Wireless 2.0: Vicious to Virtuous?

Opinion

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the open ecosystem that allows any ISV to target any mobile platform. As the CEO of Vlingo, I have seen firsthand how networks block third-party mobile applications.

If we look at the mobile ecosystem in New England, there are bright spots of innovation that would further flourish if the market broke wide open. Companies such Azuki, SkyHook, MocoSpace, uLocate and Vlingo are just a few that are delivering tremendous mobile innovations. Yet the rate at which can bring their innovations to market, as well as the potential innovation that could be borne of collaboration between us, is limited by our closed market. Personally I think about the combination of Vlingo, Skyhook and a search engine that would make it possible for a consumer using any device on any network to speak the words “movie listings” into his phone and automatically get show times for the theater nearest him.

Innovation and market openness are mutually reinforcing elements, creating either virtuously profitable or viciously destructive cycles. An open market inherently attracts innovators, whose technologies create more opportunities and further open up that market. Take away the innovators or the open market and you have a vicious cycle of stagnant or nonexistent growth. As venture investors poured $215 million last quarter alone into emerging mobile companies here in New England, it’s clear that the appetite and ability to innovate is here. The solution, of course, resides with the U.S. wireless operators and regulatory bodies. Like most, I’d prefer to see a business solution to the problem, rather than regulation. The larger players seem to “get it” from a PR perspective. We’ve seen dozens of announcements about “open networks” or “open access.” Certainly Google did its part in the 700 MHz auctions, helping to force more open access. Is this all lip service to avoid regulation, or a harbinger of true openness?

Wireless operators in the U.S. face a paradox. They view the walled garden model as a form of revenue protection, but history shows that innovation always wins. What happens to their model when every American has a “follow me” phone number from Google Voice and can circumvent the walled garden by receiving a call through a wireless network on an iPod Touch?

I propose a three-step experiment with very little risk for wireless carriers to move toward openness:

1. Immediately designate a “spec” for devices, and allow any device meeting that spec to be placed on the “current” networks.

2. Allow those devices to run any applications a device maker puts on the handset.

3. Allow the end user to download and run any application.

It would take a long time (read two years in tech) for these “open” devices to become an appreciable part of a carrier’s base of users. As that segment emerges, it would be clear if these devices and apps were “crashing” the network. On the other hand, the carrier that made such a bold experiment might also see a huge explosion of innovation coming to its network—a distinct competitive advantage as users flock to the network for innovative services, and ISVs and device makers flock to the network to serve those users.

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Dave Grannan is the president and CEO of mobile voice software provider Vlingo. Follow @

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3 responses to “Wireless 2.0: Vicious to Virtuous?”

  1. Tom N. says:

    First, I wouldn’t call Apple’s environment “friction-free” – in fact, there’s an overwhelming number of stories about problems with their app approval process. The recent Google Voice app rejection, which the FCC is currently investigating is a good example, and further goes to prove your point that there’s still plenty of work to be done, even in the iPhone/ Pre/ Blackberry ‘era.’

    Furthermore, your proposed “spec” already exists, and can be boiled down even simpler. GSM _is_ the spec – if the device has a GSM radio, I can buy a card from carrier X and be on their network. Great.

    Now, when I buy that GSM card, I can agree to some reasonable terms of service that dictate that I cannot go over X GB of bandwith per month or something similar to avoid abuse. This is identical to how consumer internet access works now. You plug an ethernet-capable device into your cable or DSL modem and you are good to go. I don’t see why it has to be any more complicated than that.

  2. Liked your historical account of the wireless world and where things lie today. You are right, the walled-garden scenario isn’t the best, but it is changing, albeit slowly.

    Don’t hold your breath on your proposed experiment.

    1. Handset revenue is a significant portion of the wireless operator’s total revenue, so they are not likely to hand over the keys to third parties (as you see in the computer industry) – at least not any time soon.
    2. Wireless operators are always the consumers first line of support on devices. If they don’t sell them and know them, they can’t be effective in troubleshooting and support (and as devices become more complex the quality of support is certainly debatable). On the other hand, if carriers could be relieved of this responsibility (hardware support) you may have something to toss into a financial model and build a business case…
    3. Any app at the consumers fingertips? I think we’re getting there – particularly with the iPhone model that is now rapidly driving carrier behavior and competition.