[opendtv] Gadget Patrol: 21st century phone
- From: Tom Barry <trbarry@xxxxxxxxxxx>
- To: opendtv <opendtv@xxxxxxxxxxxxx>
- Date: Sun, 20 Dec 2009 08:20:25 -0500
Slashdot this morning had a link to an interesting blog post by Charles
Stross, a very tech savvy dude and one of my favorite science fiction
authors. Among other things it talks about the fight to escape walled
gardens, much like we discuss here about the TV business, but for
phones. I'm not sure the two fields are even different anymore.
<http://www.antipope.org/charlie/blog-static/2009/12/21st_century_phone.html>
- Tom
---------------
Gadget Patrol: 21st century phone
(/This isn't a product review, it's a big-picture overview brought to
you from the universe of "Halting State"./)
It shouldn't be news to anyone that smartphones — as a category — really
took off in the second half of the noughties. Before 2005, few people
bothered with PDAs, and fewer still with phones that had keyboards and
could browse the web or send email. Current projections, however, show
25% of all phones sold in 2010 being smartphones — and today's
smartphone is a somewhat more powerful computer than 2002's laptop.
At the same time, the winners in 2005's smartphone market (Palm, Windows
Mobile, Symbian Series 60, 80, and UIQ) are losing ground rapidly
(PalmOS is already dead, modulo the Hail Mary pass that is WebOS on the
Pré) while strange new mutants slouch towards market dominance —
Android, Mac OS X, and maybe Maemo.
What's happening?
Here's my hypothesis ...
Pre-2005, digital mobile phones typically ran on GSM, with GPRS data
limited to 56kbssec, or Verizon's CDMA. This badly choked their ability
to do anything useful and internet-worthy. By 2005, the first 3G
networks based on WCDMA (aka UMTS) began to open up. By 2009, 3G HSDPA
networks can carry up to 7.2mbps. The modem-grade data throughput of the
mid-noughties smartphone experience has been replaced by late-noughties
broadband grade thorughput, at least in the densely networked cities
where most of us live. (I am not including the rural boondocks in this
analysis. Different rules apply.)
To the mobile phone companies, 3G presented a headache. They typically
offered each government billions for the right to run services over the
frequencies freed up by the demise of old analog mobile phone services
and early TV and other broadcast systems; how were they to monetise this
investment?
They couldn't do it by charging extra for the handsets or access,
because they'd trained their customers to think of mobile telephony as,
well, telephony. But you can do voice or SMS perfectly well over a
GSM/GPRS network. What can you do over 3G that justifies the extra cost?
Version 1 of their attempt to monetise 3G consisted of walled gardens of
carefully cultivated multimedia content — downloadable movies and music,
MMS photo-messaging, and so on. The cellcos set themselves up as
gatekeepers; for a modest monthly fee, the customers could be admitted
to their garden of multimedia delights. But Version 1 is in competition
with the internet, and the roll-out of 3G services coincided (and
competed) with the roll-out of wifi hotspots, both free and for-money.
It turns out that what consumers want of a 3G connection is /not/ what a
mobile company sees fit to sell them, but one thing: bandwidth. Call it
Version 2.
Becoming a pure bandwidth provider is every cellco's nightmare: it
levels the playing field and puts them in direct competition with their
peers, a competition that can only be won by throwing huge amounts of
capital infrastructure at their backbone network. So for the past five
years or more, they've been doing their best /not/ to get dragged into a
game of beggar-my-neighbour, by expedients such as exclusive handset
deals (ever wondered /why/ AT&T in America or O2 in the UK allowed Apple
to tie their hands and retain control over the iPhone's look and feel?)
and lengthening contractual lock-in periods for customers (why are
18-month contracts cheaper than 12-month contracts?). And the situation
with international data roaming is dismal. It doesn't hit Americans so
much, but here in the UK, if I travel over an hour by air, the odds are
good that I'll be paying £6 per megabyte for bandwidth. It's as if my
iPhone's IQ drops by 80 points whenever I leave home.
Enter: Apple and Google.
