The problem is that operator and retailer marketing departments have suddenly found a new source of revenue, and are engaging in a massive land-grab to sign up new customers, roll out new propositions, and offset declining voice revenues as we go into recession.
But I'm starting to hear some creaks. I initially missed this article, about an increase in the return rate for 3G dongles which had been sold "over-enthusiastically". I've noticed a distinct uptick in marketing hype, especially around headline speeds for HSDPA. I've also noticed a distinct lack of warnings about the fact that coverage is patchy, especially indoors.
I suspect what's happening is that the market has shifted from people like me, who already have ADSL and use their mobile service as an adjunct when they're out (and typically out in areas with good coverage like airports or cafes with big windows). The customers coming onboard now are those who want to use the products at home - perhaps instead of ADSL/cable, and perhaps in buildings with a couple of walls between their room and the outside world. Unsurprisingly this makes for unhappy results with 3G at 2.1GHz.
I've also noticed slowing speeds on 3's network in central London - although whether that's because of capacity limitations or throttling of certain apps (I really notice it on streamed audio) is hard to tell.
But above all, the alarm bells have started to ring with the rate at which network capacity is being apparently used up. It was only about 6 months ago that I heard a presentation refer to an operator that had "fired up a second carrier", ie had filled up the initial 5MHz chunk of their 3G spectrum, and had started using another. Then I spoke to a large vendor a few weeks back, who said they knew of a few places where people were on their 3rd carrier. And then another last week who mentioned somewhere they had heard about a 4th carrier - which is apparently outside the original UMTS specifications.
So given that most operators only have 10MHz or 15MHz paired allocations for 3G, it's no surprise to see the panicked interest in femtocells, 900MHz refarming, 2.6GHz auctions and various approaches to adding or splitting cells. LTE offers the chance of some more headroom too - but only if you've got convenient 10MHz or 20MHz chunks of decent spectrum spare. As if. The problem is that none of these is going to be ready for prime-time in most markets in 2009. And anyway, the backhual is still another bottleneck for many operators.
I'm predicting that next year is going to see some fairly ugly examples of mobile broadband "capacity crunch". And given that capex budgets are going to be a bit thin, I reckon we'll see quite a few more dissatisfied customers. The problem is that the €10 flatrate genie is out of the bottle, and it's going to be very hard to step up the prices now.
Another open question is how this will start to impact the useability of all those nice new smartphones & broswer/widget frameworks that are starting to get traction as well.....
Last point to raise, that I'll tackle in another post soon..... what does all this mean for upcoming spectrum auctions in 2.6GHz next year? Lots of capacity, but auctions at exactly the wrong time (hmm, shades of 2001 again?). Will the auction-tuned game theorists controlling the bidding remember that 2.6GHz and bricks/concrete don't always make a happy combination, I wonder?