How Open is Open?
On February 7 I'll be moderating a panel for Mediapost's OMMA mobile show in NYC. The title is "How Open is Open" and will focus on the trend towards openness in mobile platforms.
That will be our starting point, as the trend towards openness in mobile goes way beyond the handset. And in anticipation of the panel, I thought I'd share my thoughts on the concept of 'open.'
I see openness as encompassing four distinct areas: spectrum, handsets, message deployment and payment mechanisms.
I see openness as encompassing four distinct areas: spectrum, handsets, message deployment and payment mechanisms.
Google and others have joined the wireless spectrum auction. Even if they don't prevail in the auction, they've already succeeded (with the help of many, many others) in making the bidding process more open, and (as it pertains to the C block auction) ensuring that the auction winner can't 'lock' or 'block' wireless devices.
Similarly, the increased use of Wifi to power the mobile web and phone calls will ultimately offer consumers significantly greater choice.
Similarly, the increased use of Wifi to power the mobile web and phone calls will ultimately offer consumers significantly greater choice.
Handsets
Imagine if you couldn't download a piece of software onto your computer without the consent of your ISP, or your computer manufacturer.
Imagine if you moved and found out that the IBM Thinkpad you used with Time Warner Cable in New York did not work for COX cable in Atlanta.
Sounds crazy, doesn't it? But that's exactly how things work in the wireless space. Yes, the iPhone brought with it substantial progress in this area. However, the core features of all wireless devices continue to fall into the sole domain of the carriers and wireless device manufacturers. In other words, the carriers continue to control the feature set of wireless devices. And that means that they tend to allow only those features which they can monetize.
That's not good for consumers - and it's a real drag on innovation.
As handsets open up, as more and more players are able to build upon each other's work, consumers will enjoy a more robust mobile experience. And smart companies will develop new revenue streams that may or may not necessitate carrier involvement.
Imagine if you couldn't download a piece of software onto your computer without the consent of your ISP, or your computer manufacturer.
Imagine if you moved and found out that the IBM Thinkpad you used with Time Warner Cable in New York did not work for COX cable in Atlanta.
Sounds crazy, doesn't it? But that's exactly how things work in the wireless space. Yes, the iPhone brought with it substantial progress in this area. However, the core features of all wireless devices continue to fall into the sole domain of the carriers and wireless device manufacturers. In other words, the carriers continue to control the feature set of wireless devices. And that means that they tend to allow only those features which they can monetize.
That's not good for consumers - and it's a real drag on innovation.
As handsets open up, as more and more players are able to build upon each other's work, consumers will enjoy a more robust mobile experience. And smart companies will develop new revenue streams that may or may not necessitate carrier involvement.
Message Deployment
The carriers have used the SMS gateway to reap billions of dollars in data revenue from their customers. Billions of wireless customers actively communicate via SMS around the globe. To say that it's a cash cow for the carriers' would be an understatement. The problem is - SMS messaging isn't that great of a way to communicate. It doesn't generally synch well with the rest of your mobile device. For example, if someone texts me with the address to a restaurant, I can't automatically save that message to my calendar without cutting an pasting.
Also, SMS is not a great marketing platform. For example, unlike email there's no way for a marketer to track whether or not a particular SMS message has been read. Neither of those features (and hundreds like them) are likely to be developed by the carriers any time soon.
There's nothing inherently positive about SMS messaging other than it's quick and it's simple enough to do that even my mom has tried it. So while I think consumers are wedded to communicating via their mobile devices, there's nothing that leads me to believe that they are wedded to using SMS. In other words, consumers tend to be platform agnostic. So when they find something that is easier to use, or more fun, or cheaper, they tend to flock to the next thing. If you don't believe me, look at how AOL's subscription service and Friendster are doing these days.
Consumers will stop using SMS the moment they find something better. And while that better alternative may not be here yet, we're already starting to see some alternatives emerge. For example, I have a small Facebook app on my blackberry desktop that allows me to communicate with any of my Facebook friends very easily.
On the commercial side, look at companies such as Cellfire and Acuity Mobile (disclosure: I'm on Acuity's board of advisors), not to mention Google. All these companies offer a platform that allows companies to deploy messages to consumers without using the SMS gateway.
One of the loudest complaints I hear about working in mobile is that working with carriers on SMS programs is a HUGE pain in the ass. Do you think that marketers would be receptive to a non-SMS, non-carrier dependent messaging alternative? I certainly do! And as one or more of those platforms emerge, the carriers will see a drop in SMS revenue without necessarily being in a position to recoup revenue via the alternative platform.
Also, SMS is not a great marketing platform. For example, unlike email there's no way for a marketer to track whether or not a particular SMS message has been read. Neither of those features (and hundreds like them) are likely to be developed by the carriers any time soon.
There's nothing inherently positive about SMS messaging other than it's quick and it's simple enough to do that even my mom has tried it. So while I think consumers are wedded to communicating via their mobile devices, there's nothing that leads me to believe that they are wedded to using SMS. In other words, consumers tend to be platform agnostic. So when they find something that is easier to use, or more fun, or cheaper, they tend to flock to the next thing. If you don't believe me, look at how AOL's subscription service and Friendster are doing these days.
Consumers will stop using SMS the moment they find something better. And while that better alternative may not be here yet, we're already starting to see some alternatives emerge. For example, I have a small Facebook app on my blackberry desktop that allows me to communicate with any of my Facebook friends very easily.
On the commercial side, look at companies such as Cellfire and Acuity Mobile (disclosure: I'm on Acuity's board of advisors), not to mention Google. All these companies offer a platform that allows companies to deploy messages to consumers without using the SMS gateway.
One of the loudest complaints I hear about working in mobile is that working with carriers on SMS programs is a HUGE pain in the ass. Do you think that marketers would be receptive to a non-SMS, non-carrier dependent messaging alternative? I certainly do! And as one or more of those platforms emerge, the carriers will see a drop in SMS revenue without necessarily being in a position to recoup revenue via the alternative platform.
Payment mechanisms
Like the SMS messaging gateway, carriers exercise significant control over most every transaction processed via mobile devices. It's a great revenue stream for the carriers, and ensures that the carrier takes their cut of every mobile transaction. But what happens if/when alternative mobile payment platforms emerge?
Companies like Shoptext, Mocapay, Pocket Concierge and Bango all offer consumers the ability to conduct micro-payments outside the control of the carriers. The carriers can't impose a tariff if they don't control the payment platform.
Conclusion
Companies like Shoptext, Mocapay, Pocket Concierge and Bango all offer consumers the ability to conduct micro-payments outside the control of the carriers. The carriers can't impose a tariff if they don't control the payment platform.
Conclusion
There's no doubt - open is coming. If ANY of the four areas (spectrum, handset, messaging and payment) take off as anticipated, we'll see a very different carrier relationship with the rest of the ecosystem. And carrier claims that they are value added partners will ring increasingly hollow.
And ultimately, the carriers will be relegated to status of 'dumb pipe' that has traditionally mired their ISP brethren.
And to paraphrase Henry Blodget, that's why the carriers are screwed.
And ultimately, the carriers will be relegated to status of 'dumb pipe' that has traditionally mired their ISP brethren.
And to paraphrase Henry Blodget, that's why the carriers are screwed.
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