Stars and Striped Packets


Although I am an occasional visitor, I only noticed Tim Bray's last post on walled gardens because despite being a few thousand Kms away from David, we tend to look at each other's RSS feed now and then.

And following up on yesterday's events, it was like "Duh? Again? What closed garden?". It's like there is some sort of AOL trauma over there. Like David put it, there is no such thing as a walled garden, and keeping in touch with people around the globe, I am sorely tempted to say that this insistence on the topic is an American thing. It probably has something to do with that unsurmountable urge of ensuring freedom of choice, freedom of speech (and, in some circles, an altogether different kind of freedom) at whatever cost.

It's laudable. It is a positive attitude, and would probably be the US' best exportable meme if we didn't get all those soft drinks, sneakers and TV series already.

But it would probably benefit from a little more perspective. For instance, allow me to go over Tim's formula for making money beyond what he assumes to be a walled garden:

Open Clients

Using whatever kind of phone you like. Er... was there ever any question about that? The only difference between branded and unbranded phones is... guess what? Branding. You get the menus preconfigured for you. You can change the settings, the homepage, download whatever you want. The phones are no different.

I could go on and on about why judicious branding and identical icons and menus across phone platforms improve the user experience, but I would think that's obvious by now, especially since it's amply covered by the press.

Tim is right, and remember that I agree with him - he just appears not to know how things are being done over here, and my guess is that his post is as much of a message to US operators as he can write in his position, and not just regarding this topic.

Open Networks

No issues on this side of the pond. I'm not into service partnerships anymore, but David happens to be working the standards track in a lot of public specs, and my job is not really much different (although 99% of it is internal, and more focused on planning). Again, like the "Think Globally, Act Locally" point I made yesterday, it just makes sense. Open networks also mean lowered operating expenses, easier swap-outs of standartised network nodes (for capacity upgrades or technology updates), etc.

Applications and services dance to the same tune, and there isn't a single service out the door that doesn't follow 3GPP specs as close as possible (or IETF, or W3C, etc...). Standards in the telecomms world are a wholly different story, because things are built to last decades, not the couple dozen months of an Internet bubble - fads waste a lot of money that is needed for infrastructure buildouts.

So if mobile networks seem to be evolving slowly, there's a big part of the answer: there needs to be solid footing for them to do so.

Pricing Models

Yes, bandwidth should be cheap. I agree. But what people keep forgetting is that the mobile business is a very expensive one. I'm not going to go into the usual journalist fodder of 3G license pricing - there are plenty of countries where the cost was zero (or close enough to make no difference), and it's only an issue for those people who stop reading news stories after the headlines. The real costs revolve around capacity, coverage, and technology refresh (that's where new services come in, but they're only part of the story).

And guess what, costs won't go away anytime soon. Although per-site rates have obviously gone down since the GSM days (it doesn't take a genius to factor in site re-use and lower unit costs for some nodes due to more modern technology), there are more and more 3G sites up every day. And it seems obvious to deduce that those costs will have some influence (however indirect) in service pricing, and that capacity has to follow demand. It's a feedback loop. It's also non-linear and prone to regional assimetries.

It also drives outside analysts crazy, because they want nice, orderly figures, and a weighted average doesn't cut it. So they do what analysts do - they estimate, and often come up with entirely wrong numbers for what they think should be the CAPEX and OPEX values of their "ideal" telco.

(I just know people will latch on to this as an excuse to cry out and say "there's gold in them phones!", but bear in mind that shareholders' expectations must be met, and that this is yet another of those "half full or half empty" arguments.)

Well, there ain't no free lunches - infrastructure has to be paid for, especially when you're not an incumbent operator and can't enjoy the benefits of a comfortable head start in laid lines. And there are plenty of other factors that I won't go into. My point is that I happen to think that, on the whole, the balance is on the consumer's side, and it's only going to get better.

Services and Partnerships

Tim's post had a particular Sun touch to it in these topics. Which it should, mind you. Tim has a better overview of that field than pretty much anyone else in the industry, and he is absolutely correct in pointing out that there are a lot of opportunities in applications and services atop mobile networks. I was just a bit fazed to see that he could only come up with... US companies.

Hints: Nokia. Ericsson. Either of them has had a "services" side for years now. Neither of them is based in the US. Ericsson is even using (gasp) non-Sun hardware on a lot of its service platforms, and with open APIs to boot (please bear in mind that this is not an endorsement, it is an example - I just know it will be quoted out of context or misinterpreted).

There are plenty more, none of which are visible in your average telco pundit radar (and yes, some are US companies). And service or branding partnerships are usually a local affair and too numerous to be counted, although there are exceptions (and you just need to access a Live! portal to verify that for yourself).

Summary

No matter what operators do, there will always be different viewpoints. And in an ideal world, people wouldn't automatically assume person A, or B or Z holds the whole truth. But that is not what happens in the blogging pecking order, and as such, I think that both Russell's and Tim's posts are, inevitably, going to be linked to, discussed and re-hashed to exaustion during the next couple of weeks.

David and I just tried to point out (again) that on this side of the pond, people see things differently, do business differently, and do not have the same sort of technological or cultural hang-ups (and AOL and the whole concept of walled gardens seems to be a biggie over there). But I'm not going to claim we're right, because:

  • Some clueless idiot will eventually go all out and claim we have some sort of magical "inside track" (even despite having read my Disclaimer), that we're biased, that we think we own the truth, etc. We don't. We just happen to live here for quite a few years, worked the ISP biz, and found ourselves in an open-minded telco. And all we've written about is public knowledge - you just have to live over here and read our analysts.
  • There's no point in it. The best thing you can do before taking sides on this is to try and figure it out for yourself. Read up on things. Download some annual reports, figure out the scope of the markets involved, find out what sort of things are really being done.

In essence, make up your own mind - I just tried to compensate for the imbalance. Tim's points are excellent, but they shouldn't be taken to the letter, and you shouldn't assume all telcos are clueless.

At least not in Europe, methinks.