Why Derail the Mobile Revolution?

Call it a "Mobile Revolution."

This year's parade of cool new wireless products is beyond doubt the greatest, most diverse series of product launches in wireless history. Apple's new operating system (OS) and new iPhone are the obvious places to start, but look at everything else coming to market:

• Last month, Sprint introduced its Palm Pre, a touch-screen phone with a killer OS.
• Research in Motion is coming out with multiple new BlackBerrys this year, including an update to its touch-screen Storm.
• HTC and Motorola will come out with phones using the Android OS.
• LG, which brought out the Incite last fall, has another high-end handset scheduled for November.

Samsung and Nokia are also rushing out smartphone products, while Microsoft is nearly ready to unveil a new mobile OS.

Meanwhile, mobile applications have taken off like a rocket. "These days, it is all about the apps," writes Jenna Wortham, tech reporter for The New York Times. Even two years ago, the concept of mobile apps produced blank stares. Today, a PDA that doesn't have an easily accessible app store simply can't compete. Let the numbers do the talking: in just under a year, over one billion apps--and counting--have been downloaded from the iPhone app store.

This is the exciting backdrop that makes Sen. Herb Kohl's recent broadside against the wireless sector so downright puzzling. In a four-page, single-spaced letter, he makes no less than eight references to "barriers to entry" or "barriers to competition." Handset contracts between manufacturers and carriers come in for even stronger criticism, as Sen. Kohl calls these a "serious [emphasis added] barrier to competition."

We have great respect for the Senator and share his deep commitment to ensuring that all consumers have access to competitive, cutting-edge wireless service. But some of the concerns raised in his letter seem confusing and counter-productive since barriers to competition inevitably correspond with higher prices and stagnant product lines. Yet our smartphone choices are exploding while prices plunge. Two years ago, consumers would have paid $600 for an iPhone. Today, you can have a better one for $99 - a hefty 83% price drop (even if you factor in the higher monthly data costs on the new model, it's still a 63% savings). And a quick check on Amazon shows a dozen cool PDAs costing anywhere from $50 to nothing at all (yes, there's a one-to-two year commitment required so if you want unlocked phones with no commitment, click here).

Moreover, despite all the talk of removable SIM cards and the choices they offer European consumers, the fact is that the smartphone marketplace is far more diverse over here.

But don't exclusive contracts inevitably work against consumers? Nope - they simply force manufacturers to get creative with their products. Such partnerships are everywhere in our economy, spurring greater choice and innovation in what we can we watch on our television, in our movie theaters, the music we download on our MP3 players, and the hundreds of consumer products and brands we buy at various big box stores.

With so many Americans relying increasingly on their mobile devices for Internet access, these partnerships encourage investment and innovation and deliver even more powerful devices to consumers.

There's no doubt that the current smartphone revolution will do for mobile productivity what the PC revolution did for office productivity in the 1990s. A single smartphone generates more data traffic than 30 ordinary cell phones, which means vast new opportunities for business growth and job creation. Let's not derail the mobile revolution with unnecessary regulations that attempt to solve problems that don't exist.

Every day, we see announcements for new wireless devices and options. With so much competition in the sector and tremendous opportunities ahead in the wireless space, consumers are in the driver's seat of today's wireless sector and need to remain there in order to ensure continued innovation. So, fasten your seat belts - it's going to be a great ride.

Jonathan Spalter, chairman of the Mobile Future coalition, served as chief information officer at the United States Information Agency during the Clinton administration.

Comments

[Wansai Ounkeo]

continued...

I will be rather frank and say that this system is archaic. It was the system used for years when the mobile industry first started taking off and has been and is now phasing out in the rest of the world. Carriers decide which device features are or are not allowed and will not only interfere with these devices by bloating them up with imcompatible and unusable software, but features are also crippled.

Compare that with the rest of industrialised countries and we begin to see that carriers (in general)simply don't have the same kind of monopolistic powers that they do in America. Outside NA, we will see that people typically pay far less and have far more advanced subscripti­on/service plans than we do; on top of complete freedom to move to and fro carriers.

This is why it baffles me when trying to understand how the current system somehow provides more diveristy when it's actually the greatest flaw that hinders comptition and diversity.

