Sunday, December 13, 2009
Always blame the dumb pipe
I have written many times about the risk for mobile carriers to become dumb pipes. The device manufacturers are all out trying to steal the relationship the carriers built year after year with their customers.It started with RIM and the Blackberry, then came Apple the iPhone. Nokia with Ovi, Palm with Synergy, Motorola with MOTOBLUR, Sony Ericsson with Rachel and more to come.
The carriers are all fighting back: Vodafone with 360, built on technology they acquired (Zyb), and many others licensing code from third party vendors (many, many carriers, I know for a fact ;-)
I always knew that being a pipe is painful. Your revenues become flat, then they start going down. The brand of the device manufacturer becomes all of a sudden more important than yours. Your users become their users.
However, one thing I did not expect: the carrier being blamed for everything...
This is what is happening these days with at&t and the iPhone. Anything cool about the iPhone is Apple's making. Anything bad with the iPhone is because of the network. It is because of AT&T. They get blamed over and over, with crowds dreaming of a Verizon iPhone (ready to blame Verizon as soon as they take on the device).
This article on the New York Times talks about the AT&T network versus the Verizon one, claiming AT&T is not worst than Verizon. Actually, some of the issues iPhone users are experiencing are just due to the iPhone bad usage of the network.
That does not surprise me. A few weeks back, I put the SIM card linked to my AT&T Blackberry account into my iPhone: a few moments later, I received a call from my AT&T representative asking me not to do that. I asked why, since I believe I am paying the same amount for the iPhone plan and the Blackberry plan. They said the iPhone use of the network is way different and my Blackberry plan does not cover that. No surprise the AT&T network is collapsing...
Who did I blame for the call? AT&T, of course.
Always blame the dumb pipe. After all, they must be dumb because they let the device manufacturers take their users and blame them for anything. Dumb and dumber.
Posted by Fabrizio at 18:06
3 Comments:
Daniel said...
Interesting comment. So, what's your suggestion to get out of the trap?
MNOs could start to compete with Handset manufacturers. So far, most Operator phone iniatives are not very succesful. It's not their core competence nor do they have necessary software engineering skills to come up with a decent UI, innovative apps. Buidling up a ecosystem is also not a easy task for MNOs as you can see with Vodafone 360.
Putting usage restriction in place (e.g. Mobile VoIP blocking, Mobile Broadbad usage caps) to somehow try to steer the traffic/network load is also not an option because the public will blame you.
Getting rid of network congestion means investing in additional network resources - difficult business case when you are mainly competing on price.
Comment Posted at 22:31
Panda said...
This is a great article, except perhaps I'm missing something? I blame AT&T because... drumroll... it's their fault! Apple/iPhone is not blameless, they just highlighted YEARS of mistakes made by carriers in not providing good devices and user experience/convenience.
In addition to problems on the device experience end of things, the carriers have long neglected their pipes (at least in the US), which of course leaves us with the current problem: devices that highlight the inadequacies of the carrier. The iPhone is the perfect example of this - tethering and MMS were made available worldwide this past summer, oh yeah, with the exception of AT&T, which would have collapsed under the additional bandwidth strain.
Unfortunately, from where I sit, the solution is in "normalizing" the last 10 years of telecom profits, when carriers basically failed to see what was coming down the road, and plan for it in advance. Now they have little choice but to both build greater pipes, AND suffer them becoming dumb ones, since they have already proven in the market (and increasingly to regulators) that they can't be trusted to sacrifice *any* profit for the sake of infrastructure reinvestment an planning for the future.
Comment Posted at 16:55
Phil said...
AT&T could not have foreseen that the small number of iPhone users would consume the majority of their wireless bandwidth. I'm sure AT&T regrets negotiating with Apple over what tariffs it would need to offer in order to gain the privilege to carry the iPhone. Think of the cost of the back-haul and cell upgrades needed to satisfy the bandwidth-hungry iPhone users on all-you-can eat data plans. And does AT&T get a share of the revenue for content be vended from the iTunes store over it's network? Of course not.
Bandwidth within a cell is finite.. oh sure, it increases with each technology generation.... but it's shared and finite at each stage. When a cell becomes saturated, you can shrink the cell size (deploy more, smaller cells, increasing your costs...and prices), or increase prices to manage usage. With iPod users using such a disproportionate amount of the bandwidth and impacting other, more cost effective users, prices will have to rise. Further, operators will be encouraged to promote alternatives...such as Nokia's Ovi Store... where the service providers are offering a share of the revenue to operators who take care of the billing end of transactions. The smartphone race has only just begun, and Apple may have started in a sprint, but they're a long way from the finish line.
