Another Reason Carriers Hate to Love Apple

As if wireless carriers didn't already have mixed feelings about Apple's (Nasdaq: AAPL  ) iPhone, we can now add another item to the "con" side of the table.

Recent figures from network researcher Arieso claim that Cupertino's latest and greatest iPhone 4S is a bona fide data hog. Users of the gadget consume nearly twice the amount of data as those using its predecessor, the iPhone 4, and three times as much data as the iPhone 3GS. Arieso is quick to pin the blame on Apple's Siri virtual assistant, which is exclusively available on the newest model.

Since Siri needs a network connection to function, it's easy to jump to the conclusion that it's the culprit behind the data hogging. On the other hand, Ars Technica did a study when it first got its hands on Siri and found that even if you used it up to 15 times per day, you'd consume roughly an extra 28 MB of data per month. While results will vary, that's still pretty low, and unlikely to double anyone's usage, but Arieso's methodology certainly differs.

The company also compared the iPhone 4S to Google (Nasdaq: GOOG  ) Android devices that eat up data at a similar pace, which calls into question the allegation that Siri is responsible. The Android-powered HTC Desire S ranked in lockstep with the iPhone 4S uploads and the Samsung Galaxy S was comparable in downloads.

According to the report, only two smartphone makers are "network friendly": Research In Motion (Nasdaq: RIMM  ) and Nokia (NYSE: NOK  ) . BlackBerry users tend to use about a fifth of their iPhone 4S counterparts, partly due to RIM's data compression and the fact that its users seldom stray beyond email.

The figures highlight the need for carriers to continue aggressively investing in their network infrastructures to cope with soaring data demand, and is another reason why the iPhone is a mixed blessing for carriers. For example, Verizon (NYSE: VZ  ) recently announced that it sold 4.2 million iPhones on its network last quarter, which will hurt margins due to the heavy subsidies Apple garners. Its wireless margins are expected to take a whopping 5% hit in the quarter.

Tensions abound between Apple and carriers. Apple is the gatekeeper over what apps suck data through their networks. Carriers drool over the subscriber numbers the iPhone brings in. Apple undercuts their pure-profit SMS plans with free iMessage. Carriers have to pay 40% more in subsidies for the iPhone compared to other devices, while having to spend billions to beef up their networks. The list goes on.

Data gobbling is just another reason why carriers hate to love Apple, although I doubt it's Siri's fault.

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Fool contributor Evan Niu owns shares of Verizon Communications and Apple, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Google and Apple. Motley Fool newsletter services have also recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 06, 2012, at 4:05 PM, gslusher wrote:

    The data shows that the real data hogs are people using 3G modems and dongles. Those apparently account for more than 8 times the bandwidth use of the iPhone 4S. Also, the iPad and iPad 2 are very near the iPhone 4S in data usage.

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