Mobile operators say that they are open to accepting a range of wireless devices on their networks as well as using new models for charging people for services to those devices, based on experiences with the Kindle and the iPad, but they will still want a degree of control over their networks.
A panel of executives from U.S. mobile operators and hardware makers talked about the emergence of new business models and why the operators won't fully open up their networks during a session at the CTIA conference in Las Vegas on Tuesday. Their comments follow a push two years ago from most operators to loosen up control over which devices could run on their networks.
"We'll see all kinds of different partnerships and relationship models," said Glenn Lurie, president of emerging devices national distribution at AT&T.
It used to be that operators focused on selling US$60-per-month service plans to road warriors. "That worked well for a few years," said Frank Hanzlik, general manager, wireless, at Dell. "But when you talk about having everything connected, that doesn't work."
The Kindle is a good example of a new model for paying for wireless connections. The cost of using the wireless network to download books is built into the cost of books. "People don't think about transport when using a Kindle because it's bundled in," said Maurice Thompson, director of open development at Verizon.
That kind of pricing will have to be worked into products where it doesn't make sense for users to pay a service plan. "Who wants to pay $60 [per month] for a connected picture frame?" Thompson asked.
Apple's iPad is another example of a new way of paying for and setting up wireless connections. "We sat down and said, how do people want to buy it," said Lurie of AT&T, which provides the mobile connection to the iPad. AT&T is letting users activate service on the screen once they buy the device.
"That's the future," he said. "You buy it and have an experience with us on the screen. You decide how you want to pay and you don't have to call us. We don't want to hear from you."
Users can pay as they use the service. "They want flexibility. They won't pay $60 a month when they're already paying us" for other services, he said. "We've gotten a lot of very good feedback from that model for this product."
Lurie works on the team at AT&T that enables any kind of device that is not a phone on the operator's network. "This space is huge," he said. "This is the next big growth area in wireless."
But Lurie and others cautioned that they aren't willing to fully open their networks to just anything.
"Over the years we wanted a lot of control at the carrier, and that's partly because we wanted you to have a good experience," said Dan Bowman, president of integrated solutions at Sprint. "If we let you do anything, you'd have a horrible experience."
Lurie agrees. Operators can't be all "helter-skelter," letting anything go. "There needs to be some order around this so everyone has a good experience. A couple of customers using an application that locks up a base station in New York City is not a good experience for the other customers there."
That's why operators continue to require testing of new applications and devices. They want to make sure that the applications and devices are efficient and won't tie up the network for other users, the executives said.
Operators are also working hard to reduce confusion in the marketplace. If a customer buys a cellular-enabled netbook at a retail store, he or she may not know who to contact when things go wrong, said David Sprosty, a consultant at the ROIG Group.
But Lurie says that the right kinds of partnerships ensure that's not a problem. Customers know that if they are having a problem with the netbook they call the hardware provider and if they have a problem with the mobile connection, they call the operator, he said.
Despite the challenges, the operators seemed committed to continuing to be open to enabling new kinds of devices on their networks. If the operators hadn't decided to open up more, devices like the Kindle and the iPad might never have happened because an operator may not have chosen to allow those devices on their networks, said Thompson.