The impact of data caps on the app economy



Naturally, some are complaining, but the reality is that network capacity will always be a finite resource -- both in the United States and around the globe. Even as carriers invest in faster networks with greater capacity, mobile devices and applications will evolve in tandem to push them to their limits. The iPhone has demonstrated that simply because it's arguably the first phone in the United States that made a large enough group of consumers want to consume vast amounts of mobile content.

AT&T's new data caps have made news, of course, because they will affect iPhone owners in the largest market for Apple's booming app economy -- the United States. But it's likely that other major carriers who don't already have data caps of their own will eventually follow suite and this will have a significant impact on the app economy.

For Consumers

Consumers, particularly those who use a lot of apps and consume a lot of multimedia content, will naturally have to pay closer attention to their app usage and content consumption. Inevitably, they'll be more likely to stick with apps that provide the greatest amount of perceived value, both in the realm of entertainment or utility.

At some point, it may become desirable for consumers to be given access to more detailed information about their data usage, so they can determine which apps are indispensible and which are too pricy when it comes to their thirst for data.

For Developers

Even though only a fraction of the most avid users exceed the new limits imposed by AT&T, it seems logical that caps will generally make consumers more aware of their data usage. After all, nobody wants to get hit with a huge bill for unexpected overages. This will certainly have an impact on developers over the long haul, particularly those whose apps are content-heavy. Developers with existing apps may need to revisit how they've been designed, and developers looking to build new apps may be forced to rethink functionality.

This isn't, however, such a bad thing. Developers operating under the illusion that bandwidth is essentially free and unlimited bandwidth have little incentive to optimize their apps, or assess the relative value of certain features. That will have to change. As Dave Grannan told, " takes time to think about the client/server architecture. That means it might cost the developer a little bit more. But it's not rocket science."

Another benefit: assuming that consumers don't become paranoid about bandwidth usage, lower pricing supported by having caps could attract a lot more customers. 

For Platform Providers

Platform providers, like Apple, may be married to carriers, but their interests aren't necessarily aligned. This is particularly evident here. Apple's interest: make sure iPhone owners have plenty of apps, and use plenty of apps. AT&T's interest: maintain its network for the benefit of all customers.

Somewhat interestingly, data caps may provide Apple a stronger rationale for tough terms of service that seek to limit which tools developers develop iPhone apps with. After all, if certain third party tools produce compiled code that is bloated, or somehow encourage poor app design that increases data usage unnecessarily, Apple might argue it has good reason to limit the use of those tools. Unfortunately, poorly trained and lazy developers certainly outnumber bad development tools, so platform providers truly interested in making sure that the apps they hawk aren't going to cause problems may need to take a more involved role in quality assurance. That, of course, is tricky in an environment where developers can't be kept waiting for months on end for their apps to be approved.


Love 'em or hate 'em, data caps are a necessary evil, and they're here to stay. Consumers, developers and platform providers will all be affected by caps but in the end, the benefits will likely outweigh the downsides for the vast majority of participants in the app economy.


Topics: Content Mobile Strategy & Operations
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