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.
Christmas is certainly coming early for the smart phone world, thanks to Wal-Mart Stores Inc. Not to be outdone by the other virtual or physical electronics stores, Wal-Mart is offering a $100 gift card in addition to ridiculously low prices on nearly every smart phone in the place. You buy a Motorola Inc. Droid X, spend the entire $100 gift card (which at Wal-Mart would consist of buying groceries or Christmas gifts), and you’re still ahead $10. Granted, you are committed to paying $80 or more to Verizon Wireless for the next 24 months, but if making money wasn’t enough to cause the change, I’m not sure what is.
And yet I digress. After discussions with some of you on last week’s topic (which, in case you forgot, centered around the swirl of cheaply priced Android devices across Verizon Wireless, Sprint Nextel Corp., and T-Mobile USA Inc. and the effect of price vs. Apple Inc.’s iPhone brand), I started to coin a mantra: What Would Cable Do (WWCD)? Given the problems in the wireless world of unstoppable data growth, re-regulation threats from Washington, D.C., and declines in traditional/core services, would the traditional telco foes approach wireless differently? Let’s have a look.
WWCD about wireless coverage?
Without a doubt, cable would have a different approach to wireless in your home. Everything cable does today (at least, what they control as opposed to resell) is largely confined to the footprint of your home. They have two existing sources of electronics into nearly every home they serve: the set-top box, and the cable modem. Either of these devices (more likely the set-top box) could accommodate a femtocell, and could display texts or calls coming to my mobile (which is undoubtedly charging in another room) on my TV. With a few modifications, the TV could also become my in-home Fring, Qik, or FaceTime device, made clearer in HD by the cable provider.
Wireless coverage would not be an issue in the home or small business. On the contrary, it would be a superior experience. Femtocells would be another way to cement my loyalty to the bundle of products and services I am currently buying from cable, and it would not be a stand-alone service. It would have marginal costs (maybe 1x cost for the new equipment) and it would work on all phones. Macro network usage would grow more slowly, pleasing homes associations and zoning commissioners nationwide.
While concerns about cannibalization of the local voice service (Comcast Digital Voice, Time Warner Digital Phone) would be prevalent, there’s no doubt that in-home coverage and pricing would change dramatically under cable’s control.
WWCD about wireless applications tiering?
Outside of improved coverage, cable’s approach to content over the mobile device would be much different from what we see today. We would see more products like Sprint ID, which, while a start, is inadequate for most Android users (if only I had a clone, I’d solve this Android conundrum once and for all). Cable would have (broadcast) content that would be nicely organized into tiers with all of the apps available for no upfront fee and a small monthly fee (think premium sports tier). Cable (and satellite) also has masterminded Pay-Per-View marketing. WFC on my phone for $20, meaning I can travel over the river and through the woods this Thanksgiving and still keep all of the teenagers and older kids at bay. And I can get whatever game I want on the way home.
Wireless carriers are definitely catching on here, but, as we have chronicled many times in this column, the wireless experience needs one overall responsible party. Right now, I don’t know whether to blame the handset maker because of my Twitter experience, or Handmark (who does a great job of enabling Sprint ID), or even Twitter themselves. When there are too many places to point the finger, and no one willing to assist, the user will either find someone who will make it simple and be accountable or find something else.
Under the current system, the wireless industry requires each and every store and customer service representative to be an expert on two networks, four operating systems, six handset manufacturers, and eight different rate plans across 20 featured devices. That’s even before we get to hundreds of thousands of applications. Cable would select, simplify, and serve the needs of wireless in a far different (and, IMHO, better) manner than the wireless carriers are doing today.
(So this is not taken out of context, I am not arguing that customer service would improve under cable. Wireless applications service is non-existent from most carriers today. Better is a relative term – the wireless industry has nowhere to go but up).
WWCD about net neutrality?
Nowhere is the “Mars/Venus” relationship different than in the area of net neutrality. This comes from the fact that cable operators, despite their efforts in recent years to reorganize, think about their worlds as a collection of local franchise territories. This is a deep knowledge of the economics of operating in Emporia, Kan. (Cable One); Massillon, Ohio (Massillon); Amarillo, Texas (Suddenlink); Vicksburg, Miss. (Wehco); Granby, Colo. (Comcast); Hays, Kan. (Eagle); St. Joseph, Mo. (NPG); and even San Jose (no, not that one, but the one smack dab in the middle of Illinois, proudly operated by Mediacom Communications). And, unlike the 35,000 individuals shed by Verizon Communications Inc. in the past 12 months (this number excludes the GTE properties sold to Frontier Communications Corp.), the cable companies are replacing resources in most of their territories as people retire, keeping the local presence and knowledge intact.
What does all of this have to do with net neutrality? First, cable (Comcast Corp. a possible exception) would solve neutrality issues at the local level, which is where it should be solved. Neutrality in rural Missouri might cost more than in St. Louis. That’s OK, and we need to get over the fact that equal bytes does not necessarily mean equal bills. Cable companies know how to balance the equation in the rural communities well. They receive little if any phone subsidies ($2 to $5 perline for local incumbents including access fees and universal service fund payments), have very open skies ready to receive a signal from Echostar or DirecTV, and have regional ISPs ready to eat their lunch if they get greedy on data rates.
These cable companies also sponsor the local school sports program, run advertisements for the local tire store, and have local offices on Main Street. They cannot hide from any issue, let alone ones around privacy, “deep packet inspection” and “bit prioritization.”
Cable would solve net neutrality in Massillon, Ohio in the following manner: a) put up more fiber to the cell sites in Massillon, removing all backhaul contention; b) build content servers at the local cable head end that cache the sites most commonly accessed in Massillon; c) make sure that they keep up with local demand; d) set up a special service line/email for issues in the Massillon area; e) Free femtocell coverage for everyone who has triple play (video + high-speed Internet + local phone); and f) a handset strategy that focuses on a few high performing wireless devices, not 20. This in addition to wireless local DVR replay (GPS driven to keep the content replay in their franchise), and a killer app that doubles as a remote control and allows me to play Angry Birds in 42-inch high definition.
The Internet will never be fully neutral. However, alleviating the concerns about bandwidth to the home, be it wireless or wired, can only be solved by operators that know my home. T-Mobile USA can’t do it
. Sprint Nextel can’t do it. For most of the United States, Verizon can’t do it. But in St. Joseph (Mo.), NPG can do it. Simply put, the net would be more neutral because cable would look at the issue differently. They have dealt with bandwidth differently as high-speed Internet has grown. This is a good proxy for how they would deal with wireless.
To be clear, there are a lot of things that the wireless industry would do far better than cable (having a business strategy that serves more than the regional printing company would be a start). But imagine a series of personnel changes, e.g., Tony Melone from Verizon Wireless or John Donovan at AT&T taking Mike LeJoie’s role at Time Warner Cable; or David Juliano at Comcast filling the shoes of the recently departed Kevin Packingham at Sprint Nextel, and I think you get the drift. It would be different – a lot different.
What would cable do with wireless? They would fuse it to high-speed Internet. They would fuse it to their content strategy. And they would keep it very local.
Jim Patterson is CEO & co-founder of Mobile Symmetry, a start-up created for carriers to solve the problems of an increasingly mobile-only society. He was most recently President – Wholesale Services for Sprint and has a career that spans over eighteen years in telecom and technology. He welcomes your comments atjim@mobilesymmetry.com.
