Probably my longest article on this blog. I am preparing a pdf version as well!
Introduction
As many of you know Columbia University Professor Tim Wu has written a fascinating article called: Wireless Net Neutrality: Cellular Carterfone on Mobile Networks . If you have not read it already, I very much recommend that you do!
With a blog called ‘OpenGardens’, this topic is clearly of deep interest to me.
However, after reading the article, I have mixed views. The paper does a great job of highlighting the issues we face today, but I also believe that it mistaken on many other issues – and I find my selves taking a stance which is much more neutral.
This article outlines my thoughts on this document.
All comments welcome to ajit.jaokar at futuretext.com.
Particularly, I welcome feedback from Operators – since many in Europe I know are thinking of Opening up the network in some way.
Synopsis of my thinking• Tim Wu’s document does a great job of highlighting the issues. It does an excellent job about raising consumer awareness and I truly hope it drives some thinking at Government and at Operator levels.
• The USA is clearly losing out due to the practises highlighted in the document. However, these practises are not a global trend. Even within the USA, there is a range of behaviour exhibited by Operators. Legislation may not be the only option here – and indeed may not be the best option.
• The whole document is primarily based on the application of Carterfone principle to the Mobile Operators. I believe that the Carterphone principle can be applied to voice but not to data unless certain other conditions are fulfilled first – which I explain below. Thus, it is not a simple case of applying the Carterphone principle to the Mobile Network Operator as is implied
• Oddly enough, the document does not talk of IMS . IMS is a huge buzzword in the industry and addresses the very same issues that are outlined here. I discuss some implications of IMS below.
• In fact, if IMS were to be considered, Skype would be one of the ‘walled gardens’ (since it does not use the SIP protocol – which means it is not Open).
• It is ironic that the Carterphone principle (opening up the Mobile network as envisaged in the document), would benefit the two closest walled gardens – Skype and iPhone. (My previous caveats about applying the Carterphone principle to voice apply in this case)
• The issues highlighted are not ONLY due to the Operator in all cases. For instance, for Mobile Video, the government is an important player(and cause) of the delay in deployment.
• The document does not address net neutrality as I understand it. Thus, net neutrality seems to be a keyword designed to gain some emotional currency
• I totally agree on the discussions about Disclosure. There may be a case for legislation in this sector only i.e. enforcing greater disclosure
• Cooperation and not competition is the key!! In that sense, unless America does some fundamental rethink, it may well lose out in the end because of it’s culture of competing vs. collaborating
My core belief (and potential solution to the issues outlined by Tim) is :
In a consumption driven world, competition is the driving force. In a creation driven world(User generated content, Web 2.0, Mobile Web 2.0 etc), cooperation is the driving force. For reasons I explain below, we have no choice but to accept a diverse ecosystem in the West and legislation is not a good option. Instead, we should look at cooperation and try to identify the dimensions of the stack where we can get critical mass.
Analysis
Verizon: Firstly, let us acknowledge that Verizon is an exception. Much of what they do will be severely limiting in a Web 2.0/Social networking world – simply because Version customers will want to interact with other people (and not just other Verizon customers). Like AOL, Verizon will find out that it can’t maintain a walled garden for ever. Now, having got the issue of Verizon out of the way, let us look at a wider picture
Skype and iPhone: The irony here is – Opening up the network in this way, would benefit two of the closest gardens : i.e. Skype and iPhone
No IMS?: Surprisingly, Tim Wu’s document does not mention IMS at all. This is strange, since IMS is such a huge buzzword in the industry today. IMS also plays directly on the net neutrality issue in the sense either you can view it as a walled garden (at the packet level) or you can consider the disruptive potential of naked SIP (SIP sans IMS). Or, like I do, think that IMS has some unique and powerful features and depending on how IMS is implemented – this can be truly beneficial to the industry.
In any case, what you can’t do is – ignore IMS!
SIP and Skype : If IMS were to be included, Skype does not look that good – because it does not follow an open protocol(SIP).
The Carterfone principle: The whole document is primarily based on the application of Carterfone principle to the Mobile Operators. In my view, The Carterphone principle can be applied to voice but not to data unless the Operator creates APIs (Application Programming Interfaces) first. Carterfone without APIs is practically useless.
We can illustrate this by considering the example of Visual voicemail in iPhones. As a consumer, I love the idea of Visual voicemail. That’s EXACTLY what I want .. I hate trawling through old voicemail(and worse still – remembering keys to go next voicemail etc etc!). So, it’s fantastic to have visual voicemail .. BUT guess what? Supporting visual voicemail implies that the two (device and Carrier) are intimately in bed! Else, it is not possible to provide such a service(because the voicemail is stored on the network and not the device) .
Thus, in a Voice scenario, Carterfone may work – but in a data scenario it will not because to make a useful service(like Visual voicemail), the device needs the network to be abstracted(i.e. API enabled).
Tim Wu’s document misses this critical point.
An API enabled Mobile Operator actually is a very powerful proposition – something which I have been speaking of for some time as in Mobile web 20: Re-engineering the digital ecosystem with converged digital processes in a Post IMS/Quad play world and in The Long tail and Mobile Web 2.0
Thus, it’s certainly not a case of directly applying the Carterfone principle (i.e. Plug and Play) to Mobile Data scenarios.
Carterfone, APIs and Pipes: Note that in the above API enabled scenario, the Operator is still the hub(and not the dumb pipe). The Operator still retains leverage in this situation by managing the APIs
The iPhone : Tim says: >>> Most importantly, to the surprise of many, the iPhone only works on the network of a single carrier, AT&T Wireless. The hundreds of millions of consumers who are not AT&T Wireless customers cannot make use of the iPhone unless they become AT&T customers. The question is, why? Why can’t you just buy a cell phone and use it on any network, like a normal phone? <<<
No No No .. I was not surprised. See my longish post saying ..
In fact, as I said before, the iPhone CANNOT work with multiple Operators with ease because it needs to be in bed with the Operator to give that unique user experience. The client alone cannot deliver that user experience and I use the case of Visual voicemail to indicate why
Locked phones? In light of the above, locked phones are not such a big issue.
Qualcomm/ BREW : One must also not ignore the role of Qualcomm/BREW in this – i.e. Qualcomm by definition leads to a certain ecosystem biased towards a walled garden at all levels(network, apps and so on). Outside that scenario, the Mobile world is a lot more open place.
Mobile TV and Video: Mobile TV and Video is hobbled not by the Operators – but due to a range of other factors(including broadcast spectrum allocations in Europe). Thus, it’s a much more complex issue – with standards wars at technology/broadcast level – not a pure Operator scenario
Developers: When the article talks of developers, the implicit assumption in the document is : you need to be on the carrier portal/deck. However, Operators were never good at marketing mobile applications. In other words, even if you did end up on the deck, it may not translate to sales(excluding simple content such as games etc).
The Operator Portal also degrades the brand of the content/application owner. They are not the destination site. If they were strong or innovative enough, they would not want to be eclipsed by the Operator’s brand and instead would want to promote their own brand. Clearly, the off portal market in the USA is not mature (and this is the real problem i.e. short codes need to be viable and interoperable). In the UK, companies like Yell Mobile , which have good content, are primarily taking the off portal route rather than the Operator route.
Thus, if the service is compelling enough, I would not recommend the Portal route. As a corollary, I think the off portal market in the US needs to improve. That’s a real issue
WAP vs. Full browsers : Yes, WAP was a crippled version of the Web. That’s true. But, in the early days (low bandwidth, low CPU etc), was there an option? i.e. could we have really been able to run full web browsers on mobile devices? Today, as we increasingly see the uptake of full web browsers on Mobile devices from companies such as Nokia and Opera, these vendors are redefining the landscape(and I include Widgets amongst browser technology). This will lead to applications that span the Web and the Mobile Web using technologies like Mobile Ajax, Mobile Widgets and WICD () – making long tail applications possible.
Openmoko : Openmoko has been on my radar. It is interesting. Time will tell. It still needs a network though and I am not sure how that works.
Net neutrality: Defining net neutrality primarily in terms of terms of the Carterphone principle sounds limiting to me?
The mobile network is different and the Mobile network operator is not anonymous : Mobile network operator is not anonymous. In fact they are a (longish!) phone call away. But accessible none the less. Which means – they can be sued. I don’t think this fact can be ignored. For instance, if you get Spam on the Web, there is not a lot you can do. However, if you get Spam on the Mobile web – who do you call? Your Operator. In practise, this fact cant be ignored.
The security risks are also higher due to the personal nature of the device. For example, a child may be using a PC(which may be also be used by an adult). But in case of the child’s phone, it is always being used by the child – hence more risk.
The point of these arguments is: there are genuine reasons to be cautious.
Why change and why now?
In the last few years since I have been tracking this space, why is the idea of opening up Telecoms networks suddenly of interest?
Here is the reason in my view.
Telecoms is a mature industry. Voice revenues still drive a lot of the business. Data revenues are small, indeed non existent. However, Voice revenues are under threat from VOIP – and that’s a universal phenomenon – on both fixed and mobile networks. (albeit on mobile networks today, it is still mainly voice over WiFi).
Also, in most places in the West, the markets are saturated. Thus, growth prospects for voice alone are limited. In contrast to the Web companies, especially with the uptake of Web 2.0, Telecoms is not an attractive investment proposition in light of the (lack of) future growth.
Hence, witness the interest in Fixed to Mobile convergence (fixed operators trying to poach customers from mobile operators and vice versa) and acquisitions in fast growing markets like India. And also an interest in Mobile data for the same reason.
Hence, market forces will drive the change in many part of the world. Other factors also help. Better devices, mature networks, better browser technology etc.
Case for Government intervention?
Tim Wu’s article concludes: “At some point, I think Americans are going to put their foot down and say, ‘We won’t tolerate this anymore.’”
That’s true
The real question is: What could be done and should the government intervene?
In fact, a government mandated environment leading to fantastic rates of growth and innovation does exist today. It’s in South Korea where the Ministry of Information and Communication (South Korea) or MIC Korea plays the overseer role.
But is that the best way? Is that the optimal path in the West?
Think about this, Korea and Japan have made great strides internally but have struggled (and will continue to struggle in my view) to export their Mobile/communications services globally. That’s the dark side of government mandated standards – high internal growth – low global growth.
Thus, excessive government intervention is the wrong thing in my view.
See my blog Should you be thinking of Vegas on your next flight to Tokyo or Seoul? .
Speaking of Governments, ours(UK) did intervene in the dot com boom and reaped a windfall through the 3G spectrum auctions . By saddling the Operators with debt, I believe the British government squashed a golden opportunity for British companies to take a lead in the Wireless space. We definitely don’t want more of that – Thank You!
The Web itself is not exactly free of monopolies. Take the case of Microsoft. However, with my Randian / free market view, I would oppose any regulation on a company like Microsoft. After all, if customers truly hated it, they could change(nothing prevents them from making that choice – much as the same with leaving a specific Operator). With Google applications , that may well happen – but the changes will be market driven and not regulatory.
The search for disruptive elements
The problem with the Mobile industry is: It’s still very arrogant. We talk of concepts like Mobile Youth – but the IPTV industry does not talk of ‘IPTV Youth’ or the fixed line industry of ‘Fixed line youth’.
Once we accept that there are only ‘people’ and they want to communicate irrespective of transport mechanisms – then we have to ask ourselves the question : Where can we get critical mass?
In my view, no single Operator can gain critical mass because the Operator’s subscriber base is fragmented along many dimensions, for instance devices, Pre pay-Post Pay etc.
So, disruptive elements can arise if we unify the stack across Operators along some dimension
At the application level, I believe that Web technologies will do this (especially full web browsers, widgets etc). At a network level, the combination of devices and WiFi/WiMax is the key.
These will happen organically – and we will always have to get used to working in a diverse ecosystem.
Co-operation as a solution
To recap, I believe that :
In a consumption driven world, competition is the driving force. In a creation driven world(User generated content, Web 2.0, Mobile Web 2.0 ), cooperation is the driving force. For reasons I explain previously, we have no choice but to accept a diverse ecosystem in the West and sweeping legislation is not a good option.
In that sense, unless America does some fundamental rethink, it may well lose out in the end because of it’s culture of competing vs. collaborating. In contrast, the European / GSM approach is more collaborative and suited for future growth
To conclude
1) We will continue to live in a diverse ecosystem and that is good
2) Operators will end up with Open APIs and that’s not a Pipe.
3) As we go from a consumption driven ecosystem to a creation driven ecosystem, cooperation will be a driving force and not competition. The need to communicate will overcome outdated business models.
4) Market forces are the main drivers to opening up in Europe(the need to show growth to the investment community for example)
5) In my view, government regulation is the wrong step(except in cases like Disclosure). A combination of Web enabled devices, devices supporting WiFi etc will drive disruptive applications.
PS: In an ironic twist, the March 26 issue of Business week’s best performers – has Google in the top spot. But guess who is on No 7? Yes, Verizon communications!. It indicates to me, that if customers want to leave a service, they will – but they don’t at the moment because they are primarily consuming content.
However, I believe that the future will belong to those Operators who open up because the creation driven ecosystem will demand that (in contrast to the current consumption driven ecosystem)
Image source: Image shack
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A note on comments:
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and they always help me out since I am one of the few regular European speakers. Thanks to Jeremy, Faut, Dion, Laurie and Megan for all your help.
