RIM chief cautious about unlimited wireless data plans

The president and co-chief executive of Research In Motion, maker of BlackBerry devices, warned the industry on Monday that allowing people unlimited wireless data use will have a devastating effect on wireless innovation.

In a keynote address given at GlobalComm, a telecommunications trade show in Chicago, Mike Lazaridis told attendees that carriers need to be very careful how they roll out wireless Internet services.

"No matter how you slice it, bandwidth is not free," he said. "If we don't set up economic incentives now, research and innovation for new networks won't happen for the future. We want companies to be encouraged to make efficient use of the network, so we don't cross over and use up all the capacity of the networks."

Wireless operators have spent billions of dollars over the past several years upgrading their networks to 3G networks so they can handle more voice calls and advanced data services. Carriers have already begun offering new applications, such as mobile Internet browsing, email downloads and TV viewing to drive revenue.

Currently, all three of the US' major mobile carriers — Verizon Wireless, Cingular Wireless and Sprint — offer all-you-can-eat wireless Internet usage plans for a set price of about $80 (£43) per month. Sprint and Cingular also offer plans that charge people for the capacity they use each month.

But Lazaridis warned that as wireless data usage becomes more pervasive, these unlimited plans could have a devastating effect on the industry, since even the most basic data applications eat up more bandwidth than voice calls.

For example, an average voice plan that includes 500 minutes of airtime uses about 45MB of capacity per user per month, he said. By contrast, a user with an unlimited data plan who watches 15 minutes of video per day, reads at least three articles from a mobile Web site such as CNN.com, and checks email using his company's virtual private network uses about 1.6GB worth of capacity per month. Translated into voice minutes, this amount of data usage would require roughly 20,000 minutes per month, he said.

"How do you handle pricing of these services?" he said. "The voice network was built for efficiency, and as a result, it's been properly priced and has predictable business models. We need to encourage conservation of spectrum and encourage users to use the network more efficiently for data, too."

He used Research In Motion as an example of how application developers could achieve this goal. He said roughly 90 percent of BlackBerry users use less than 2MB of data per month, which translates to about 22 minutes of airtime per month.

But some experts disagree with Lazaridis' contention. Jeff Pulver, the founder of Pulver Media, said that unlimited bandwidth use in the wireless world is needed because access to the network is what spurs innovation.

"I appreciate what he is saying," he said. "But he is discounting the future and the natural evolution of technology to provide more wireless bandwidth."

But Lazaridis said that unfettered use will destroy the economics of offering wireless data, discouraging carriers from future investments in new technologies.

"You have to let the industry grow by allowing the carriers to make money," he said. "The message here isn't that we shouldn't do new things, but that we need to have incentives for efficient usage. When you have a fibre running into your home, it is its own little universe with dedicated bandwidth, but wireless spectrum is something that we all have to share."