Cheers and Jeers for Mobile without Numbers

My article “The Future of Mobile – without numbers” created a large reaction.  I received a full inbox worth of cheers and jeers.  For those who cheered, I say “thanks.”

comedy-tragedy-maskFor those who jeered, I say, “Thank you very much!”  I have always believed that when people challenge your thinking and your logic, you have the opportunity to learn and make your own arguments better.  With this in mind, I have created a couple of broad categories of challenges from my critics.   (If you have not read the original article you should first check it out with this link)

 These areas are:

1-The sociological, technological and economic feasibility of my hypothesis that social networking and VoIP will fundamentally change the mobile industry

2-What should the Wireless Service Providers do to counter this threat?

Item 1:

To explain and expand on my logic more fully it is useful to look at some history.

What was the key invention that made the Internet a global phenomenon?

It was not TCP/IP, or browsers or even Google.

barilan_internet-thumbThe key invention was the Domain Name Server (DNS).  DNS translates a domain name to an IP addresses.   It is much easier to remember www.nytimes.com, instead of its IP address (170.149.173.130).  DNS servers are continuously updated around the globe as Internet services switch IP addresses; add new destinations or new web services are created.

DNS is also what makes email possible.

Prior to global DNS services the translation of a name to an IP address took place (if at all) in the equivalent of a local address book on your computer.  You would update this local file with new IP address/Web name pairs as you discovered them, with the obvious problem that your local address book did not automatically update to track changes.

 Does this sound familiar?        

For nearly 100 years telephone services have been in the local address book mode.  As a telephone subscriber, the implied requirement was for you to carry your own version of a local DNS in your pocket. Antique telephoneYour phone contacts would only update if you physically made a change to your address book.

The phone company would issue all subscribers a regional, printed, version of DNS on a yearly basis, the big phone book.

This fundamental use case did not change until the introduction of phones with imbedded contact lists.  With embedded contact lists you could scroll through a list and click to call.  This feature eliminated the need to dial or punch all the digits yourself, but was still limited to your personal updates.

Prior to the ability to look up and retrieve phone numbers for people and businesses on the Internet, the only global DNS equivalent for telephone service was “411”, information service.

The use case for smartphones is the start of a fundamental change.  With their larger screens and easy keyboard entry, you just type the name of the person you want to call and press send.  The connection with the phone number is further eroded.  The contact list still, however, must be maintained personally, just like our Grandparents did with their paper versions.

I can still remember the phone numbers from my friends in high school, but have to look up my kids’ numbers.  The reason is that I never use my kids’ numbers; I just type their name.

The ability to take your phone number with you when you change providers (landline or wireless) was a big boost to the manual updating of address books.  This was made necessary because of the lack of Global DNS in telephone service.

The emergence of large, ubiquitous social networks is the final missing puzzle piece that will finally alter this 100-year pattern and make phone calling similar to typing “nytimes”, instead of its IP number.  These social networks provide several key elements.

They are a collection of your friends, family members and business associates.  Your network(s) contain the majority of people you need, or want, to communicate with on a regular basis.

fhw1uoifmega5hwmediumSecondly, your networked friends should give you permission to view and have access to their actual phone numbers.  This access will give you the equivalent of global DNS for your contact list!  The updating of the phone numbers will no longer be your responsibility, but the responsibility of your friends.  This is the same scenario as a Webmaster updating their web services IP address for DNS.  Even if Voice over IP (VOIP) services do not emerge as a dominant mobile trend (I believe they will), then the social network aspects will be a major force unto themselves.

So, at least to this point the logic is that Social Networks = Global DNS.

The last aspect of social networks is that they can easily provide an “always connected” status.  This is the way instant messaging services (AOL, MSN, Yahoo, Skype) work today.  This always-connected feature creates a direct IP path between any two (or more) members.  If you have a direct IP path, you can easily create voice and video communications services.

The combination of social networks providing DNS-like service and IP connectivity is the core of the technological argument.  The fact that the Internet has trained a large segment of the world to access sites and services by name, instead of by IP number is my proof point that there should not be a sociological issue with my scenario.

The economics of this scenario are more difficult to predict.  I agree with those who said that the social networks and VOIP providers such as Skype would not run a global communications network without significant revenue and profit.  The issue to consider is:  Have the economics of providing a significant portion of this service forever altered in a significant manner?

