Walled gardens and the mobile Web

Larry Borsato — Fri, 28 Mar 2008 12:28:17 -0700

How useful would email be if you could only send a message to someone else who used the same ISP? It would be pointless -- imagine, a Verizon customer being unable to send an email to an AT&T user! Who would ever design such a communication system?

Yet when mobile phone companies implemented text messaging on their networks less than a decade ago, that's exactly the type of framework that was developed. A Verizon user couldn’t text an AT&T user. Only recently has cross-network texting been enabled.

Nevertheless, when it comes to other types of mobile applications, developers must still deal with the specific limitations of each carrier. Every first-year software engineering student understands the value of standards. Why has the importance of standards continued to elude the carriers?

Control and greed are the reasons, and it’s killing the mobile market. While penetration is fine and plenty of phones are being sold, the uptake of new mobile applications has stalled.

Compare this state of affairs to the rise of the Internet. On the Internet, low connection costs combined with open standards has spawned an explosion of new applications and technologies. And this explosion has in turn driven even more Internet use, and created more new customers for the ISPs.

Interestingly, the ISPs have responded not by increasing network capacity, but by complaining that users are consuming too much bandwidth (even though they originally promised "unlimited" usage for many of their plans). Providers have throttled applications, suggested tiered pricing, and in some cases simply cut off users who exceeded arbitrary limits.

With telecom consolidation, those ISPs are now in many cases the same folks who run the mobile networks. They include AT&T and Verizon in the United States, and Bell, Rogers, and Telus in Canada. They are chasing the holy grail of the mobile phone world -- maximizing ARPU (average revenue per user). This basically means charging as much as possible for the services provided. In that sense, it’s not unlike what they are attempting to do for their ISP businesses.

In the mobile realm, the service providers have limited what handsets can do. They are locking out features and locking in customers -- in other words, exerting absolute control over what customers are allowed to do with their own products. And in the process, they are killing the possibility of achieving an Internet-like explosion.

Rather than learning from the factors that drove the growth of the Internet, they have instead built competing applications that only work in the walled gardens of their own networks. Some of them seem to think that the peak mobile experience is being able to watch video on a phone, as opposed to being able to access email or browse the web efficiently. Moreover, the phones that are available to the public are tailored to what the carrier wants subscribers to be able to do, rather than what they might want to do.

When the iPhone came out with a decent Web browser and a relatively low-cost data plan, it gave customers more options. Google noted that it was seeing 50 times more searches from iPhones than from any other handset -- a clear indication that other service providers do not understand what people really want to do with their phones. While Apple has often been accused of taking a walled garden approach themselves, they do adhere in most cases to standards, and they do provide an SDK for the iPhone so that third parties can develop their own software, providing even more customer choice.

The pattern is clear. Most service providers have only themselves to blame for keeping the mobile Web from taking off. What will it take for them to understand that knocking down the walls will lead to more satisfied customers and even greater mobile usage?

Related news, commentary, and predictions:

Prediction: Apple rolls out mobile videoconferencing on iPhone
Prediction: More than 200 applications available at iPhone App Store launch
Prediction: The next iPhone - release date not before August 2008
Prediction: Motorola finds buyer for handset business
Prediction: FCC greenlights Google white space plan
Larry Borsato: ISPs, the music industry, and the Web
Larry Borsato: Communications: Is price all that matters?

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Walled gardens and the mobile Web