Triple play or triple threat?

The iPhone has provided a real shakeup in the way wireless services are offered by US carriers

Things are supposed to happen in threes, and the trio the networking space has been focusing on is the "triple play" of voice, data and video service. But a new triple has emerged, one that's potentially a greater influence on the industry -- and for some at least it's not a good influence.

Mobile services have been the financial darling of the service provider industry, growing in revenues and largely keeping the big providers ahead of the game as legacy wireline service revenues fall. Mobile has become the No. 4 item in the evolution from triple play, in fact, but it's also the focus of our new trio of threats.

Our first threat is Apple's multimodal iPhone. Is the iPhone cool? Sure, but that's not the big news. Neither is its design or its Web surfing. The big factor is that the iPhone works with Wi-Fi in addition to cellular service. In fact, because the iPhone supports only the slower form of wireless data, it works a lot better on Wi-Fi than on the wireless network.

IPhones are far from the first to be multimodal like this, but the popularity of the iPhone is going to increase the number of people who use mobile instruments on something other than the mobile network. That weakens the wireless operators' control over the customer by not only allowing the customer to have an "out-of-provider experience" but encouraging it. In a hot spot, a user could learn to stray from the carrier (for now, AT&T) fold.

To what? Well, that's where the next threat comes in. Fixed wireless is encroaching on 3G. Municipal Wi-Fi networks are gaining ground. US carriers Sprint and Clearwire are partnering to create a national WiMAX network. Today's iPhone doesn't work with WiMAX but nobody doubts that a future version will. T-Mobile is pushing its own multimodal service plan using its own hot spots or the customer's home Wi-Fi. The threat is so great that one of the hottest new technology concepts in wireless is femtocells, or microcells using 3G technology that are installed in the home (or in theory in other places) to create an owned-by-the-carrier form of home Wi-Fi access.

The reason this issue is so critical is that advanced mobile services like video or even Web surfing aren't something that can be easily conducted while whizzing along the expressway at 65 mph or so. This is coffee klatch activity, the sort of thing you do sitting in a nice outside table on a promenade. Those are the kinds of places where Wi-Fi, or even better WiMAX, could reach easily. In fact, Clearwire has already said that most of its customers have wireline broadband already, so they're using the service for "portable" needs. Phone users could do simple voice on 3G and take all their nonvoice services off-net, and off the bill.

Of course, all of this is hampered by the fact that in the United States at least, your mobile handset is provided by your carrier, and the carrier may be less than enthusiastic about your intended exercise in broadband democracy, since it potentially loses your payments for these advanced data and video services. But maybe not for long, since the FCC is exploring setting aside a portion of spectrum for open wireless services. This allocation would be available only to bidders who promise no instrument or service constraints on the user. Google, not surprisingly, already has indicated it will throw some of its war chest at the auction for this spectrum if it becomes available as planned.

There has been increased pressure on regulators to open up the mobile space, a kind of backlash against the fact that competition for wireline broadband seems limited to fights between cable and the RBOCs. The plan to set aside some open spectrum won't be world-changing in itself because only big players can bid the amounts likely to be needed to win auctions in major metro areas, and because the cost of deploying 3G cells is far from trivial. But it will create pressure on the big mobile operators to open their own networks just a bit, and then maybe a bit more .... You get the picture. We are likely moving toward more open wireless.

All this is probably very good news for the consumer because mobile services are really a lot more walled gardens than anything else that's offered. It's also likely very bad news for the operators because it will erode away their absolute control of the revenue stream that flows out of mobile customers. That has significant network infrastructure impacts, too.

The most likely immediate impact is on the IP multimedia subsystem, or IMS. The darling of the trade show circuit last year, IMS was far from a show-stopper in the debut of NXTcomm this year, and it could be that the handwriting was already on the wall. For all its talk about application enabling, IMS is a customer ownership architecture. If the triple threat I've talked about weakens the ability to "own" the customer, it weakens IMS. The Verizon A-IMS and AT&T CARTS (Common Architecture for Real-Time Services) are examples of extensions to the basic IMS capabilities to incorporate more service types and more customer relationship flexibility. A number of IMS supporters are already considering how IMS could be adapted to the new "unlocked customer" situation.

All of this activity may be coming from the wrong end of the industry, though. Incumbent operators aren't noted for their ability to adapt to new consumeristic trends, and all of the accommodations to these threats that I've seen so far from the legacy mobile operators and equipment vendors have focused on somehow getting customer ownership back. It's probably too late for that now, because none of these three threats seem likely to go away.

We'll just have to wait to see what Apple does, I guess.

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Thomas Nolle

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