Los Angeles • 29 Sep 2007 • EDITORIAL
Well… no, it’s not completely broken. You can make calls, send texts, maybe even do email on your Blackberry. So it does the important utility stuff. That’s good, but it really should be able to do more. Mobile phones have been able to make calls and send texts for quite some time now. So why can’t they run applications and let us access the Internet the way we want them to? They are, after all, miniature computers with sophisticated wireless connectivity. My phone has a processor in it equal to that of my desktop computer from 1990 and it can access the Internet much faster than that computer’s modem did. So why is that I still can’t use it to buy a concert ticket without pulling out huge clumps of hair in frustration?
Form factor, for one, is a big issue. Even the larger than normal screens and full keypads of a Blackberry or a Motorola Q suffer from tiny images and keys the size of a microdot. To further this issue, mobile devices have been shrinking steadily to the point where many look like oddly shaped credit cards folded in half. And while we should all give kudos to Apple for evolving usability and ergonomics in small form factors, it is not the primary hurdle we face. Form factor is not the real reason why you can’t book a concert ticket with your phone.
The greatest obstacle we face is a prolonged and deliberate lack of standards and openness in mobile phones and services. All of our powerful and up-to-date little mobile devices are still as proprietary as an IBM mainframe and are locked down like Fort Knox. Again using Apple as an example, they may have set a new bar in ergonomics, but they’ve also sent us three steps backwards in terms of openness. Their illustriously hyped iPhone is completely locked down and Apple isn’t sharing the key.
This lack of openness coupled with the consumer desire for customization has often resulted in small underground armies of clever enthusiasts finding ways to tweak their devices. These enterprising hackers have been using brute force to open their devices up but companies like Apple are determined to even the score. Last week, Apple publicly stated that users who unlock their phones for use on other networks or who install any 3rd party applications risk voiding their warranty and possibly even “bricking” (crippling) their phone. While this gives Apple and others a lovely recurring revenue stream by locking the customer in, it is bad for the industry and terrible for consumers.
While Apple deserves a lot of heat, they are hardly alone in perpetuating the closed door policy and they are simply following a long standing tradition. The mobile industry has repeatedly inflicted this punishment upon itself for years now. Mobile operators and device manufacturers like Apple are intentionally blocking open access. Operators have done everything in their power from crippling Bluetooth file transfer capabilities (Verizon) to removing essential data from Internet based transactions (Vodafone). Why do they do this, you ask? Good question. Let’s explore.
If you remember the early (pre-Internet) days of AOL (America On-Line), they ran a very successful closed network of information and entertainment services that you could access from a modem connected to your computer. These were the days before the Internet was commonplace and services like AOL were isolated information islands. They were essentially a closed and completely proprietary provider of content and services. This was good for AOL in that they provided all sorts of relatively sophisticated content and services that consumers could only get from them. The profit margins on content were big and the competition limited. The data connection via the modem was merely a technical requirement to allow the customer to get access to the information on the other end.
As the Internet became better known, AOL embraced it. They had quite a lot of data hungry users already signed up and were cleverly marketing themselves as the easy way to get onto the then very mysterious Internet. At this point, meaningful Internet content was still sporadic at best and finding it was a chore. AOL’s content was still valuable in that it was easy to find, reliable, and entertaining.
Soon things began to change. Web browsing standards propelled Internet content forward at a dramatic rate. Content owners discovered that they could have a direct relationship with the Internet enabled customer as opposed to giving middle-men like AOL all of the control. The AOL content quickly became less and less unique. Pretty quickly, the majority of their customers were using AOL only to connect to the Internet. Their content continued to expand but they couldn’t keep up with the explosion of content taking place on the Internet. AOL’s business model was turned on its head making them into an Internet service provider. Both then and probably still now, AOL (and Time Warner) executives would desperately try to convince you that there is much more value to AOL but it simply is not true. They are an ISP.
To complete the circle, this is essentially where mobile operators are now. The only difference is that AOL started as a content business and became an ISP and mobile operators started as ISPs and are now trying to be content providers as well. The reality is that they are the unneeded middle-man between you and the vast content and services waiting to find you. As this middle-man, they want you to believe they can not only provide you with wireless coverage but can also:
- Dictate what type of mobile device you should have
- Determine what entertainment you like
- Decide what information is important to you
- Choose which applications you need
- Protect you from the bogey man
The operators will tell you that they are providing very much needed additional value to their base service offerings. This simply isn’t true. The reality is that they are limiting what you have access to and are artificially maintaining inflated prices to access what’s left. Mobile operators didn’t always have this position. It was only when the competition thinned out the profit margins of the core business (voice). In the scramble to find more lucrative revenue streams, mobile operators unanimously decided that “value added” data services was the place to go. The problem is that they can only maintain healthy margins on data services by controlling access to most of the outside world. Looking back at AOL, they were able to charge for a lot of their content and make healthy revenues from it when they were the only ones doing it. When all their users decided to get their content from the Internet, AOL’s content revenue stream fell apart. This is what mobile operators are desperate to prevent. Fortunately, customers eventually get what they want and natural forces towards openness will eventually prevail. Behind closed doors, some mobile executives reluctantly admit it is a fait-a-complis and only a matter of time.
Google has recently been positioning itself to become a potential white knight for the mobile consumer. They have requested the FCC mandate the new radio spectrum up for auction next year be used to provide Internet style open wireless services. The UK regulatory body OFCOM has made similar indications about a similar range of spectrum they will auction next year as well. As incumbents in both the US and the UK evolve their plans for wireless broadband, this radio spectrum is hugely important. If it is deployed as Google has requested, in an open Internet style of access, it will be the single most important event in mobile communications since mobile phones were first made available to the average consumer.
Conceptually, there could be a time in the not too distant future that you could sign up for a wireless broadband service by paying a monthly recurring charge to allow you unlimited voice and data usage. The notion of paying more for long distance calls and international calls would be almost non-existent. You would have unfettered access to all the content and applications to use as you wish. You would buy your device separately if you so wished. It would be available at any retail consumer electronics store and would not be bound to any type of service or plan. It may cost you a little more but you can use it on any carrier you like and you can switch when you want to. Your device would be built entirely around public standards. Like you have with your PC, there will be numerous free or nominally charged software applications that you could download and run. These applications may be from big software companies like Adobe or Microsoft or they may be from the guy next door. Open source and community developed applications like OpenOffice would be available in mobile form to run on your phone as well.
The incumbent forces are very scared by this prospect and are scrambling to figure out how to prevent it. It puts them in the same position as AOL after the Internet boom. Operators would be ISPs and the content and services would come from everywhere else.