iPhone: joining the subsidized pack

While the masses praise Apple for the new iPhone 3G, one should remain mindful that this release is actually a giant step backwards for the US cellular industry. Let me be clear, the iPhone 3G is another stunning design encapsulating new, cool features into a superior form factor. The problem is not the handset itself. The problem is the way that the handset will be marketed and sold.

Previously, Apple garnered praise for championing the movement to a more open mobile ecosystem. But, since that time, Apple has continuously acquiesced to the pressure from AT&T to play by the carrier-centric rules of the game. Yes, as has been explained in an earlier posting, the carriers in the US rule the mobile world with an iron fist.

While professing to support consumer-benefiting progress, the carriers have no intention whatsoever of actually loosening their tight grip on consumers. But, let’s not let the consumer off the hook too easily. US consumers are suckers for anything “cheap” or “free”, to their own peril. This deadly combination results in the continued practice of carriers subsidizing handset sales in exchange for consumers signing up for long-term contracts. From that point on, the consumer has no real option to switch carriers and therefore the carriers have no real incentive to improve their offerings, or provide new and innovative services.

Remember the old rhyme:

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

Except, in our case, for the want of a free cell phone, the whole US mobile kingdom is lost.. or, at least, is 2 generations behind mobile service in Asia.

Openness in Mobile: depends on what the meaning of the word “is” is

A long, long time ago, in a galaxy far, far away the mobile universe was all abuzz and basking in the radiance of openness. You remember it well, don’t you? The date was November 27, 2007. Verizon, the long-time stalwart finally drank the koolaid and agreed to open their network to any device and any application. Remember, in October 2007, when Apple relented to public pressure and agreed to allow third-party developers to build applications for the iPhone? Remember, in January 2008, when the declaration, “First and foremost, the wireless industry does not block text messages of any type,” was made by Steve Largent, president of the CTIA, the wireless industry association?

Well don’t look now, but that flash you’re seeing out of the corner of your eye is the mobile operators backpedaling faster than a BALCO-fueled sprinter, although I doubt they will ever put on a similar public display of repentance for their transgressions.

Wireless operators have been working long and hard to roll-back the hands of time and hold on to their outdated ways. Given the threat of truly open spectrum that was forced by the efforts of Google, Verizon and AT&T shelled out a combined $16 billion in the 700-MHz spectrum auction. And, while publicly maintaining support for openness, the carriers have been working behind the scenes to stop any mandate for such openness. The latest hits to the openness movement were inflicted by FCC Chairman Kevin Martin, who drew applause from mobile industry stalwarts when he announced:

In light of the industry’s embrace of this more open approach, I think it’s premature for the commission to adopt any other requirements across the industry. And thus, … I am going to circulate to my fellow commissioners an order dismissing a petition by Skype that would apply Carterfone requirements to the existing wireless networks.

Doesn’t the FCC realize that the only reason the operators have “embraced an open approach” is because the FCC mandated that a large swath of the 700-MHz spectrum be open? No major US carrier made any declarations in support of openness before that mandate was announced. And, even after the auction, AT&T still believes that spectrum is more valuable when it is tightly controlled, as is evident from the statements of Ralph de la Vega:

The results of the auction bidding demonstrate that the B Block was the most attractive the most valuable spectrum available, and it was the best investment for AT&T and its customers. The lower 700 MHz spectrum that AT&T acquired from Aloha Partners is not subject to the same strict regulations imposed on the upper C-Block spectrum the FCC recently auctioned. With fewer costly and complex regulations we have the certainty and flexibility needed to move faster in rolling out new mobile technology and more customer choices in devices and applications.

I’m sorry, is Mr. de la Vega living in a different, parallel universe where the grass is blue and the sky is green? In this world, the US is far behind Europe and Far East Asia in mobile technology… about 2 generations behind! (Even wireless broadband in Japan and Korea is an order of magnitude faster than the fixed-line broadband, cable or DSL, that is available in the US.) The reason for this lag has been the long-time in-fighting within the US cellular industry (e.g. AMPS vs. TDMA vs. CDMA vs. GSM). Rather than work together and let the “rising tide lift all boats”, the operators fought to maintain control of their own little fiefdoms, and they continue to do so!

Apple’s recent about-face should not go unnoticed either. After swimming in praise for creating an SDK to allow third-party developers to build applications for the iPhone, Apple is apparently showing that those old stripes don’t change so easily after all. Apple has apparently rejected the application of nearly all third-party developers to join their program. That’s right, the iPhone is actually only open to the anointed few select partners.

Mobile Industry, you either welcome the movement with (pun intended) open arms, or fight to hold onto your walled gardens. Thinly veiled lip service won’t cut it. Open is open… regardless of what the definition of “is” is.