Analyst Angle: Why all smart phones & networks should be open

Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Imagine for a minute if highway toll roads only allowed certain makes of cars to use the road. If you didn’t have one of those approved vehicles to use the toll road, then you couldn’t use it. All toll roads are built with either special government funds or, in some cases, private funds authorized by the respective state government. But, in all cases, toll roads are built so that any car or truck can use them. They are not free: the charge is typically based on the amount of toll road resources that are used: 1) higher costs for larger vehicles (typically number of axles) and 2) higher costs for distance driven (typically set as a cost per mile).
Now, jump over to the world of mobile and wireless. We have a very different environment. Private companies have built wireless networks to operate on spectrum that they have licensed from the Federal Communications Commission. Handset manufacturers have built phones that can operate on the wireless network’s spectrum. There are two kinds of technology used in the United States: 1) GSM, the same technology that is used in Europe and many other areas in the world (but at a different frequency) and 2) CDMA, which is implemented on fewer wireless operators in the United States including Sprint Nextel Corp. (S) and Verizon Wireless (VZ).
The wireless operators – in order to protect and keep their networks separate from their competitors – require handsets to be developed only for their networks. This is “hard and fast” for CDMA networks that require customers to activate their phone through customer service. GSM networks (AT&T Mobility (T) and T-Mobile USA Inc. (DTEGY) ) use SIM cards that can be inserted into any GSM-compatible phone and run on any network (same as in Europe), although the toll charges may be different on each network.
The recent 700 MHz auction was an attempt by the FCC to make wireless networks more open so that they would operate more like a vehicle toll road: you could take any handset that is certified to run (like a car certified to meet all transportation requirements) and run it on any network of your choice. That would include taking a device built to run on AT&T Mobility (say Apple Inc.’s (AAPL) iPhone) and simply deciding to switch over and use Verizon Wireless. That would be interesting. Users would have more choice to take their phone and operate it on whatever network they wished either because of pricing advantage, service reasons, or any other reason.
The new 700 MHz open networks won’t happen for a while, but when they do, they will be a big experiment to see how handset manufacturers, wireless operators and users deal with their new found freedom. We’d like to have subscribers in the United States have at least as much freedom as those in Europe and other areas of the world: They can run their phone anywhere – on any network that’s built and made available.
When this happens, then handset manufacturers can build phones and sell them anywhere, not just through the wireless operator or the operator’s authorized retailer but, literally, anywhere – out of the back of a van, in a convenience store, or in places like Target. Operators would have to provide better services in order to attract subscribers. One might offer a faster network for lower cost, or another might drop far fewer calls, while still others might simply focus on basic services at the lowest cost possible.
What about applications? They should operate in the same manner. Developers should be able to build an application for, say, the iPhone, and get to publish it in the Apps Store without approval from Apple as long as it can be certified to run on the AT&T Mobility network and doesn’t crash or disrupt other applications on the iPhone or iPad. That would make applications really open.
Some applications, like those for adults, might have to require authentication that the subscriber is an adult (biometrics could do this) and operate out of a separate gated community. So, each platform such as Apple’s iOS, Research In Motion Ltd.’s (RIM) BlackBerry, Google Inc.’s (GOOG) Android, Microsoft Corp.’s (MSFT) Windows Phone, Hewlett-Packard Co./Palm Inc.’s (HPQ) webOS and Symbian would provide an open environment for all applications – not just those they like or judge to be “appropriate.”
In a dream world, it would also be nice if developers could write their application for one platform (say, Apple iOS) and easily migrate the application to another platform (say, BlackBerry). But, the platforms all typically have a different APIs, toolkit libraries, and development editors that makes it impossible to have a “write once, run anywhere” environment. (This was the idea behind Java but it didn’t work out as planned). Plus, you have different screens produced on different handsets that require customization as well.
And then there’s one more area of open to deal with: Can developers migrate outside their application store environment to build different applications that might serve different purposes – such as manage the wireless connection in a more secure way? Or, another unapproved application might let users sync their music and video clips with their computer over Wi-Fi without using a cable. This process is often called “jail breaking” since the developer is moving outside the platform’s “walled garden” to do something that is outside the boundaries of traditional applications. On July 26, the Library of Congress (which controls the U.S. Copyright Office) ruled that it is perfectly O.K. for developers to bypass the phone’s controls over what software will run. The ruling seems focused at Apple but the same case can be made for other platforms as well. Jail breaking is more prevalent on platforms where there’s a tight walled garden but doesn’t exist in other more open environments, especially when the source code for the platform is available to all (like Android).
While this column may appear to focus on Apple and it’s relatively closed environment, the message about being open is the same for all smart phone platforms, for all wireless operators, and for all device manufacturers: Build products that conform to basic operating requirements set by the government but then let users choose what phone they want, what network on which they want to operate that phone, and then choose any application they want to run in that environment.
Simple and easy to declare. Much harder to actually implement. It seems so right and natural. If enough users demand it, then hopefully economic forces with government oversight will enable it.
J. Gerry Purdy, Ph.D. is Principal Analyst, Mobile & Wireless,MobileTrax L.L.C. As a nationally recognized industry authority, he focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North Am
erica. Dr. Purdy is an ‘edge of network’ analyst looking at devices,
applications and services as well as wireless connectivity to those devices.
Dr. Purdy provides critical insights regarding mobile and wireless devices, wireless data communications and connection to the infrastructure that powers the data in the wireless handheld. He is author of the column Inside Mobile & Wireless that provides industry insights and is read by over 100,000 people a month.
Dr. Purdy continues to be affiliated with the venture capital industry as well. He currently is Managing Director, Yosemite Ventures. And, he spent five years as a Venture Advisor for Diamondhead Ventures in Menlo Park where he identified, attracted and recommended investments in emerging companies in the mobile and wireless. He has had a prior affiliation with East Peak Advisors and, subsequently, following their acquisition, with FBR Capital Markets.
For more than 16 years, Dr. Purdy has been consulting, speaking, researching, networking, writing and developing state-of-the-art concepts that challenge people’s mind-sets and developing new ways of thinking and forecasting in the mobile computing and wireless data arenas. Often quoted, his ideas and opinions are followed closely by thought leaders in the mobile & wireless industry. He is author of three books.
Dr. Purdy currently is a member of the Program Advisory Board of the Consumer Electronics Association (CEA) that produces CES, one of the largest trade shows in the world. He is a frequent moderator at CTIA conferences and GSM Mobile World Congress. He also is a member of the Board of the Atlanta Wireless Technology Forum.