Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
The concept of open wireless networks is not new. In fact, an obligation to support “reselling” was embedded in the original FCC rules that created the cellular industry. Over the years, that obligation faded away. “Openness” is being reborn, for a number of reasons, and this time I predict that it’s going to stick.
About the rebirth: There is finally a realization that the explosion of the Internet was due, in large part, to its openness; to the fact that the applications and services that have made the Internet so valuable to us were created in a competitive environment that is friendly to entrepreneurs and intrapreneurs. The Internet is truly open to everyone (perhaps too much so; one has to be really egregious to get disciplined), its protocols are standardized, and it’s available at low cost to virtually everyone. No wonder that the new appointee for chairman of the FCC is described as understanding “the importance of open networks and a regulatory environment that promotes innovation and competition to a robust democracy and a healthy economy.” No wonder that, at the last CTIA conference, the CEOs of Verizon, Sprint and T-Mobile all endorsed the concept of open networks.
This kind of discussion would have been unthinkable five years ago. I see this as an important indicator that the wireless garden wall is starting to crumble even though each CEO – Lowell McAdam of Verizon, Dan Hesse of Sprint, and Robert Dotson of T-Mobile – had his own unique definition of openness in his network. And as you might guess, their definitions fell far short of the openness that we have enjoyed for many years in the wireline network and in the Internet. More important than their cautious definitions (you’d be cautious as well if you had to justify a multi-billion dollar investment in infrastructure and licenses to your investors) was their open-mindedness; an attitude change that portends great progress for our industry.
True open access to wireless network is inevitable. In contrast with the Carter decision in which the FCC mandated the open access that initiated the collapse of the wireline walled garden in 1968, wireless open access will happen without intervention by the government or the courts. It will happen for one simple reason: open access is good business.
Before I explain this, here’s a brief summary of my definition of open wireless access:
In an ideal world – or at least in my ideal world – a wireless operator will run its network business as an independent entity separate from its application and services businesses. The network entity will focus upon generating revenues and return on assets by delivering of transport and associated services. The network entity will offer access at competitive rates to all qualified entrants. Of course I would expect the operator to create other independent entities to deliver applications and services to the public, to enterprises and to the government. But think about how much more competitive, how much sharper, these service entities will be when they are faced with genuine competition on a day-to-day basis.
Here’s how open access will change the wireless world:
–The idea of a “locked phone” will fade into history. It’s just too easy to unlock phones. Even the iPhone is now being offered in unlocked form.
–The concept of the “cellular phone” will disappear. There will be countless wirelessly connected devices, each optimized for an application, or set of applications, that appeals to a particular set of consumers.
–The applications and services delivered on these devices will be created, not only by the operators, but by the same wildly creative and entrepreneurial industry that made the Internet become a vital part of our lives.
–A variety of platforms will be used on these devices that will make them more flexible and more accessible to developers. The open platforms available now like Android and Symbian are only the beginning. We will find that new industries will arise by virtue of middleware that makes it practical and economical for device manufacturers and application developers to tailor their products to an increasingly wide variety of consumers.
–The pricing of access by the network entities will be flexible enough to facilitate a variety of wireless business models from broadband applications using tons of data to applications using a few bits occasionally and everything in between.
–Ownership of the wireless customer, long constrained to operators within the walled garden, will default to those most capable of serving the customer. This will continue to be the operator in some cases but there will be lots of others in the game. Apple and Google already own part of the wireless customer relationship – that is just the beginning.
In the 100 years preceding cellular service, wireline communications became an indispensable part of our lives. In only 25 years, wireless communications, and the freedom that wireless implies, has already exceeded that impact on our lives – but this is only the beginning.
It will not be FCC action or antitrust lawsuits that undermine the walled garden. Operators will discover, as technology drives capacity higher and costs lower, that they have far more transmission capacity that they can deploy or utilize or market by themselves with applications restricted to their own creativity. It is a matter of simple economics. The way to extract the greatest value from their capital investment is to optimize the use of the network. Operators will still have significant advantages in delivering certain services and they will continue to do so. But they will only benefit when other services that may, for example, be uneconomic for a large operator, are provided by others.
Everybody wins! Operators’ revenue, profits, and growth will be enhanced, opportunities will abound for application providers, and the wireless consumer will be king.
Complete achievement of the open access dream will take time but you will start seeing incremental progress very soon. Why? Open access is just good business. It took 120 years to create the garden wall. The collapse will happen faster – and we will all benefit.
You may contact Martin at Marty@arraycomm.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.
