Lars updates us on the Clearwire funding situation. They’re in an interesting position as a new technology and business model entrant, funded now by Motorola and Intel.
This is a really risky venture, because WiMax faces some tough implementation challenges. There are question marks over the design trade-offs of mobility (doppler tolerance), latency, power use and bandwidth. Other technologies are snapping at its heels: xG, Flarion, IP Wireless, etc. — not to mention the standard 3G/CDMA roadmaps. Motorola’s dual role as handset maker and equipment vendor may cloud other technology, partnership and investment decisions.
[Disclosure: Err, I’m NDA’d. But assume I’m guilty of something and we’ll leave it at that.]
Nonetheless, it offers the fascinating possibility of seeing re-verticalisation in the industry driven by the vendors of the “edge equipment”.
Given the operators are busy colluding to squeeze the rest of the value chain, it could be time of the rest of the value chain to fight back. Hard.
I know from personal experience that the handset makers are frustrated, and know that much more exciting and interesting services are possible once you get the slothful mobile operators out of the way.
So, one possible scenario is this. Apple, Nokia, Samsung, Motorola, Intel, etc. club together and buy up a whole bunch of spectrum in the upcoming auctions popping up all over. The release of TV spectrum is going to be a big opportunity for change.
This spectrum is put into some kind of trust or special entity that has checks and balances to ensure neutrality to those using it. A wholesale maket is created in connectivity on top of it. This will enable a number of parallel models; spectrally-efficient voice-only channels, best-effort IP, IMS, Internet, private corporate nets, whatever.
Then you engage in a kind of “reverse MVNO” where you invite existing MNO to do the dull billing, support etc. for you whilst the revolution of new devices rolls out. Marketing stays with the handset vendors. Prices are lowered, volumes are high, and the handset makers get to play NASDAQ Celebrity Deathmatch.
It’s simple economics. Make complementary goods cheap, and substitutes expensive. Connectivity is a complement to consumer electronics. The ideal price for connectivity, if you’re a handset vendor, is zero where possible!
This could release some really interesting new stuff. Why, for instance, doesn’t my handset talk directly to your handset (like a walkie-talkie) when we’re in range of each other? “Mesh-lite”. It’s because it doesn’t generate a billable event. Likewise, Family Radio Service doesn’t appear in any mobile chipsets, despite costing pennies. Indeed, if we’re going to get to see the benefits of “mesh heavy”, the winners might me “Motonet” and “NokiaConnect”, and that’s not going to happen if the existing operators are in the way. Anyone for an iPhone? Not as long as Apple are beholden to a telephony system that would try to charge you for caller ID and an unlisted phone number.
Perhaps we’ll see several different parts of the value chain trying varying degrees of collaborative vertical integration to eliminate distribution bottlenecks. Generally attempts to become more vertically integrated tend to founder for lack of competence and comparative advantage at the other stages of production. But in this case the operators are performing a co-ordination function of stopping us stomping on each other with our wireless communications. The rest if fluff designed to extract a huge amount of money for doing not a lot. That co-ordination function could just as easily be done by the makers of edge devices. For instance, wi-fi works, because you simply can’t easily buy a device that breaks the rules. (Although if you jam a peanut in the interlock on your kitchen microwave, you can have a lot of fun and frolics…)
Who knows, just enjoying the summer sunshine and multi-billion dollar corporations fighting it out to the death. Random aimless musing, nothing of substance. Move along, please.
Posted by Martin Geddes at 07:45 PMTrackBack URL for this entry:
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Interesting thoughts. Much the same result is achieved if handset vendors, as well as some Internet Service Providers, got together to form a communication 'facilities' consortium.
This would be similar to corporate Open Source initiatives, like Eclipse. It would lead to a platform organization and product that is necessary to facilitate their business (connectivity and bit pipes), but not core to their value proposition, and would of course, contribute further to commoditizing simple connectivity. The consortium would then 'own' the expertise required to build and manage the communications utility, while members would be free to focus on how best to exploit these faciities and offer powerful new applications and services to their customers.
Of course, how would the mobile vendors do this without pissing off their key channels today? Oh well, it was a nice thought ...
Posted by: at July 18, 2006 08:41 PM