Tuesday, June 21, 2011

The Transition To Data (Verizon/AT&T/Etc)

Cell phone tower cleverly disguised to look li...
Voice over IP technologies like Skype and Google Voice are rapidly making the traditional concept of what a cell phone is obsolete, assuming of course you have a smart phone.

Right now phone companies like Verizon and AT&T make a lot of their money by charging for text and phone plans but increasingly they are going to be moving to charging for data since that is where the action is going to be. This trend has already started. If you're a light to moderate user of data you may actually see your bill drop. If on the other hand you like to stream video than you may be in for a very rude awakening.

AT&T actually made this move a year or so ago here in the US and Verizon is supposedly going to follow suite soon.

This isn't surprising at all if you follow the trends in networking. It used to be that companies had separate data and voice networks but this is increasingly no longer the case. Voice, video, data and any other service you'd care to name are pretty much all capable of running over the same cable these days. This is a good thing as it lowers costs but it does add some complexities on the network management side as you need to be sure that all the services that are flying around on your network are getting their appropriate share of resources. People get grumpy when the quality of the audio on their phone calls is sub par.

From an entrepreneurial perspective this is all very cool as it means that in most cases we no longer need to invent all new devices and delivery mechanisms to get our service or in some cases product out to consumers. TCP/IP, the technology that underlies most Internet communication is a rich and highly mature set of protocols that give the ability to do everything from audio to video. This functionality in conjunction with increasingly powerful mobile devices such as smart phones and tablets means that businesses and consumers have a tremendous amount of opportunity to create and/or interact.

All of which leaves the traditional carriers kind of out in the cold. This is particularly true if you consider how little success most of them have had with setting up their own Application stores. They have increasingly gone from being service providers to only providing the infrastructure. There are still profits to be made at that level of the value chain but they tend to be a lot smaller and harder to come by.

The big mistake these carriers made was in going down the path of vendor lock in. By trying to box their customers in they also boxed themselves in. By this I mean that they created services and products that were only available to their own subscribers rather than everyone. If I were in senior management at one of these companies I'd be thinking very seriously about what kinds of services I could create that would appeal to all customers and shift away from trying to build a wall around my existing ones. The world is changing and there is little they can do to fight this. Adapt or die are their only choices.

In poorer parts of the world traditional cell/mobile service is going to be around for many more years. Companies operating there have the opportunity to be more proactive in adapting.

Image via Wikipedia
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