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Apple's FaceTime Can Eat Up Cellular Data

The ability of Apple Inc.'s (AAPL) video-calling application FaceTime to be used over cellular networks will give iPhone users a new way to eat up chunks of data, just as wireless telecommunication companies are finding new ways to charge for that usage. The data consumption from FaceTime could be significant for regular users and, depending on their data plans, leave them needing a larger monthly allotment. While that may tap the wallets of some users, the total increase of usage will continue the trend of data sales driving a bigger portion of wireless revenue at telecommunication carriers. FaceTime uses a camera on the iPhone to connect with others on their phones, iPads or Mac computers. The application has been available for use only when both users are connected to Wi-Fi, but, with the coming of iOS 6 in the autumn, it can be used on cellular networks. FaceTime's move to cellular coincides with the disclosure from Verizon Wireless--a joint venture of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD, VOD.LN)--of a new pricing regime that focuses on subscribers' data usage and that will raise prices for many users. AT&T Inc. (T) is soon expected to disclose a similar pricing structure. The company was the first to charge for a preset amount of monthly data in 2010 and has been successful in getting 60% of its postpaid customers off unlimited data plans. Sprint Nextel Corp. (S) remains committed to offering unlimited data to users on its network. The carriers that offer the iPhone wouldn't comment on their plans for offering FaceTime on their networks, but an AT&T spokesman said the company is "working closely with Apple on features disclosed for iOS 6, and we'll share more information with our customers as we get closer to launch." Apple declined to comment. Akshay Sharma, an analyst at research firm Gartner, said FaceTime allows for variable bandwidth so that the quality of the picture can adjust to the available connection speed. But with the next-generation iPhone expected to operate on 4G networks, he said he expects FaceTime will have no problem operating at the maximum rate and thus consume maximum data. By looking at FaceTime's current Wi-Fi ability, Mr. Sharma said he estimates it uses about 1.5 to 7.5 megabytes per minute. That translates to 11 hours of talk time from one gigabyte of data use at the lowest rate. At the highest rate, it translates to about two hours and 15 minutes. In comparison, streaming video on a 4G network eats about six megabytes per minute, according to Verizon Wireless. For those on the low-end of Verizon's new data plan--with a single gigabyte to last the month--users could potentially exceed their allotment just by making one five-minute call a day on FaceTime. FaceTime's ability to enable more data consumption is part of the reason why the application wasn't initially allowed on cellular networks that were once dominated by subscribers with unlimited data, according to industry sources. "The preponderance of data plans connected to the iPhone are now metered, so the concern of someone using a lot of data is now mitigated," said Charles Golvin, an analyst at Forrester. The sheer size of Apple's FaceTime community could have a large impact on the total data use for the wireless carriers, Mr. Golvin noted. Using FaceTime over a cellular network is available only on the latest versions of the iPhone and iPad, but that still includes millions of devices in the U.S. Mr. Golvin projected that FaceTime has a larger base than other video-calling applications, including Microsoft Corp.'s (MSFT) Skype. Officials from Microsoft said the company doesn't release user statistics for its mobile applications. Further, it is unclear if the major carriers will let FaceTime be used freely on their networks or if restrictions will be applied. AT&T, once the exclusive carrier of the iPhone, blocked users from tethering other devices to the iPhone because of fears of the amount data that would be consumed. While the official launch of iOS 6 is months away, FaceTime's ability to run on cellular networks is already enabled in beta versions of the operating system that Apple has distributed to developers, according to a source using the software. While the new FaceTime feature will burn more data, analysts noted that many people will continue to make video calls from places that have Wi-Fi coverage and thus avoid network data usage. But they also said the customers who will use FaceTime the most frequently are likely to be children who might not be concerned or aware that their video chats are gobbling up bytes. "You really need to make sure that you are on Wi-Fi," Mr. Sharma added. --Steven D. Jones and Ian Sherr contributed to this article. Write to Thomas Gryta at thomas.gryta@dowjones.com

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