Archive for the ‘Big Bell Dogma’ Category

Whither Isis? Is Big Bell Dogma a dead dog strategy?

Wednesday, May 4th, 2011

Today’s news is hardly surprising. I think Fierce’s Mobile’s Sue Marek describes the news better than I could:

Less than six months after AT&T Mobility, Verizon Wireless and T-Mobile USA announced their mobile commerce initiative, called Isis, it appears that these major players are already starting to rethink their ambitious plans.

Today the Wall Street Journal is reporting that the operators are scaling back Isis, which they had originally hoped would compete with Visa and MasterCard and instead have decided to set up a mobile wallet.

Interestingly, this new mobile wallet plan sounds very similar to what Sprint Nextel has been doing. If you recall, Sprint was noticeably absent from the Isis joint venture. The operator said at the time that it was not interested in competing with the credit card companies and didn’t want to be part of a proprietary system. Instead, the company unveiled a mobile wallet solution in November that enables customers to use buy physical and digital products directly from their phones, entering a universal PIN code and billing purchases to their existing Visa, MasterCard and Amazon Payments accounts. Sprint’s Mobile Wallet is not a carrier billing mechanism, instead the company calls it a “container” for on-the-go customers to leverage traditional payment methods.

It appears that AT&T, T-Mobile and Verizon Wireless are taking a cue from Sprint. The WSJ article says that Isis is in talks with Visa and MasterCard and others to see if they will participate in this mobile wallet initiative.

Here’s what I had to say about Isis back in December:

Isis is a perfect example of Big Bell Dogma. Carriers think they can do a better job than Visa, Mastercard, American Express, and others in the payments ecosystem, so they invest billions to try to replicate capabilities and compete with existing players rather than focusing on what carriers actually do well and enabling the existing players and nimble startups to leverage the carrier’s infrastructure to bring real value to consumers. Carriers have been trying to do that for over a hundred years in different industries. Sometimes they get lucky and succeed, but most of the time it’s a miserable failure.

Does this Isis abandonment point to the death of the Bell’s “Big Bell Dogma” strategies?

I hope not. As I concluded in that December post:

Maybe I shouldn’t be trying so hard to put an end to Big Bell Dogma. Instead, in the short term, Sprint can enjoy the benefits of being the best partner for everyone else in the ecosystem, and in the long term, we all can enjoy the fruits of Big Bell Dogma’s glorious failures.

So, as the Big Bells continue to compete with their customers/partners in home security and social coupons, all I have to say to everyone in the ecosystem is: if you want to move at carrier speed, go talk to the big bells and wait for them to enter your market and compete with you. If you want to move at silicon valley speed with a true partner focused on mutual success, come talk to Sprint.

“Improving the Customer Experience”

Wednesday, April 27th, 2011

This week, I participated in the VentureBeat Mobile Summit. The tagline for the event was “30 hours. 180 executives. 5 key issues in mobile.” The concept was to bring together the most influential people from across the mobile ecosystem to wrestle with some specific issues that will need to be resolved for all of us to enjoy the full potential growth of the associated opportunities. A worthy goal and an interesting approach. VentureBeat plans on publishing a manifesto at their MobileBeat event in July to capture the outcome of these discussions and debates.

In between working sessions on the topics, VB’s Matt Marshall played MC and moderator for a collection of short keynotes and fireside chats. Although counter to the event concept of working alongside others from the ecosystem, it provided a more comfortable format for large incumbents who are more adept at talking at the ecosystem than talking with the ecosystem. Verizon Wireless and AT&T each had one of these fireside chats with Matt.

Matt kicked off the event acknowledging that we’re in the midst of a revolution and referred to the event participants as the revolutionaries who are reinventing how the world works. Based on the comments from Verizon and AT&T, I’m not sure these companies are all that interested in revolutions that challenge the status quo. Of course, they’re perfectly happy with evolutionary steps that increase their power over the ecosystem.

On Monday evening, Nicola Palmer, VP of Network Operations for Verizon, spoke mostly about Verizon’s impressive nationwide launch of LTE last fall and their continuing work to strengthen and expand that network.

She talked about the massive data growth that is happening and predicted that video would drive 68% of mobile traffic by 2014. (I’m not sure if these are Verizon numbers, or from Cisco’s model, or another source – there was no credit given on the slide she used.) She mentioned that when advanced smartphones moved onto the networks, all carriers saw big jumps in data traffic. For Verizon, that was Android, while for AT&T, it was the iPhone. And now that “everyone” has “everything” (referencing Android and the iPhone), we’ll continue to see this growth in data traffic. (Apparently, in Verizon’s eyes, the U.S. market has already shrunk to the two carriers that carry the iPhone.)

Matt asked her if openness is a differentiator for Verizon. Nicola said that the differentiator for Verizon is network reliability, but said that the fact she’s speaking at this event is an indicator that Verizon sees value in enabling the ecosystem. “We wouldn’t have bothered coming to an event like this two years ago.”