I do agree with you that we're in exciting times... in North America. However we do need regulations...The best regulation we could have is regulation that strips control from the carriers and let devices and services fight it out; as is happening in the rest of the world. Whether anyone believes in our current system or not, it's a fact that our peers are enjoying better, more advanced services and doing it for much, much cheaper.

[Wansai Ounkeo]

There are a few issues that don't quite sit well with me here; and maybe it's simply because it is coming from a North America centric perspective.

1. Apps have been one of the major "features" of the mobile telecoms industry for a decade now, at least outside of the NA market. We saw a whole ecosystem during the Palm Pilot/PDA era and we still see it now with the bigger mobile OS, namely Symbian. However you are right that it isn't centralised. Or rather, it hsn't been centralised since the Palm Pilot/PDA era. That doesn't mean apps and related development communities are suddenly a resurgence.

2. I would have to disagree completely with the notion that the NA/USA market is more diverse for smartphones or even mobile phones. Apart from the iPhone, we're typically one of the last on the list to be launched for new products. And even when they do launch, the carriers have exclusivity to models they think will benefit their bottom line the most; which translates into heavy subsidies and locked-in customers, which translates further into device makers setting priorities to other countries first.

[jwil77]

The wireless industry was once dull and boring (just voice & text) and a phone for the rich. It has evolved into a dynamic space (mini-computers) and a device of necessity for all Americans. The competitive nature of the industry has spurred carriers, manufacturers, and app developers to new heights --- not the government. This is one of the few brights spots of the economy. Now is not the time to fix what is not broken.

[wisewomcat]

Welcome to the Huffington Post! Congratulations on making this your first comment!

LESS REGULATION!!! LESS REGULATION!!! Am I right?!

The financial industry wasn't broke until it broke...right? Why fix it until it breaks? Am I right?!

I'm reminded of our good friends in the American car industry. They fought legislation at every turn! And they were right on! By forging their own path on fuel economy, they became a true bright spot of our economy!! Am I right?!?!

The cellular market actually more reminds me of Microsoft and the browser wars. Microsoft bundled their own Internet browser (and crippled others) in their operating system, just like the iPhone ensures that you can only use it on AT&T's network. Clearly what is best for the economy is for customers to have very few choices...right? If you want this phone, you get this carrier. If you want that carrier, you can't have that phone. Limiting choices is hardly ever what is best for the consumer.

More likely, it's bad for them. Smaller start up carriers that might eventually rise to dominance are being shut out of the market because they can't sell the latest/greatest phone because the phone manufactures have signed exclusive deals with the large carriers. That is so clearly anti-competitive behavior, that I would be very interested in someone arguing that it isn't.

[wisewomcat]

Oh yeah, I thought I should also point out that the coalition you work for has AT&T as a member...which kind of makes me wonder if they aren't funding the entire organization.

AT&T is the company that signed an agreement that only they would be able to carry the iPhone.

Maybe I'm jaded, but today we live in a world where industries are constantly trying to convince us to serve their best interests. The healthcare industry spends $1.4 million a day lobbying our government to ensure that nothing changes in the healthcare world -- and if it does, that it goes in their favor, not ours.

Remember how the tobacco industry didn't know that nicotine was addictive? And they didn't know that smoking was bad for consumers?

Now adays, every time I see a corporation telling me what I should believe, I tend to believe the exact opposite.

[wisewomcat]

It seems like you provided a lot of links, but not one so that your readers could read Sen. Herb Kohl's letter for themselves. I searched for it, and found this:

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/06/AR2009070603526.html

In his letter, he apparently talks about the rising price of text messages. Did you know that with AT&T's pricing for Text Messages, it costs about $1,310 to send one megabyte of data? Do you think it costs the networks that much to transfer them?

http://www.techcrunch.com/2008/07/01/atts-text-messages-cost-1310-per-megabyte/

Seems like the crux of what the Senator is wanting is more competition in the market place. When businesses compete, consumers generally win. I understand that cell service providers invest in their infrastructure, and incur significant costs -- and so did Bell Telephone. There are models for sharing common infrastructure that cell phone companies should be able to follow.

I for one, hate the fact that I'm going to have to switch to AT&T or Sprint to get the HTC Hero when it comes out here in the states (yeah, it's already out in the UK, on Orange's network...so maybe the UK model is working better?). Why is it that I should have to switch from Verizon (which by far has the best service) to use the cell phone of my choice? It's silly, and I personally think it should be changed.