[opendtv] News: Cellphone Straitjacket Is Inspiring a Rebellion
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 12 Nov 2007 08:36:21 -0500
A minor point of irony here.
The storm clouds are gathering around the cellphone industry, which
has been acting as an oligopoly to keep prices high and to keep
control over its subscribers. Articles like the one that follows are
now commonplace as the barriers to competition in wireless
communications begin to fall.
I suspect that there are few on this list who would disagree with the
above, or complain that competition is going to lead to lower prices
and better products/services.
Yet when the subject of multi-channel TV distribution comes up in
this forum, there are persistent arguments here that similar levels
of predatory pricing and control of consumers even exist.
Perhaps this is beginning to change too?
Regards
Craig
http://www.nytimes.com/2007/11/12/technology/12cell.html?_r=1&th&emc=th&oref=slogin
Cellphone Straitjacket Is Inspiring a Rebellion
By LAURA M. HOLSON
Published: November 12, 2007
First come the grumblings, then the torches and pitchforks.
Consumers have never been happy about their cellphone carriers and
the services they provide - or refuse to provide. But they also have
hardly the means to do anything, except switch from one carrier to
the next.
But a rebellion is brewing in the communications industry that is
expected to pit wireless carriers, including AT&T and Verizon
Wireless, against Silicon Valley powerhouses like Google. The tussle
might undermine the control incumbent companies have over mobile
phone consumers by giving them a few weapons to strike back.
The first salvo came last summer with the release of the Apple
iPhone, which, with its easy-to-use features, redefined how
mainstream consumers view hand-held devices. Last week, Google
generated fanfare when it announced plans for the Open Handset
Alliance, a consortium of companies working to turn mobile phones
into hand-held computers that can offer a variety of applications and
services.
In addition, federal regulators are moving to create a more open
national wireless network when it auctions off spectrum licenses in
January that would allow bidders to build a network free from carrier
constraint.
At the heart of the tension between the different camps is whether
the wireless network should be open, much like the Internet is today,
or remain under the watchful control of companies like AT&T and
Verizon Wireless, a joint venture of Verizon Communications and
Vodafone. Carriers, who paid billions of dollars to build their
networks, are unwilling to open them.
For others, change can't happen soon enough. As such the alliances
and partnerships struck now are likely to shape the industry over the
next five years.
"It is the battle of the overdogs," said Tom Wheeler, a venture
capitalist and former chief of the CTIA, a trade group for the
wireless industry. "They are all jostling back and forth to be
leaders of the next generation. The question is, how do I position
myself? It is a territorial battle."
Indeed, the rift has spilled into public view. At CTIA's Wireless
I.T. and Entertainment conference in San Francisco last month, a
woman attending a panel discussion with representatives from AT&T,
Verizon and Sprint Nextel, stood at a microphone wagging her finger
and chiding them for being too controlling, as several others in the
audience whispered and nodded in agreement. The next day, at a panel
on social networking, executives griped that software developers
would not prosper unless phone companies were less greedy.
"Definitely there is hostility," said David Weiden, a partner at
Khosla Ventures in Menlo Park who has previously worked at McCaw
Cellular, Netscape and AOL. "There are enough catalysts for change
now, and it is already happening."
But the question many are asking is why the tension now, in contrast
to, say, six months ago? The catalysts are threefold, said Mr.
Weiden: the proliferation of new technologically advanced mobile
phones, greater bandwidth and increased competition. But mainstream
consumers too are being conditioned to expect more, particularly
after the debut of the iPhone which offers easy-to-use Web browsing,
Wi-Fi capabilities and high-quality video.
Indeed, Shahid Khan, a partner at the IBB Consulting Group in
Princeton Junction, N.J., said he believes wireless networks will go
the way of the Internet, where closed communities like AOL once
dominated, then later morphed into hybrids. Now services like AOL
co-exist, albeit in a less powerful state, alongside open networks.
"The industry is really at an inflection point," said Mr. Khan.
Roger Entner, a senior vice president for communications at IAG
Research, said telephone companies have to do a better job
communicating with consumers who are accustomed to unfettered access
on the Web.
"The carriers have done a pretty poor job in portraying their
position and reasoning to the public," Mr. Entner said. By contrast,
venture capitalists and technologists are better at whipping up
interest in sexy new technologies. "Silicon Valley has done a good
job in telling the world what a wonderful nirvana the Internet is,"
he said. "But 90 percent of the sites aren't profitable."
Telephone company executives know they are in a tricky spot. Ralph de
la Vega, the president and chief executive officer of AT&T Mobility,
said he does not sense tension in the industry. Instead, he politely
called it "change."
But he agreed that AT&T and others could better explain that
companies like his are more open than most people think. In
particular, he said, there are six operating systems currently
available on AT&T mobile phones, as well as a variety of music
services and e-mail options.
It should be noted, he said, that AT&T backed the iPhone. And Mr. de
la Vega did not rule out the notion that his company would one day be
part of Google's alliance. "It is one of several operating systems we
could use down the road," he said. "We are still looking at what it
means. If we think it's something our customers want, we will be part
of any alliance."
Indeed, wireless carriers are circumspect. When a Verizon executive
at the CTIA conference was asked by a reporter what he thought of the
calls for openness, he said, "If I talk to you and someone sees me,
I'll get fired." (He asked not to be named, fearing reprisals from
colleagues.) Last week, Verizon executives were not available for
comment because they were traveling.
Tim Wu, a professor at Columbia Law School, said the relationship
between software developers, carriers and handset makers can only
change because the way that consumers relate to their phones is
changing too.
"On a personal level, the phone feels more like property," said Mr.
Wu. "Once you start to make it yours, you feel like you have more
rights to it. It will have a huge effect if you don't feel free to do
what they want."
His view is that now that entrants like Apple and Google are in the
game, companies like AT&T and Verizon are going to have to adjust.
"Little companies are not going to change industry practices," said
Mr. Wu. That happens, he said, "when you have big, powerful players
with a different ideology."
Not surprising, he and others are focusing on what will happen with
the auction of the 700-megahertz wireless band by the federal
government in January. Last summer, Google said it would offer at
least $4.6 billion for a stake if certain conditions for the auction
were met. Some were, but Google has not said whether it would
actually join the bidding.
There has been a lot of speculation about what other companies will
step forward before the end of the year. Cable companies, software
makers, even media companies, are among those weighing their options,
industry executives said. "If Google doesn't get it, what does it
do?" asked Mr. Wheeler. "And if it does get it, what does Microsoft
do? It's a game of musical chairs. When the music stops, everyone
wants to be near a chair."
Mr. de la Vega said, though, that there is a big difference between
buying a license and running a network. And few companies aside from
AT&T and others have the expertise. Added Mr. Entner, "An open
network is really awesome if you don't have to operate it."
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