Telepocalypse

Found you!

Cellular carriers are struggling to see how to integrate WiFi into their mobile data product offering. Is it a complementary or substitute product?

The thing about cellular is that it has asymmetric value. Incoming calls are more valuable than outbound ones. Why? Because there are plenty of substitute ways of making outbound calls most of the time — desk phone at work, home phone, e-mail, call box in the street, borrow someone else’s cell phone. But there is no substitute product for “send this voice message to Martin wherever he may be right now”. (For an illustration of this, see the failure of Hutchinson’s Rabbit network in the UK in pre-cellular days: it only allowed outbound calling.)

And that “find the user” capability is wired into the lower layers of the network architecture through a home agent switching service.

Now WiFi isn’t a very mobile technology. In end-to-end fashion, any “find this user” capability is built into the end points via things like instant messaging presence servers, dynamic DNS lookups or mobile IP. There’s nothing smart in the network itself to support mobility. So it’s philosophically very different in how the value is dished up. The core “find the user” function is freely available independent of the connectivity, so there’s less to charge for.

Even worse from the cellular operator’s point of view, the WiFi connections are not under carrier control. So you can’t filter and meter, unless you lock down the device. But consumers may be unwilling to accept locked-down devices that run on their own connectivity. (Although DVD players and iPods suggest that rejection of lock-down isn’t always the case.) And if you can’t filter and meter, you can’t charge for the true value the customer receives. Cue usual dirge on business model collapse for telcos.