This is the third in a series of posts analyzing what forces might break the hold that carriers have on the mobile market. Part I is here and Part II is here.
(6) Open Standards
Well, obviously. Wide adoption of open standards will reduce the carriers’ ability to control the handset and what you can do with it. The question is why will carriers adopt technologies that threaten their business models? Because they need to deploy those technologies themselves in order to reduce costs and launch new services. This means IP end-to-end, open operating systems, and a growing reliance on open source software. Vodafone has announced that all of their future phones will be based on Windows Mobile, Symbian, and Linux. It will be very difficult for Vodafone to prevent customers doing whatever they want with those phones; consider Cingular’s efforts to cripple dial-up networking on the Treo 650.
(7) Demand from Enterprise Customers
If phones are going to be widely used for Internet access, enterprise customers need a lot more control over employees’ phones than they have today. Remote access; provisioning of software from behind the firewall; the ability to wipe the memory of a lost phone; locating staff; companies like Ford and Citibank do not want to rely on wireless operators for these services any more than they want to let Google host their web applications. Above all they want ‘fixed mobile convergence’, the ability to treat a mobile phone as just another extension on their PBX, another node on their wireless LAN. Carriers can’t deliver FMC without giving up control of the phone.
(8) The Southwest / Ryanair Strategy
Sometimes it seems like every major operator in the world has the same strategy: become the number one branded provider of wireless voice and data services in their market. MVNOs may focus on one segment (people with poor credit or heavy data users or immigrants phoning family members at home), smaller players like Alltel and Leap in the US or 3 in the UK may compete on price because they have no choice, but the major operators will all tell you that their target market is "men and women aged 18-34." Sooner or later one of the majors (perhaps T-Mobile in the US or Softbank in Japan) will give up and adopt a different strategy entirely: become the lowest-cost provider. And the best way to do that for data services is to offer customers unrestricted access to the Internet.
(9) Network Parity
Europeans can stop reading at this point. For them, the idea that one wireless network could offer better coverage than another is a quaint memory by now. Why in 2006 can people not get a wireless signal in many parts of the US? It is not simply because US carriers use a variety of technologies while Europeans standardized on GSM; the three biggest Japanese carriers use three different technologies. It is just that the US is one of the largest and least densely-populated countries on Earth. And local communities have a habit of objecting to new cell towers even while they complain about poor service. Nevertheless, one day there will be very little to separate Verizon, Sprint, Cingular, and T-Mobile in terms of network coverage, and at that point they will have to compete on price, handsets, and data services, just like carriers in Europe.
One more post to come.