Mobile Operators: Turning Opportunities Into Threats

from the brilliant-strategy dept

Fri, Apr 7th 2006 12:15pm — Mike Masnick

Too many mobile operators seem to have a history of missing opportunities, as they try to control every aspect of the mobile data experience. It seems like many are actually afraid of mobile data following the successful path of internet adoption. That's partly why content companies have embraced the mobile world so much lately. Both industries are much more interested in a system that provides top down control -- believing that leads to profits. What they're missing is that the opposite happens. It leads to people not being very interested in using their services -- especially when there's competition from the internet itself. It's all about these two industries trying to control a much larger slice of a much smaller pie. No one seems willing to add up the total area, to recognize that the money from being the small slice in the larger pie is a lot bigger than the big slice of the small pie. That's why it seems so ridiculous to see mobile operators being told to worry about the "threat" of big internet companies who may come along and (gasp!) actually get people to use their data services. Mobile data is still a small market. People need compelling reasons to use mobile data. For the internet, it was the openness that allowed all sorts of content and services to go online and make it valuable. Why is it that the mobile industry sees these same services as threats rather than ways to make mobile data valuable, convincing many more people to use mobile data and increasing their core business?

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

11 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Andrew Schmitt, 7 Apr 2006 @ 12:41pm

AT&T OneRate
The recent announcement by Verizon that allows you to program your Tivo remotely for a few $$$ a month is the most ridiculous example.

Remember what happened when AT&T wireless introduced the "OneRate" plan (I think that was what it was called) that dissolved the difference between in and out of call areas minutes? People used their phones more. It was so successful all the other carriers had to follow.

Some carrier will wake up one day and make the same radical move in mobile data, and the others will be forced to stop this nonsense.

The wheels of capitalism sometimes turn slow....
[ link to this | view in thread ]
Roy, 7 Apr 2006 @ 12:59pm

Isn't it obvious?
What made the internet great in the first place was the freedom. The choice of destinations was open, and the content at the endpoints was freely offered up. But mobile phone companies are, at their core, phone companies. They were born and bred to charge for every single aspect of using their services, as well as to assume that they (and only they) would offer services over their networks.

Data access plans grate at the mobile companies because they don't control the data being accessed, and all they can do is shave a few cents for a kilobyte's transmission. If they owned the content, too, they could charge for it, and then charge for its passage through the network, and then maybe even charge for demarcation. That's why most carriers' data access plans started out as walled gardens.

Gartner (in the linked article) warns about "making the mobile operators just a provider of connectivity and robbing them of crucial revenue in the future." That's funny! Mobile operators *should* be nothing more than providers of connectivity. To let them be more is to exacerbate all the arguments currently lumped together as the "net neutrality" debate.
[ link to this | view in thread ]
Monarch, 7 Apr 2006 @ 1:58pm

I can't wait for either Muni WiFi or some other WiFi, then we'll have REAL competition for broadband access, and I think I'll have to quickly patent my idea of a WiFi Skype or VoiP mobile Phone. Shhhhh, no patent trolls grab that idea please. Oh Wait if they do, here is prior Art!
[ link to this | view in thread ]
Anonymous Coward, 7 Apr 2006 @ 2:05pm

Re:
I can't wait for either Muni WiFi or some other WiFi, then we'll have REAL competition for broadband access, and I think I'll have to quickly patent my idea of a WiFi Skype or VoiP mobile Phone. Shhhhh, no patent trolls grab that idea please. Oh Wait if they do, here is prior Art!

You really think thats not already patented or prior arted?
[ link to this | view in thread ]
Anonymous Coward, 7 Apr 2006 @ 2:11pm

Re: AT&T OneRate
Andrew, your point hits the nail right on the head. I think the reason people are not interested mobile data services is primarily because so few carriers have data connection "blocks" bundled into their basic wireless plans. The average Joe isn't going to use the mobile web if he knows the meter is running the whole time he's connected, especially if he perceives his service as being flakey.
For "mobile data" to really take off, carriers are going to have to start offering lower cost all-you-can-eat data portions as part of their basic wireless plans.
This evolution happened for wireless voice, there's no reason why it should not happen for wireless data.
[ link to this | view in thread ]
AnarChaos, 7 Apr 2006 @ 2:36pm

Re: Re: AT&T OneRate
What?? FREE wireless Internet on your cell phone?? LAMO! If its that big of a deal, why hasn't someone come out with DATA software update for cell phones so that you can scan for free(sic) wireless carrier signals?? It would be the same as driving around with your wireless laptop and looking for hotspots to connect to...

