2006 Predictions 3 and 4

3. 3G won't kill Wi-Fi, WiMAX won't kill 3G. There will be no killing of rival radio technologies.

4. Operators will still struggle to find the key selling points of 3G.

Mobile operators are still struggling to figure out what to say when customers ask why they should switch to 3G. Video calling failed miserably as a USP, and cheap voice and text remains the lure of choice for some operators' 3G offerings. They think that music and video will do the trick -- but they're wrong, there, too (we'll explain why in a couple later posts). What else have they got -- mobile turkey shoots?

Operators will have some success getting people onto 3G networks through a sort of soft forced handset upgrade. While they won't stop selling 2G handsets, the only  cool ones available will be 3G ones. So if you want something new and something hot, at some point on many carriers, you'll have to go 3G. That may be more successful, really, than trying to sell people on any sort of application they've currently got.

The underlying problem here is how carriers approach this sort of thing, and their insistence they be at the middle of everything. If they haven't yet come up with something -- a few things -- to convince people that 3G can add some value to their life, they're not going to without changing how they go about it. The concern is that they'll be relegated to bit pipes, doing nothing but selling network access. There's two sides to this: first, there are plenty of successful ISPs out there that make money. Second, if they're smart, they can be more than just a bit pipe, if they're smart.

Operators need to be additive -- their role should be to add value, and if they're successful, people will pay. They need to facilitate communication, entertainment and whatever else people want to do, and make it as easy and fulfilling as they can. Typically, they take the opposite approach, limiting what people can do. Want to moblog? Use their blog site, with their rules and their charges, and lose your content if you change operators. Want to watch TV? You can watch anything, as long as it's something the operator sells you. Then, look at the flip side. Want to send something to your own blog? You're on your own. Want to watch your own video? Have fun getting everything set up. The whole attitude is "it we don't sell it, we don't want you to do it."

If carriers are going to insist on taking an active role in everything people do on their phones, they've got to take an active interest in making sure that people can do whatever they want. A total reversal of their attitude is needed, changing from explicitly telling people what they can do to letting them do whatever they want to do. Embrace this mentality, and people will figure out on their own what the value of 3G is.

So this is supposed to be a prediction -- well, that part's simple enough. Carriers won't figure this out in 2006. Expect more of the same old locked down networks and applications, and expect 3G to stutter because of it. This is one prediction I'd be happy to see not come true.

Comments

[eduardo de souza]

I agree with you, but developers like me are doing things without carriers, for instance you can develop a java appication that communicate with your web site or webservice, and for the operator is just a GPRS/Edge connection. They will see your point sometime this new year.

[mobilejones]

When mobile operators don't get simple concepts, how can we expect them to get on board with more complex ones?

[Tim Hayward]

You are spot on with #4. The irony is that that 3G is a much better pipe but carriers only want to sell 'services' and treat users as if they are too stupid to know what to do themselves. All wireless networks are simply access networks to the internet but carriers are going to learn this the hard way.

One place to see it is in the difference between business and consumer customers. Most carriers recognise (even if they don't say it) that for business customers they are simply a pipe into the firewall or ASP, but for their consumer customers they are still trying to be all things.

Of course what they have taken their eye off is the fundamentals of providing a 3G network - good coverage and performance. 3G networks (especially GSM based) are not providing sufficient coverage and they desperately need a lower frequency to operate on to improve rural and in-building coverage. This is where the focus should be.

[Simon Morris]

I agree with your general point in #4 about “Operators will struggle to sell 3G”. But your comments that the solution is to just become an ISP, and be smart about it is just way too simplistic… "there are plenty of successful ISPs out there..." huh?! - like who? – dinosaurs like AOL, Netzero, Earthlink are on a one-way ticket to obsolescence. Broadband ISPs (Cable or DSL) are all part of cobbled-together multi-service offerings from vendors locked in a monthly subscription race-to-zero. ISPs are not attractive role-models for mobile operators. They have very little incentive to head this path.

And as for “they can be more than just a bit pipe, if they're smart” – I guess they’re trying pretty hard to be “smart” but this will take time and money – “smart” doesn’t mean giving away full free access to unique mobile resources for any web service that can string together an offering (what do you mean those web services have to PAY something to the operator – you mean all those cell towers, network and data services infra, handset subsidies – you mean all stuff isn’t just free? – I mean this is the internet , web 2.0 and all that stuff isn’t it??). Building a mobile network costs billions of dollars. There needs to be a financial return – otherwise – *poof* – bye bye mobile network. The network barely exists yet. Not like the DSL or cable networks which were already largely in place before the internet even arrived – at least the last mile to the home was largely in place – i.e. the expensive bit)

Wireless is not the same as the wireline world – not yet by a very long stick. Mobile operators are not just glorified ISPs. Mobile phones are not just slightly retarded PCs. Both business and cultural situations are very different. When there is one dominant service delivery platform, when end users pay for the whole cost of a handset, when operators really split apart network operations from network (web) services, and when cultural norms start to settle on how we’ll actually use mobile devices, at that point maybe we’ll be ready to see mobile operators being “more than just a bit pipe, if they're smart” – until then there will be plenty more fumbling in the dark.