Apple are an /experience/ company. They're a high-end marque; if they
were in the automobile business, they'd be BMW, Mercedes, and Porsche
rolled into one. They own about 12% of the PC market in the USA ... but
91% of the /high end/ of the PC market (laptops over $999, desktops over
$699). How they got into the mobile phone market is an odd and
convoluted story, but it's best to view it as a vertical upwardly-mobile
extension of the MP3 player market (from their point of view), which has
taken on a lucrative life of its own. Apple's unique angle is the user
experience. Without OS X to differentiate them from the rest of the
market, their computers would just be overpriced PCs. So it should be no
surprise that Apple's runaway hit iPhone business team have a single
overriding goal: maintain control of the platform and keep it different
(and aspirational).
Apple don't want to destroy the telcos; they just want to use them as a
conduit to sell their user experience. Google, however, are another matter.
Google is an advertising corporation. Their whole business model is
predicated on breaking down barriers to access — barriers which stop the
public from accessing rich internet content plastered with Google's ads.
Google /want/ the mobile communications industry to switch to Version 2,
pure bandwidth competition. In fact, they'd be happiest if the mobile
networks would /go away/, get out of the users' faces and hand out free
data terminals with unlimited free bandwidth. More bandwidth, more web
browsing, more adverts served, more revenue for Google. Simple!
This is where the Nexus One
<http://www.engadget.com/2009/12/13/the-google-phone-what-we-know-and-what-we-dont/>
announced last week may be significant. If the rumours are true — that
they're pushing it at a low or subsidized price, and have strong-armed
T-Mobile (the weakest of the US cellcos) into providing a cheap
data-only mobile tariff for it, and more significantly access to VoIP
<http://en.wikipedia.org/wiki/VoIP> and cheap international data roaming
— then they've got a Trojan horse into the mobile telephony industry.
I think Google are pursuing a grand strategic vision of destroying the
cellco's entire business model — of positioning themselves as
value-added gatekeepers providing metered access to content — and their
second-string model of locking users in by selling them premium handsets
(such as the iPhone) on a rolling contract.
They intend to turn 3G data service (and subsequently, LTE
<http://en.wikipedia.org/wiki/3GPP_Long_Term_Evolution>) into a
commodity, like wifi hotspot service only more widespread and cheaper to
get at. They want to get consumers to buy unlocked SIM-free handsets and
pick cheap data SIMs. They'd /love/ to move everyone to cheap data SIMs
rather than the hideously convoluted legacy voice stacks maintained by
the telcos; then they could piggyback Google Voice
<http://en.wikipedia.org/wiki/Google_voice> on it, and ultimately do the
Google thing to all your voice messages as well as your email and web
access.
(This is, needless to say, going to bring them into conflict with Apple.
Hitherto, Apple's iPhone has been good for Google: iPhone users do /far/
more web surfing — and Google ad-eyeballing — than regular phone users.
But Apple want to maintain the high quality Apple-centric user
experience and sell stuff to their users through the walled garden of
the App Store and the iTunes music/video store. Apple are an implicit
threat to Google because Google can't slap their ads all over those
media. So it's going to end in handbags at dawn ... eventually.)
The real message here is that if Google succeeds, the economic basis of
your mobile telephony service in 2019 is going to be unrecognizably
different from that of 2009. Some of the biggest names in phone service
(T-mobile? Orange? Vodafone? AT&T? Verizon?) are going to go the way of
Pan Am and Ma Bell by then; the ones left standing will be the ones with
the best infrastructure (hint: that doesn't look like AT&T right now —
by some analyses, AT&T mis-understand TCP/IP so badly that their network
trouble is self-inflicted
<http://blogs.broughturner.com/2009/10/is-att-wireless-data-congestion-selfinflicted.html>)
and best interoperability (goodbye Verizon), selling bits at the lowest
price to punters who buy their cheap-to-disposable (phones are part of
the perpetually deflating consumer elecronics sector; today's $350 BoM
should be down to under $100 by 2019, for something a good deal more
powerful) unlocked in WalMart and take ditchwater-cheap international
roaming service for granted.
Probably around the time VoIP takes over from the current model, we'll
see something not unlike DNS emerge for mapping OpenID or other internet
identities onto the phone number address space. (God, I /hate/ phone
numbers. Running a phone service that forces everyone to use seven to
twelve digit numbers is like running an internet that forces everyone to
use raw IP addresses.) Then the process will be complete, and things
will have come full-circle, and the internet will have eaten the phone
system.
What's good for the internet is good for Google. Right now, the phone
companies are not good for the internet. If I'm right about the grand
strategy, the Googlephone will change that.
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