VOIP service for home or business is significantly less expensive for the consumer than a direct-wired solution using 100-year-old twisted pair telephone technology.  The ease of provisioning and maintenance, and the lower cost of transmission and billing, has changed the economics of landline services.   It is less expensive to transmit and manage a very high bandwidth data path using Internet technologies, than to maintain individual transmission paths.  

Why not the same for mobile?

Item 2:  What should the Wireless Carriers do?

If I were the CEO of a major service provider I would execute the following strategy:

vzw_logo_1024Recognizing the importance of the trends that I discussed, the game that is now being played puts this mobile carrier at a structural disadvantage.  If you think you are going to lose at the game that is being played, you change the game.

The Carriers should obtain their own DNS service for their subscribers that updates continuously and allows for one click friend calling.  This service should be a collection of the key social networks.  

The Carriers should Interface/partner with Facebook, LinkedIn, etc and create a superset DNS of their subscribers’ contacts.  Then they should build the social networking application(s) directly on the phones to permit IM, voice, and video communications. The existing mobile numbers can be used as the equivalent IP addressing scheme.  The integration with the social networks will also permit contextual communications as the subscriber has access to their friends profile and status.

The strategy of partnering with the social networks for calling DNS functionality and contextual communications would create tremendous value. 

The marketing possibilities for a Wireless Carrier with this strategy are huge.

If this strategy was implemented by just one carrier (Verizon for example) then they could market to your friends list to switch and get In-Calling rates (free) when they call each other.  If 98% of your calls were within your social networking contacts, then it would make sense for that group to be on a single carrier.

The Carriers have tried viral marketing in the past with In-Calling and T-mobiles Fav-5 program.  What I am suggesting would be many orders of magnitude more impactful.  The first carrier that figures this out and executes will steal many of their competitor’s subscribers and really change the game.

The last issue for the Carrier strategy section is to counter the VOIP threat.

My strategy would be to embrace and profit from it.   There are two obvious moves to capitalize on mobile VOIP.  First, follow the strategy of the landline providers by creating your own VOIP mobile service that utilizes your connections into the social networks.  You can have a flat monthly fee for VOIP calls.

Secondly, you can also provide a “bring your own VOIP” service plan.  The Carrier would charge a lower monthly fixed fee that would reflect their lower costs in servicing these 3rd party subscribers.

theatre_and_the_internet

Over the past five years the bulk of new mobile service investment has been on mobile data applications. Mobile  voice services have not evolved beyond the basic voice call, callerID, voicemail stage.  This is the opportunity to merge the data application investments directly with the core voice service.

The real issue for the Wireless Carriers will be in the recognition of this threat and the real opportunity that this fundamental disruption in the market it creates for a first mover to capitalize on the changes and redefine how people communicate.

I hope I have addressed many of the Jeers that I got last week.  I welcome your comments on these expanded explanations and logic!

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3 Comments

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3 responses to “Cheers and Jeers for Mobile without Numbers

  1. Pingback: The Future of Mobile - Without Phone Numbers « Mobileman

  2. Schorsch

    First of All – I really like your visionary way of thinking ! I have one agree and one disagree.

    1) agree – Use of SN as connected global phonebooks with the help of carriers (and maybe manufacturers to integrate into the native phone book) makes absolutely sense and will happen, this is for sure 🙂

    2) disagree – i really doubt the technology side of your vision. VOIP did not even succeed in the fixed line world. I have been watching this topic since the late 90ies, and have seen so many trials and initiatives, that finally have been withdrawn – just because of a lack in voice quality and stability.
    I worked in several companies who switched to a completely IP based telephony network. All back to regular voice service again. Why? Just because operation cost of this basic technology is so low, that saving this little money was not worth having the slump in quality of service.
    Same happened to SKYPE. When the service evolved some years ago, everybody was enthusiastic about it, pc connected headset sales skyrocketed. But after trying the service for some time, most of the users fell back to landline or mobile telephony. Why? Same matter: Lack in Quality of service (mostly in reliability – if the service is up, the quality is sometimes amazing, but i just dont accept some second “outages” within a 30 minutes call, if i can have it for 30 cents on a regulary landline phone)
    Where is skype today? Its popularity is still amazing, however growth rates decreased to a normal level. But what are people using it for?

