All Together Now

It’s a little known fact that Verizon Wireless used the Beatles song All Together Now in commercials in 2002. So it was interesting to read the words of a current Verizon executive, Jeannie Diefenderfer, vice president of global network operations (NYSE: VZ)  in Telephony Online this week talking about “coopetition” – or cooperation among competitors – as a key attribute for successful telecom operations.

“I believe in today’s world, and more so going forward, the ones who learn to master the art of coopetition are going to be the winners” she said. Well it’s good that at least one executive is talking about it because the communications industry has a huge weakness in the new digital economy – fragmentation.

We all saw last week’s report that downloads from Apples app store have hit 1.5bn; that there are now 100,000 developers developing apps for iTunes and the iPhone generates at least 10 times more data traffic than the average cellphone. That’s on a market base of just 40m iPhones and iPods - tiny compared to the global mobile handset market of nearly 4 billion. So why can Apple corner the market for applications?  - so much so that Apple CEO Steve Jobs is boasting: “the App Store is like nothing the industry has ever seen before in both scale and quality. With 1.5 billion apps downloaded, it is going to be very hard for others to catch up.”

Well great design and marketing aside, the reason developers are flocking to iTunes is because Apple represents a very simple go-to –market strategy for them - one company to deal to get to a worldwide market – one set of application programming interfaces (API’s), one set of contractual terms and conditions. Compare that to working with phone companies (who by the way earn nothing from all of those apps as the revenue flies ‘over the top’ and the data bandwidth is on an ‘all you can eat’ basis.)

There are roughly 1000 mobile service providers around the world each of whom are busy launching their own apps store and dreaming that it will be an iTunes killer. They will fail – not because it’s not a good idea but because the fragmentation of 1000 sets of API’s, 1000 different terms and conditions and dozens of handset types all with different characteristics kills any kind of value proposition to a developer. Dealing with that complexity is just too hard – especially when both Apple and now Google (with their Android handset platform and their ubiquitous developer platform) make it so much easier to get to market than the underlying service provider.

Digital services are a global market yet the phone business is essentially a patchwork quilt of hundreds of different geographic providers. They created a global seamless telecom network through standards but who haven’t co-operated to create a global seamless digital services platform. If they did they would be formidable - after all they currently enjoy a $1.4trillion market. While they keep themselves weak by competing with each other, the real competition is encircling them before they have even realised that the market has fundamentally shifted. As Diefenderfer hinted – coopertition is the name of the game.

The TM Forum is owned by the world’s communications players and is ready made, global, commercially minded vehicle for collaboration on new and innovative services. Let’s hope that more and more executives can see the light that fragmentation is a killer ad that a bit of co-opetition can unlock huge power to fight the real competition.

All together now?