Someone asked her about Verizon’s use of femtocells. She said that Verizon’s use of femtocells is focused on the home and that they are using other technologies and approaches to manage data growth, including data optimization and data management in the network. “When we move to metered billing – I think everyone recognizes that the era of unlimited data is over – users will welcome data management. Metered billing will turn everything on its head. Users will need to think differently. App developers will need to develop differently.” So, in other words, Verizon subscribers will welcome data management with open arms because it will improve their customer experience (I assume by hopefully reducing the incidents of huge data overage bills).

I know from her comments that Verizon doesn’t see Sprint as worthy of notice, but if she would care to listen, we actually don’t think the unlimited era is over. We’re going to do everything we

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can to be able to profitably offer unlimited data plans for our smartphone customers. We believe that “unlimited” is the experience customers really want.

It’s just a hypothesis, but my guess is that Verizon (and AT&T, who is actually leading this charge) see metered billing as a lever to return to the Big Bell Dogma heyday when carriers kept a stranglehold on innovation in the mobile ecosystem. Metered billing is a barrier to folks using mobility for everything. It forces people to stop and ask “Should I do that now, on my mobile device, or should I wait until I get home or to the office where I can use my (monopoly profit for the Bells) wireline service?” It puts the carriers in the strong negotiating position with app developers and service providers. If providers want to stand out by making it easy and affordable for mobile users to use their apps and services, they’ll need to come to the carriers for help. The euphoria that permeates events like this Mobile Summit because of the unfettered growth in the mobile ecosystem, and the opportunity to earn attractive returns across the ecosystem, may be threatened as the Big Bells try to roll back the clock to the pre-iPhone era. This should be interesting to watch.

On Day 2, AT&T had their fireside moment, with John Donovan, the carrier’s CTO, jokingly wary of Matt Marshall’s questions. Donovan focused his prepared remarks on the very remarkable progress that AT&T has made in opening up to developers. But Matt quickly turned the focus of his questions to AT&T’s planned acquisition of T-Mobile.

Again, the answer to all questions is “improving the customer experience.” John said that the merger will “improve the customer experience” by addressing AT&T’s network quality issues, extending the network, increasing grid density and network capacity. When Matt asked him about whether the deal would stifle innovation, John said “the deal won’t stifle innovation, in fact innovation benefits will expand, not contract.” I’m still trying to figure out the logic behind that claim.

An audience member asked about AT&T’s strategy for mobile payments. Donovan confirmed that Isis is AT&T’s primary strategy for mobile payments. Of course, Isis is the perfect example of how the Big Bells want to put a stranglehold on innovation and return to the good old pre-iPhone days. In fact, in a separate discussion, a different AT&T participant refuted someone’s expectation that dozens of mobile wallets would start appearing on smartphones, by saying “We won’t allow that. We learned our lesson from the iPhone, which opened it up way too much. It was good for the users. It was good for the ecosystem. It was good for Apple. But it was bad for the carrier. We left a lot of money on the table, and we won’t let that happen again.”

So much for “improving the customer experience”…

AT&T + T-Mobile USA?

Wednesday, March 23rd, 2011

A couple of days have passed now since AT&T’s industry-changing announcement.

Sprint’s official position is clear:

The combination of AT&T and T-Mobile USA, if approved by the Department of Justice (DOJ) and Federal Communications Commission (FCC), would alter dramatically the structure of the communications industry.

AT&T and Verizon are already by far the largest wireless providers. A combined AT&T and T-Mobile would be almost three times the size of Sprint, the third largest wireless competitor. If approved, the merger would result in a wireless industry dominated overwhelmingly by two vertically-integrated companies that control almost 80 percent of the U.S. wireless post-paid market, as well as the availability and price of key inputs such as backhaul and access needed by other wireless companies to compete.

The DOJ and the FCC must decide if this transaction is in the best interest of consumers and the

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U.S. economy overall, and determine if innovation and robust competition would be impacted adversely and by this dramatic change in the structure of the industry.

I won’t comment further, but I’m curious what others think. Feel free to leave your comments.

Big Bell Dogma: February 2011

Monday, March 7th, 2011

Big Bell Dogma is the innovation stifling mindset, most often seen in large market-dominating companies, where the big company protects the status quo, tries to control what happens in the ecosystem, and believes they can perform tasks better than others in the ecosystem who specialize in that function. Big Bell Dogma hurts consumers, hurts the ecosystem, and slows market growth, but sometimes results in higher profits for the big companies. Here are recent examples:

Big Bell Dogma: January 2011

Wednesday, February 2nd, 2011

Big Bell Dogma is the innovation stifling mindset, most often seen in large market-dominating companies, where the big company protects the status quo, tries to control what happens in the ecosystem, and believes they can perform tasks better than others in the ecosystem who specialize in that function. Big Bell Dogma hurts consumers, hurts the ecosystem, and slows market growth, but sometimes results in higher profits for the big companies. Here are recent examples:

Big Bell Dogma: December 2010

Monday, January 3rd, 2011

Big Bell Dogma is the innovation stifling mindset, most often seen in large market-dominating companies, where the big company protects the status quo, tries to control what happens in the ecosystem, and believes they can perform tasks better than others in the ecosystem who specialize in that function. Big Bell Dogma hurts consumers, hurts the ecosystem, and slows market growth, but sometimes results in higher profits for the big companies. Here are recent examples:

Big Bell Dogma: November 2010

Thursday, December 9th, 2010

Bonus: Brough Turner shares “My Frustration with US Broadband

As we work to build mobility into every product, service, and process, our greatest inhibitor is the mindset represented by those who defend the tethering of products and processes to specific places. This mindset is fueled by the investments that have been made that establish power in the companies, departments, and individuals that stand in the way of mobilizing our lives and our businesses. These investments are not always in hard assets, but often are investments of time and experience to establish intellectual and relational assets. We should expect our assault on these ways to be defended to the death. Here are recent examples:

Apple suffers from Big Bell Dogma

Thursday, October 28th, 2010

On Tuesday, I participated in the Connected Planet 4G Salon. My first slide showed two paths the mobile operators could pursue. The starting point was 2006 (specifically chosen as the end of the pre-iPhone era).

One option is what I refer to as the “Big Bell Dogma” path. This path involves making every decision with one goal in mind – maximize control over the ecosystem which allows the operator to maximize its share of the revenues in the ecosystem. This path forces innovation to happen at “carrier speed” and the result is constrained ecosystem growth. As I’ve described before, Big Bell Dogma is named to represent the mindset that telcos have held onto ever since Alexander Graham Bell invented the telephone in 1876 and was really at its prime in the old monopoly AT&T days. However, all carriers suffer from Big Bell Dogma to some extent – some more than others.

The second option is the one I referred to as the “Open Enablement” path. This is the path that Sprint has chosen, perhaps as best represented by our hosting of our 10th annual developers conference this week in Northern California. On this path, every decision is considered with the goal of maxmizing ecosystem growth. Operators must ensure that they’re adding value, both to accelerate growth but also to make sure that our added value translates into an earned share of the revenue in the ecosystem. Along this path, innovation happens at “Silicon Valley speed.”

Later, during the Q&A, someone from the audience asked how Big Bell Dogma was different from Apple’s approach to managing the ecosystem.

That’s an excellent question and the reality is that Apple suffers from Big Bell Dogma. They want to put constraints on how innovation can happen so that they dominate the ecosystem and extract the most value.

The difference is the starting point. Unlike mobile operators, Apple really is an innovative company. They understand the “hits-based” nature of the software industry and therefore the need to enable lots of apps to enter the market so that a few can really make a difference, so they gave application developers the basic capabilities that had previously been missing to allow the app ecosystem to explode. However, on every other dimension, Apple has kept the clamps on, constraining innovation to happen at “carrier speed.”

Unlike Apple, Google has allowed the Android ecosystem to innovate in all dimensions, and even in the app ecosystem, Google’s lack of constraints is winning over developers.

Think about it – Apple makes great handsets. But they introduce one new iPhone handset a year. How much real innovation is represented in that one handset? Only as much as one company can imagine and productize. Now think about all the different Android handsets you’ve seen and the level of innovation that handset OEMs are bringing to market. Consider just the HTC Evo: kickstand, front and rear facing high resolution cameras, HDMI output, 4G network connectivity… Now multiply that by the innovation that Samsung, Motorola, LG, Sanyo, and all the other innovative handset manufacturers that are out there can bring to the table.

Think about it – here in the U.S. Apple has limited the iPhone to one carrier. How much innovation has that operator delivered to customers since 2007? In that time Sprint alone has rolled out 4G nationwide (in 2 months, Sprint 4G will cover 120M people), introduced the first all inclusive unlimited plan (Simply Everything), Ready Now to help customers actually make full use of their advanced devices, Any Mobile, Anytime, and the Sprint Free Guarantee, just to name a few. I imagine T-Mobile and Verizon have each had some innovations as well. The Android ecosystem benefits from these innovations, but the iPhone ecosystem doesn’t.

And even within the application segment, the Android ecosystem can enjoy growth-accelerating innovations, like Sprint ID, which would never be allowed by Apple as they seek to rule the app ecosystem with an iron fist…

Apple makes great products and back in 2007 they gave the entire ecosystem a fast start with the (previously unmatched) enablement they provided to application developers, but they are definitely playing the Big Bell Dogma game.

Big Bell Dogma: September 2010

Friday, October 1st, 2010

As we work to build mobility into every product, service, and process, our greatest inhibitor is the mindset represented by those who defend the tethering of products and processes to specific places. This mindset is fueled by the investments that have been made that establish power in the companies, departments, and individuals that stand in the way of mobilizing our lives and our businesses. These investments are not always in hard assets, but often are investments of time and experience to establish intellectual and relational assets. We should expect our assault on these ways to be defended to the death. Here are recent examples:

Big Bell Dogma: August 2010

Thursday, September 2nd, 2010

As we work to build mobility into every product, service, and process, our greatest inhibitor is the mindset represented by those who defend the tethering of products and processes to specific places. This mindset is fueled by the investments that have been made that establish power in the companies, departments, and individuals that stand in the way of mobilizing our lives and our businesses. These investments are not always in hard assets, but often are investments of time and experience to establish intellectual and relational assets. We should expect our assault on these ways to be defended to the death. Here are recent examples: