AT&T’s Billion Dollar App

No, no, AT&T won’t make a billion from this app. Instead, this app will cost AT&T a billion dollars.

Sling Media’s SlingPlayer 3G update was just released last Monday, and I’ve had a chance to try it out over the weekend. If you haven’t been following, SlingPlayer is an iPhone app that allows you to watch your own TV remotely on your PC or iPhone. SlingPlayer was released for iPhone more than a year ago, but at the time you could only watch over WiFi – 3G streaming was disabled. Apparently AT&T and SlingMedia have been negotiating since then, and SlingPlayer can now stream video from your TV over 3G.

I spent a couple hours watching Olympic ski jumping, and the video quality was quite good: lots of motion and aerial shots, and I wasn’t bothered by video encoding artifacts. The frame rate seems a bit slow, but overall I found it quite watchable, impressive for a sporting event. Audio was fine for spoken commentary, but the high notes of the Olympic opening theme were quite distorted. All in all, quite impressive, especially over 3G. Just to compare, I went back and watched some YouTube videos and found the video quality considerably worse – a lot more blocking and tearing.

Now, for the fun part: I measured SlingPlayer bandwidth consumption at about 120 Megabytes per hour, much higher than YouTube at 44 MB/hour (in my tests).

Although the consumer in me loves AT&T for allowing this app, the network engineer in me is terrified. YouTube, the current “villain” of Internet video traffic, is mostly short clips, so if you stop paying attention, the clip ends and the load on the network stops. SlingPlayer is designed to let you watch your TV, however, so it encourages long periods of watching (at least 42 minutes per show!), and it’s easy to turn it on and leave it running for hours – I did just this and listened to the Olympics while I wrote this note – chewing up bandwidth all the while.

120 MB/hour works out to 270 kbps sustained, a significant chunk of a cell site that is supposed to support hundreds of active subscribers. AT&T increased their 2010 CapEx by $2B to $7B to add more base stations and upgrade the existing stations. (http://www.att.com/Common/about_us/files/pdf/IDC_report.pdf).

At 120MB/hour, the highest sustained rate I’ve measured for an iPhone app, it’s not too hard to see that SlingPlayer could cost $1B over the next few years.

What’s the solution for all this mobile traffic? Femtocells are sure to be part of the solution: they pull traffic off the macro network, even when the consumer forgets to switch their phone from 3G to WiFi when they get home. For the $2B that AT&T increased their spend, they could give away a Femtocell to every new iPhone subscriber. [AT&T added 3.1M new subs in 2009 Q4, so annualizing to 12M for 2010, they could give every new sub a femto for only $1.8B ($150 total cost/sub including network)].

So, how about it? Free Femtocells for all?

Mike

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