Archive October 2007
Open Network Debates at CTIA Show
by mobileman (10/26/2007 - 16:09)
This past week was the annual CTIA Wireless IT show. I have been attending and speaking at this show since its inception in the late 1990s. This show was different from past events in a way that may not be fully 
appreciated for some time. The conference promotes wireless data services to consumers and enterprises. In the early years, data on wireless networks was a real four-letter word.
appreciated for some time. The conference promotes wireless data services to consumers and enterprises. In the early years, data on wireless networks was a real four-letter word. When I was a Director at Lucent in the 1990s, it was not uncommon to have to explain to top executives the difference between content, enabling APIs, and operating systems. With those days in the collective rearview mirrors, we are at a stage where data revenue is accounting for 15% of carrier revenues -- and climbing. It was further announced at the show that the volume of SMS (text messages) in the U.S. is now 1 billion per day. On the surface, everything is pointing up.
In the middle of this self-congratulatory week, Walter Mossberg of the Wall Street Journal rained on the parade. His Wall Street Journal article declaring the mobile industry a closed “Soviet-style” planned economy was not taken well by the CTIA and its main clients, the wireless carriers. However, in the halls, bars and some of the panel sessions, his views were greeted with quiet (read: look-over-your-shoulder) applause.This cry to open up the wireless carrier networks also occurs at a time when the FCC is about to auction a valuable chunk of the 700 MHz spectrum. This confluence of industry news, trends and events created the perfect storm for one of the more lively and controversial panel sessions in which I have ever participated.
The title of the session was “Off Portal: Razing the Closed Garden Wall.” My colleagues on the panel were the ever-affable, and never afraid to strongly state his mind, Andrew Bud of Mblox; the thoughtful professional of OpenMarket, Steve Shivers; Fredrik Ruben of Ericsson, who asserted a surprisingly aggressive view toward openness; and newcomer (at least to me) Jayanthi Rangarajan of Novarra, who was most outspoken on declaring that the Internet is the solution.
Mblox largely benefits from the status quo, as they have built a significant business in connecting content players to carriers. The other panelists were either neutral to pro-Openness, with Rangarajan being the most outspoken in declaring the open network, Internet-style agenda.
My position is this: We have grown the premium SMS market from $80M to more than $1 billion in three years. We have done that in an industry with the restrictions, conservativism and rules of the major carriers. The off-portal arena is where the bulk of entrepreneurial activity rests in the mobile industry. So, after we say “good job” and take a bow, the question is, how do we grow from $1 billion to $100 billion?
We cannot accomplish a two-order-of-magnitude increase within the existing industry structure. The mobile economy must become part of, and seamlessly integrated with, the e-commerce economy of the Internet and beyond. We must use the phone as a point-of-purchase device for goods and services that go well beyond ringtones, wallpapers, alerts and games.
There are two ways to achieve this lofty goal. The first way would be for the carriers to rethink the value chain that has been imposed on the markets and make their networks more open to the free flow of all means of commerce. The carriers have a huge embedded advantage to capitalize from this next wave of value creation: the ability to bill on behalf of, to provide location-based APIs, and to offer their own storefronts all place the carriers 90 yards ahead in a 100-yard dash.
The carriers should think of themselves as Amazon.com. Amazon has created a powerful commerce machine out of its platform. It has opened this platform to complementary and competitive services. By making its platform available at a reasonable cost competitive with the general the e-commerce market, Amazon has no doubt forestalled and eliminated the development of numerous competing services. In short, it is easier and more economic to use the Amazon platform for your e-commerce storefront than to build your own.The wireless carriers can take a page from the Amazon playbook.
The second way in which this openness can occur is to remove value from the carriers (a la Mossberg), and turn their billions of dollars of investment into pure pipes. This will either happen by the creation of an open-network competitor via the 700 MHz auction, or through entrepreneurs and various disruptive technology that breaks down the walls.
In either scenario, change is inevitable. The choice is clear.
If I were the CEO of a carrier, I would recruit some of the best and brightest from leading e-commerce companies: Amazon, eBay, Google, Apple, etc., and also from companies such as Visa and American Express. I would charge these new executives with the task of infusing the necessary corporate-culture DNA to make the necessary changes within the carrier value chain that does not just preserve investment, but creates immense value out of a machine that is in many ways more powerful than the static Internet.
The carrier would have to reward these entrepreneurs in a similar manner to their potential outside of a carrier company. It would be a bold, big move.
If carrier companies choose instead to play defense and try to preserve what they have at the cost of stifling innovation, then they clearly lose.
Even with a 90-yard head start, if you stand still, you will lose.
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Internet Safety Tips
by mobileman (10/16/2007 - 16:49)
A Few Words on Social Networking Safety
I am often asked for advice by friends who are parents of teenagers about how safe various IM, chat and social networks are for their kids. The advice one would give a teenager is different than that given to a pre-teen or elementary school child. Here is a collection of some of the advice I give regarding teenage chat safety:1-The Internet is a reflection of society. It has good, bad and ugly people.
