Why Apple's iPhone Doesn't Need 3G

By Carl Howe

We've all read articles about why Apple's (NASDAQ:AAPL) iPhone won't sell because it doesn't boast the latest and greatest 3G technology, which can transmit data at 1.8, 3.6, 7.2, and in some places, 14.4 megabits per second. Instead, Apple chose to go with the more ubiquitous EDGE system, which tops out at 0.2 mbits per second here in the US, and presumably will do the same in the UK and Germany when the iPhone launches there next month.

But the question left unasked as been, "Does 3G really improve the user experience dramatically?" Most pundits would reply, "Well, of course Internet experiences improve with higher bandwidth. That's why the world went broadband." And if the pundit is having a bad day, they'll add "Duh."

Funny thing though. They're wrong. Bandwidth doesn't affect the mobile phone experience nearly as much as most people think. And in some cases, high bandwidth Internet is actually worse for the user than a low-bandwidth one.

How can this be? Because:

• People confuse network bandwidth with latency. Think of latency as how long it takes bits to go from the server to your phone, while bandwidth is how many lanes of highway those bits can use to get there. Because mobile phone networks use narrow-band radio signals, their latency is on average 2 to 10 times that of a wired network. And because of the way the Web HTTP protocol works, the quality of a Web user experience depends much more on low latency than high bandwidth, because Web pages typically contain lots of different elements such as pictures, ads, and widgets coming from many different sources. The result: loading Web pages on a 3G phone may actually take about the same amount of time as a phone loading those pages over an EDGE network because all the network time is spent setting up and tearing down connections, not actually sending big amounts of data. And so far, most carriers have preferred to optimize bandwidth at the expense of latency. Why? Because it's more marketable (see erroneous analyst quote above).


• High bandwidth radio networks are more error-prone. Because of the sophisticated signaling needed to do high-data rate transmission over narrow-band radios, higher bandwidth networks don't do as well in real-world radio environments as a lower speed network will. Multi-path interference, doppler frequency changes, and radio noise disrupt high-bandwidth signals more than low. And since phones using TCP connections -- the dominant connection type used in Web browsing -- have to retransmit data that is corrupted by errors, even an error rate only a few percent higher will dramatically slow down Internet experiences.


• Phone processors and software don't necessarily keep up with fast data transmission. I noted this phenomenon when I compared my Nokia E61i with the Apple iPhone. Despite the Nokia's 3G and WiFi network capability, the phone actually felt significantly slower than Apple's iPhone on the same networks. Why? Because the Nokia processor/OS/software combination was simply slower at moving bits than the iPhone is. The result: even with a 54 megabit WiFi network -- a network several times faster than the fastest 3G network -- the Internet experience on the Nokia was significantly slower and poorer than that of the iPhone. The phone just couldn't keep up.


• High bandwidth networks drain batteries. Power consumption of any chip increases according to the frequency squared. That means if you want your network to go 10 times faster, the chip inside your phone managing that network consumes 100 times the power that a slower chip would (It's not quite that simple because of different signaling techniques, but the overall principle still holds). This is why Steve Jobs has decried the power consumption of 3G networks -- that speedy signaling actually matters in a battery-powered device. So why don't European users see this power-draining effect today with their phones? Well, check out the Nokia message boards and you'll find that they do experience some of the effect, but that effect is diminished by the fact that Europe has a much higher density of cell towers than the US does. And since cell phones decrease their radio power output when signal strength is high, the frequency effect of 3G transmission is partially offset by the fact they can use lower power amplifier settings for their radios.

The bottom line: Carriers, analysts, and consumers alike have an unhealthy obsession with bandwidth to the exclusion of other important factors that affect the user experience with a phone. Just as the computer industry finally figured out that more gigahertz wasn't necessarily better for users, the phone industry is going to discover the same point (and for the same reasons). And companies that use limited bandwidth in smarter ways to deliver a better user experience -- like Apple -- are going to have a leg up on their competitors no matter what network they use. Let's hope it doesn't take phone carriers as long as it took the computer industry to figure out they need to sell something other than technology to win over the average consumer.

Full disclosure: the author owns Apple stock.