Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
We’ve come a long way since the introduction of the iPhone in 2007 and the App Store in 2008. It has provided a reason for owning a particular handset, and allowed personalization and (un)productivity to flourish. While the iPhone has been exclusive to AT&T, let’s assume the pundits are correct and two providers exist by the end of the year. Outside of price, how will the new carrier differentiate itself from AT&T? What if it’s three or four carriers instead of two?
AT&T’s recent earnings clearly show that it’s not because of voice pricing – overall voice usage has decreased by 5-6% (~60 minutes per month since 2Q 2008) while ARPUs are only down 2-4% (or about $1.70 over the same period). Check out the details on The Sunday Brief. If anything, AT&T is enjoying the benefits of less iPhone voice usage. Why less usage? Because iPhone users are data consumers first, then voice. If they were asked what they’d most want to change, the answer would both voice plans and data throughput.
When voice is less of a factor, and applications are more/ most important, where’s a better place to differentiate than IP latency? Too many times, carriers stop engineering at the base of the tower and assume that requests for websites “go to the cloud.” In the case of AT&T, Verizon, and Sprint, they are the IP cloud. This didn’t matter much in the circuit-based world, and, to date, no one has dared to publish a service level standard for Short Messaging Services (the Tweet Guarantee – all Tweets delivered in 10 seconds or less). But data – that’s different.
Imagine Pandora One on a Motorola Droid. Not the run of the mill Pandora, but the 192 Kbps version. It’s good enough to plug into your home or car stereo. No static and no commercials. There are millions of Pandora users who would pay for a data guarantee. Not much, but they’d move and pay for a kept promise. Publish the stats (by city, or even individualize), and be accountable for the results. And provide an in-home solution to maximize the value of the carrier’s spectrum as opposed to Wi-Fi.
The commercial might go like this: “Pandora across the other guy’s iPhone” (repeated buffering) “Pandora over the Motorola Droid from Verizon Wireless. It’s like nothing else you’ve ever heard over your mobile. Better networks make for better apps. We guarantee it.” Repeat this for any data-intensive app such as Sling Mobile, iVideoCamera, Qik Video Camera and Last.fm and things get interesting. Rather than reduced performance through the restriction of bandwidth, carriers create differentiation through backbone and server optimization. Verizon and AT&T pick up a lot more special access revenues for their struggling telecom business units. 4G will have more opportunities to access a fiber-based network without microwave gymnastics. The content providers get on-network transit for low costs or free. Everyone’s happy.
Who will take the first step with Twitter (that’s an SMS application – should be pretty simple stuff)? How about Pandora? Maybe even an ESPN 360 or CBS March Madness guarantee. It’s a “make or break” strategy that could create billions of value – who will be first?
Jim Patterson is CEO & co-founder of Mobile Symmetry, a start-up created for carriers to solve the problems of an increasingly mobile-only society. He was most recently President – Wholesale Services for Sprint and has a career that spans over eighteen years in telecom and technology. He welcomes your comments at [email protected]