2-Teenagers should only communicate online with people whom they know in the “real world”.
3-Teenagers should keep their profiles secret/private/hidden to all, except for a white list of their trusted friends whom they know in the “real world”.
4-Do not believe anything that a random chatter tells you.
5-Do not believe how random chatters identify themselves .
6-If you see something, say something:
Companies like Upoc take tips regarding potentially inappropriate behavior between adults and underage subscribers very seriously. Tips are fully investigated and can result in referring an individual to the proper legal authorities.
7-Never agree to meet a stranger from a chat, IM or social network. If you pay attention to tip 2, this would never arise.
8-Never give out any personal information for yourself or a friend.
9-If you are in a chat room or a chat group, everything you say can be viewed by all members. If you do not know all members of the group, proceed with great caution and pay attention to tips 4 and 5.
8-For parents: Keep track of your kids' Internet usage. It is a good idea to keep the PCs in your home in a public place (living room, kitchen, family room, etc.).
9-Lastly, teenagers should realize that anything they create online could influence (positively or negatively) college admissions officers as well as future employers. They should be cognizant of the digital footprint they are creating for themselves.
If you have other useful tips, please send them along.
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Mouse No Longer Roars
by mobileman (10/01/2007 - 05:10)
The big news that nearly got lost last week was Disney closing up its remaining MVNO. Now, both ESPN and Disney mobile have failed in the MVNO game.
Despite the MVNO failures, Disney will profit from wireless in a huge way.
What should we as an industry learn from these two expensive attempts?On the surface, both companies have the consensus prerequisites for a successful MVNO.
They have immense name recognition, strong brands, loyal and large clientele, and enough money to fill the Superbowl, or Cinderella’s castle for that matter. Both ultimately failed for similar reason.
Reason number 1:
Disney is not in the wireless services business.
This may seem institutively backwards. After all, what MVNO is in the wireless business before it starts? Answer: Virgin. Which MVNO is successful? See answer to previous question. The challenges of the wireless MVNO business, with thin margins, are unique to big brands. Disney is the premier storytelling and content king.
Reason number 2:
A key to a successful MVNO is retail distribution and promotion.
Disney never seemed to be able to ramp up a critical mass of retailers for its mobile services. This is a curious failure since Disney products are found in many of the largest retail superstores. My assumption is that the toy and apparel buyers at Wal-Mart and Target have little in common with the buyers of telecommunications equipment. The MVNO sale in retail establishments is tough on any level. The retailers are likely to prefer the big post-pay brands that give them a residual on the service contract to a onetime prepaid sale. I cannot remember seeing a single ESPN or Disney phone anywhere I've shopped.
Reason number 3:
Exactly who is going to buy a Disney phone anyway?
Being a father of grade school-aged children, I get opportunities to conduct informal “focus groups” with my kids' friends when they are over at my house.
They all seem to be getting mobile phones around 5th or 
6th grade. The trend is clearly getting younger. I would ask them who would want a Disney phone? The looks of horror I received was uniform. A Disney phone? “That’s for kids!" echoed one 9-year-old, “I want a Krazr!” If this crowd was rejecting the Disney, then who was left? 6-year-olds? The purchasers of these phones were parents. Parents do respond to constant badgering from their kids. (Gee, I hope my kids are not reading this!) Preteens want what teens have – the mainline phones from the big carriers. Not a Mickey Mouse phone.
6th grade. The trend is clearly getting younger. I would ask them who would want a Disney phone? The looks of horror I received was uniform. A Disney phone? “That’s for kids!" echoed one 9-year-old, “I want a Krazr!” If this crowd was rejecting the Disney, then who was left? 6-year-olds? The purchasers of these phones were parents. Parents do respond to constant badgering from their kids. (Gee, I hope my kids are not reading this!) Preteens want what teens have – the mainline phones from the big carriers. Not a Mickey Mouse phone.Reason number 4:
Family plans rule.
This was a huge miss on the part of both ESPN and Disney. In the case of ESPN, Dad is getting on the same phone plan as the rest of the family. For Disney, junior is getting the $10/month family plan deal. You might make a case for single men getting a cool ESPN phone, if ESPN and sports content was not available on every other phone! For Disney, there are very few financially independent 6-year-olds with purchasing power. The whole family was expected to convert to Disney. (Not.)
Reason Number 5Be careful with premium pricing
Both plans were post-paid and premium-priced compared to the big guys. With ESPN content available everywhere and the major carriers quickly catching up with kid-friendly phones and plans, there was no room for a premium-priced Disney alternative.
And now, why Disney can be huge in wireless.
Disney is a content monster. No company has the breadth of “Monday Night Football” to “High School Musical.” The wireless medium is another cash machine for Disney, just like DVD, theater, toys, clothing, theme parks, cable channels and the Internet. They attract and retain audiences in all genres. The mobile audience is, and will continue to be, a lucrative venue for the Disney Kingdom of Content.
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