Usdan, deputy director of public and private partnerships at the Federal Communications Commission (Washington). Ian Goldstein, a Princeton-based partner at the national law firm Drinker Biddle, which cosponsored the forum, moderated.
The panelists reached the consensus that while developers are rushing to meet increasing consumer demand, rising costs for both consumers using data and carriers building infrastructure threaten to stall the app boom.
“Growth and demand outrun the growth of supply,” Chiang said. “The creativity of app developers will lead the wave; the supply of capacity will be behind. It’s a major issue that we create a win-win for everyone; otherwise, this exponential growth will come to a stop.”
Chiang said app data has become too expensive for consumers, even citing his own high phone bill as an example. He asked how many in the audience still pay for unlimited data plans, then said no carrier will be able to offer that option in two years. “Restaurants charge by how much we eat, and carriers will have to do the same,” he noted.
Representing prominent carrier Verizon, Nolting said as carriers rush to meet rising demand, they will have to pass on their costs to consumers. “It’s no secret that appetite for data has outstripped delivery,” he said. “There are questions about availability of spectrum. Cellphone towers involve difficult engineering and are expensive. Everyone is worried about access to capital.”
Hunter, whose company produces television and other interactive content for popular children’s shows like “Yo Gabba Gabba!” and “iCarly,” used DHX as an example when discussing the problems content providers and developers face in getting their products to consumers.
“We have over 2,500 30-minute episodes, but we can’t do super HD for streaming because of bandwidth,” Hunter noted. He said he worries that because the viewing experience isn’t as good, consumers might shy away from watching the shows on their tablets or phones.
When asked for solutions, Chiang suggested ways to reduce both high prices and service delays, including educating consumers about their data costs and generating advertising revenue to offset those costs. He also described what he called “happy hour pricing,” which depends on when consumers use their apps. “If your app can wait, you get a discount for helping reduce peak usage,” he explained. Chiang quoted a study that found discounted pricing could cut peak traffic by 30 percent because users wanted to wait, feeling they were taking advantage of a good deal.
On the regulatory end, Usdan said the government is working to increase supply to meet demand. “It’s a long process that takes years,” he explained. “We hear you, and we’re working on the issues.” Usdan said the government predicts app bandwidth demand will increase to 35 times its current size over the next five years. In response, it hopes to implement bandwidth holder incentives to either share spectrum or sell it at auction.
Nolting predicted carriers will adapt to consolidating infrastructure. “More standardization is coming,” he said. “Eventually all carriers will use the same over-the-air technology.”
“Most people are becoming cost-conscious,” Navarrete said. “I do believe consumers will be more adamant about price transparency.”
“The market will have to help sort out everything,” Nolting agreed as the panel discussion was ending. “There have to be better ways of letting users know how much data they’re consuming.”