    1) Text messaging, mainly in the business world (at least in my country, germany – just everybody uses it for business chat). What is more, private communication meanwhile also slighty moving from msn/icq/yahoo to skype.

    2) Calling /VOIP in selected usecases. When it comes to large distance calls, especially to/from emerging markets, that are expensive enough to compensate the lack in quality, people accept voip as a welcome alternative. But this is only a minimal fraction of global call minutes.

    3) VOIP within emerging markets with a lack in regulary telephony infastructure or outdated pricing models for calls
    –> also here: no big money to make.

    OK, what does this all have to do with mobile?

    Very easy 🙂 The QOS of mobile IP networks is light years away from todays broadband fixed line internet connections. If it doesnt work properly in this world, why the hell should it work mobile?
    For voice calls, the GSM/UMTS or CDMA technology has a couple of workarounds to resolve temporary network problems. They would have to work very close with VOIP companies and even cahnge their hardware near software in base stations to give VOIP over mobile networks the same QOS as their regulary telephony services.
    This could happen of course – but: What is the difference then compared to todays business model? The carriers would keep their part in the vlaue chain onad cuold charge for that – no matter if directly form the customer or from voip providers.

    I rather see a slump in voice call pricing over the existing technology down to a price level, where nobody takes notice any more.

    My 5 cents for a future business model for carriers:

    proving a stable voice + data network for a total flatrate price of 30€ /40$ in industrialized countries and maybe 20$ for emerging markets.

    The rest will be done by players like in the web world. But voice will still be voice and data will be data (maybe its all IP based, but the technology control lies within the operator)

    And nothing more. No carrier operated intelligent applications, services or content business models. Just dumb bit pipes.
    Of course, carriers can fire up to 70% of their upper management in this scenario. This will happen 🙂 If i was the CEO of a big operator i would go for this scenario and play the pricing card: Release all unnecessary upper/middle management and concentrate on providing stable voice/data connection for – without small print – reasonable flatrate pricing. And maybe add excellent customer service on a free number 🙂

    Then i promise to buy your stocks as long as my wallet provides cash 🙂

    cheers,
    schorsch

  3. The reason that I believe this scenario is not only plausible, but probable is that it allows unified communications where voice, video and data (email, SMS, etc.) can all be integrated for the user by application providers.

    I don’t buy the quality issue raised by Schorsch since VoIP, and before it proprietary digital voice communication technologies have been with us for years. PBX vendors have not built an Analog product using the classic 4K channel for decades. The first step was to use digital channels and VoIP in the pieces of the network that they had control over (i.e. from the handset to the PBX).

    As time and market structure allowed, the “gateway” moved further into the network, until services that provided QoS and signaling conversions for call set up and tear down came on the scene (SIP trunking, etc.).

    If you look at the growth of open source and VoIP based products for business communications like Digium/Asterisk, SugarCRM, etc., you will understand why the economic model can be turned upside down. With hundreds of thousands of downloads, and tens of thousands of active PBX user/developers, Digium has features and applications at their disposal that have been defined and developed by their “customers”. Talk about “voice of the customer”! As a result, they have fewer marketing folks telling R&D what the customer wants, and fewer developers coding features.

    The key issue is how the economic model changes to support the change in the technology & development model. In the open source environment, the “vendor” brings in revenue by supplying not only the “free” version, but also the “tested” and “certified” versions of the product. These products are available at significantly lower cost to the user based on this low cost business model.

    As far as QoS, this will be done using a combination of methods including continued improvement of the technologies, but more importantly by using networks that are deterministic and managed. This is why VoIP over a pipe that you lease from a service provider that manages their IP network provides better quality that an Internet based Skype connection.

    There is a place for both based on what users need and are willing to pay for quality services.

    I love the notion that Verizon, et al should embrace this. After all, they are in the position to work out a profit model that rewards them for their investment in wireless channels, and can lead the way to lower cost networks by changing the complex signaling model.

    Whether they can turn the battleship or not is the key question.

    In another life, I worked for AT&T and proposed flat rate billing plans vs. $.10 per minuet for LD. I was quickly told that I did not understand, and that “a penny drop in the price of LD meant a two penny drop in earnings per share”. Although there is still a company using the name “AT&T”, the AT&T from back in the early 1990’s does not exist anymore.

    I have no doubt that we will see all IP Unified Wireless Communication in the future.

    The issues are simply when?, from who?, and at what cost?