Oh yeah - that would lead to more PRIVACY issues... next we'll have adware and spyware on our phones (I'll copyright the term "SPell" - hehe. Will people (or governments) start recording AUDIO and DATA from our wireless devices?? (CellPhone Security Beta??) -that's mine as well =P

I can't rightly see ANY mobile company giving FREE web access through mobile phones, PDA's and the like. The old adage still stays the same ~ "If people want it bad enough, they WILL pay for it!"
[ link to this | view in thread ]
Moogle, 7 Apr 2006 @ 2:49pm

Numbers?
Mike, do you have any numbers for your claims that there's more profit to be made by opening up and getting a larger audience? You make very bold claims, but I'm curious if data isn't a financial loss that's used as a differentiator (which of course, everyone then has to do).

I can certainly understand that they should experiment in the market more to see if it's true, but they're probably afraid that they can't go back once they've tried it out, and they might be right. They could very well lemming themselves and their competition right off a cliff if they open markets before the tech gets cheap enough to support it.

Really I'd just like to see some evidence for this market data you imply is fact. Hmmm?
[ link to this | view in thread ]
Mike (profile), 7 Apr 2006 @ 3:17pm

Re: Numbers?
Mike, do you have any numbers for your claims that there's more profit to be made by opening up and getting a larger audience?

How about history? Look at the difference between the internet and the early closed systems that came about in the 90s? Where are the closed systems now? They're either dead or open.

I'm curious why you would demand "numbers" on future potential markets. There are no such numbers. However, it's not difficult to look at historical trends and do the math yourself on what it should lead to for future markets.
[ link to this | view in thread ]
Anonymous Coward, 7 Apr 2006 @ 4:20pm

I work for an MVNO and I barely ever use my Treo for network access and the damn thing is free! Check my email once in awhile, use KMaps on occasion. I do listen to music, but that's transferred, not downloaded. Sorry, I'm still waiting for the killer mobile network app.
[ link to this | view in thread ]
Moogle, 10 Apr 2006 @ 7:57am

Re: Re: Numbers?
Sorry, "reasoning" would have been more appropriate than "numbers", you're right. Thanks for the reply.

I'm still not convinced that there's necessarily more profit in opening the service. I'm a pretty poor student of history, but I would have thought that other services were opened in order to compete with other players, rather than to increase profits (regain some of the profic lost to competition I suppose). If they don't think that they have competition in their area, then they might justifiably feel that they can make more profit by controlling everything.

In terms of profitability, however, I think the only ones with the real statistics on what combinations of markets take in the most money are the mobile operators. Whether they're experimenting enough, or are paying any attention at all is a separate question.

This is all vauge hand-waving supposition on my part, so I could be miles off base, but I just wanted to clarify why I thought your claims didn't ring completely true to me. You're far more the expert on this matter, so I just want to know where you're coming from.

Cheers,
Moogle
[ link to this | view in thread ]
Technology Savvy, 4 Jun 2006 @ 2:29pm

Re: Re: Re: AT&T OneRate
Actually if you keep up-to-date, you will see that this is already starting to unfold. Its not as far fetched as you may think and yes as always risks will exist but everything evolves and adapts.

I'd like to reference Skype's mobile phones which will double as a wifi phone that will switch from the typical airwave mobile phone into a broadband connection, when available. Skype implements voice encryption when both parties use their software. See netgear's phone currently available on pre-order, http://tools.netgear.com/skype/

Also, Google and their associates are venturing into building a new wireless internet to escape the telecommunication companies monopoly. Which would encourage a free internet, ofcourse it wouldn't be a surprise, if they installed a form of advertising business around to defer the costs associated with building this new network. See article, http://www.wirednews.com/news/wireless/0,1382,68920,00.html

Finally, If you are worried about privacy issues dealing with government recordings, etc. According to an article published the NSA has installed what would be called black boxes on various telecommunication offices throughout the United States in efforts to monitor any activities that may be deemed illegal. See article, http://www.wired.com/news/technology/1,70619-0.html

[ link to this | view in thread ]