Amygdalin may sound like a Star Wars character, but in fact it’s a precursor to cyanide
found in apple pips. And your daily Gala, Fuji, or Cox’s Orange Pippin
isn’t the only fruity offering with a potentially harmful ingredient
inside.
The Apple iPhone might just look to some like a dodgy cameraphone
that you can’t operate one-handed. But lurking under those curvy
plastic corners lies an assault on the pulsating the heart of the
mobile operator.
Bypassing
operator charges for services has been a pastime for hackers and users
since the first networks were deployed. With the arrival of the
Internet, going ‘over the top’ is perfectly legitimate. However, there
are serious limits to what can be achieved. Sometimes this is because
the handset is locked down — e.g. the application can’t access the
voice processing path, radio or address book. [There’s a deeper analysis of this in our Voice & Messaging 2.0 report.]
But more fundamentally, mobile phones aren’t just little shrunk-down
PCs. They have to live with severe constraints, most importantly
battery life.
This is important as many of the ‘over the top’ alternatives to traditional telco voice and SMS messaging have foundered on this rock. The application needs to keep activating the radio to poll for new messages.
Radio networks carrying phone and SMS traffic
are very efficiently crafted to avoid waking the end user device
unnecessarily. When a call comes in a special paging channel is used to
signal ‘Wake up number 787919823239832, it’s your turn!’. The phone is
an ‘always off’ device, unlike a wired PC which is ‘always on’ as far
as the rest of the world is concerned. (SMS manages to get the whole
messaging stuffed down this side channel.)
Apple have resisted calls to allow what are known as ‘background
apps’ on the iPhone. Letting applications run continuously in the
background can suck up battery power, deplete memory resources, and
generally make things treacle slow. Instead, Apple have launched a Push
Notification service to wake up the phone, and you have to initiate that request through an Apple platform.
Operators should tread very carefully here. Apple could easily offer
to integrate with the paging feature of host networks (or kludge it
with SMS) to increase the efficiency of this
process. The telco then has no monopoly over reaching to the user and
activating the phone using the paging service. Apple can bunch
notifications from many applications, since they control the whole
application ecosystem — and future presence-driven apps are likely to
be very chatty. And you don’t have to be too bright to realise that one
of the most likely things to be pushed to a phone in future is an
advert, mediated again by Apple.
As a by product of having Apple in the middle, it could also solve a lot of privacy problems
associated with background applications running, such as location data
being passed without your real knowledge. There’s also the potential to
filter noxious or intrusive messaging.
In addition, Apple can data mine the application message stream —
and it’s been a telco’s dream for years to mediate such flows (what
else is IMS for?). No doubt the first use of
such data will be to optimise both their own application portal, which
incidentally obsoletes the telco’s own efforts and eliminates that as a
VAS revenue stream (and turns it into an all-you-can-eat data cost centre instead). If iPhone users do really generate three times the browsing traffic
of other smartphones, and a zillion times that of featurephones, then
it doesn’t take massive market share (stimulated by the new low price
point) for the iPhone to de facto become the mobile web.
On top of this, the MobileMe data synchronisation services captures lots the key user data which could be the foundation for future 2-sided market models.
So Apple have an interesting solution to a real technical problem
with their push messaging, coupled to a powerful back end. But under
that tasty, shiny skin lies a potentially bitter taste for the
operators who swallow the fruit. And Nokia — are you ready to finish your back-end platform yet? The telcos need an alternative, quick!
But, it is not all doom and gloom for operators as Apple has
provided a rubber stamp to the subsidy-driven business model. They’ve
also ceded pricing power
back to the operator: that headline price drop for the device masks a
hefty price rise for the service. We are firm believers that control of
edge devices — handsets, home hubs, set top boxes, media gateways, home
automation systems — is vital for both fixed and mobile operators. The
easiest way of achieving this control is by paying upfront for the
device and recovering the cost over a subscribers lifetime.
There has always been a fierce debate as to the extent that
individual handset demand is driven by the handsets themselves and the
attractiveness of the features within them, or operator subsidies and
length of contracts. It is a complex relationship with many variables
playing a part, and at least now in the Apple ecosystem the chosen
operators have one variable firmly within their control.
The other important area of the control is the applications (and
most importantly revenue stream from them) that run on the handset, and
Apple seems to be firmly in control here and probably more so than
either the operator or upstream application developers or content
providers currently realise (see above). The operator secures the basic
voice and data revenues, but the handset is capable of much, much more
- witness the tension between the Nokia Ovi services and the operators.
A key battle ground here appears to be music: it seems these days
that everyone under the sun has their own music store, with iTunes
being the runaway market leader. However, Apple does not currently have
permission here from the major labels to provide over-the-air music
downloads, and therefore music for the iPhone currently will have to
continue to be sideloaded from the PC. This
is a major hole in iPhone functionality, especially when compared to
the Nokia Comes with Music or white-labelled Omnifone service,
This just shows that tension does not only exist between the handset
players and the operators, but also the content providers want a
“reasonable” slice of the action as well. In this case, the music
companies probably have a long shopping list of requirements gathered
from their years of experience with iTunes.
To their credit, Apple has shown through the acceptance of subsidies
that their business model is flexible. We believe that Apple will have
to show a lot more flexibility in the future if the iPhone is going to
be a real mass-market mobile device rather than the healthy niche it
currently occupies.
This Blog is republished from
www.Telco2.net/blog.
The Telco 2.0 Initiative is a new industry program focused on helping
with this thorny question: "How do we (telcos, handset manufacturers,
Media companies, IT players, NEPs, etc) make money in an IP-based
world?"