[This is the first of several posts digesting what I learned at the very informative NMS Connect conference. Their CTO, Brough Turner, was live-blogging and so you can read the blow-by-blow action of each session here.]

 

One of the themes that ran across multiple sessions and hallway discussions was: What should be the role of the wireless carrier in new data-driven telephony applications? Or, as it is commonly simplified: Should the carriers be providing dumb or smart pipes?

 

smart-pipe-sm.JPGIn the “dumb pipe” approach, the carrier provides direct internet access to handsets and then stays out of the way. They make money by charging per bit and treat all bits the same. The hope is that having an open platform will attract developers to create millions of mobile applications, some of which will become runaway hits that can survive on advertising, while others find ways to monetize the long tail of niche users. (We’re nearing 3 billion people on mobile phones so it’s hard to imagine that you could foresee their needs through design-by-committee.)

 

On the other hand, the “smart pipe” approach has the carrier act as both content and access provider, controlling the whole the experience. This allows the carrier to charge based on function, not on bits, and to prioritize traffic on their networks more intelligently. That way real-time applications like video calls won’t be sacrificed by someone on the same cell tower downloading a song. And that way we can keep the mobile world more “tidy” — free from spam, phishing and other nasty things. I’m certainly willing to pay a bit extra for that.

 

This issue was at the center of the conference’s most lively debate. Rooting for dumb pipes was Seamus McAteer from M:Metrics “The endgame is the mobile internet, not something from the 3GPP. They will never keep up with innovation. That’s what users want.”

 

In the other corner, Andrew Bud from mBlox: “I fundamentally disagree. The internet model is not a great way for service providers to get any value….”

 

I’m not sure where this dumb vs smart paradigm started although it certainly got a big boost with the 1997 essay Rise of the Stupid Network. As a short-hand for broad discussion, “smart vs dumb” is useful but as we drill-down into the details we need better terminology. The word “smart” is just as ambiguous when describing a pipe as when describing a person. A pipe can be smart in different ways.

 

As it turns out Andrew was arguing in favor of a particular kind of smart pipe, where carriers partner with 3rd parties for content but keep close control (and a cut of revenue) over all transactions happening on their network. (It’s no coincidence that his company enables exactly this kind of relationship.)

 

 

The nature of a carrier-type organization is not conducive to the creativity you need to create new applications. Dean Bubley nailed this point with a question from the audience — and I’m paraphrasing here — “The coolness lifespan of an internet service is about 18-24 months, which is about how long it takes for a carrier to roll out a service. So how can you possibly keep up?” Russ McGuire from Sprint-Nextel admitted: “We know we are not going to be the innovators. But we want to be sure we attract innovators in a fashion that doesn’t leave us in the position of being a dumb pipe.”

 

 

On the other hand, there is a strong and valuable relationship between carrier and subscriber that doesn’t exist in the wireline world. Michael Scully from Virgin Mobile put it this way: “If I buy a ringtone on my cell phone, even from a third party, and if there’s a problem, I call my cellular provider.  After all, they’re the ones that billed me for it, and I may not even know how to contact a third party if I even know that I bought from one.  Conversely, if I have an issue with an order on Amazon, I don’t call Comcast.”

Carriers have the infrastructure to do itemized billing, access to credit and payment history and hardware-based identity tracking (through the SIM card). It would be a shame to throw this all away and put each new mobile application in its own “sand-box” that knows nothing about me and needs its own user name, password, etc.

 

So this leaves us with a stand-off that has led to some pretty unfortunate situations as chronicled by Corey Doctorow in a recent essay

 

Every time we butt up against some rotten ‘feature’ in the mobile phone world — screwy data-pricing… carrier-locked handsets, handsets that can’t run user-installed software, APIs that can’t talk to the phone’s radio hardware … phones that won’t play your own music or movies, phones whose numbers can’t be ported to another carrier, phones where number portability takes weeks or months, “unlimited” data-plans that cut you off if you use too much data — everyone’s got someone else to blame. It’s the greedy, stupid, dinosauric carriers. It’s the wimpy, gutless phone manufacturers. It’s the coked-up Hollyweird fat cats from the record industry. It starts to feel like a Mexican standoff, three tough guys, each pointing a gun at the others’ heads, deadlocked and unwilling to risk anything to break the standoff.

 

I’ll be a bit less dramatic and say simply that both sides need to give some ground:

 

  • Carriers need to realize that creativity lives at the edges, and that they will never be able to design the next Twitter or Mig33 or Facebook.
  • Developers need to realize that there is unique value in the relationship between carrier and subscriber and it would be a shame to throw it away.
 

10 Responses to There’s more to pipes than smart vs dumb

  1. Mark says:

    I am all for the dumb approach. I don’t want to rely on my cellular carrier to provide content as I don’t want my broadband ISP provide content. As the Internet access speeds get faster, more megabytes will be downloaded, more bandwidth used and more money will they make.

    Mark,
    http://bandwidthbuyersguide.com

  2. [...] Berger has a bit more on this debate at Call the Cloud.) Michael Scully, Director of Music, Mobile Content and Data, at Virgin Mobile USA was the one [...]

  3. Gad says:

    Walled gardens have their pros and cons. Cameron Moll discusses this from a web designer’s view point in his Mobile Web Book. I found it to be a good read, especially if you intend to get into mobile web development.

    While it is true that you can deliver a higher-grade experience to customers using the mobile web from a walled garden approach, it leads to a blocking out of those chance sites that appear out of the Internet ether. Plus this approach alienates customers from experiencing the world outside of the network. Would you really accept it if Rogers limited you to their set of quality sites? The world is and should be open. And open it shall be with sites finally beginning to play with location based services.

  4. Todd Spraggins says:

    Mr. Scully is making a generalization that does not hold water, especially in an age of heightened brand awareness. I purchase a Direct TV package from Best Buy – do I call Best Buy when the signal gets fuzzy 2 months later? If there is any confusion as to what content or services are Virgin Mobile, it might be traceable to the obfuscation the carriers introduce in the transition from on-deck to off-deck experience. I think the general consumer is going to know who to vent frustration toward when their Google maps directions take them to Tim Buck Two.

    Personally I think there is room for both, and frankly I am perplexed as to why I can’t choose between plans for either a “controlled experience” a.k.a. iPhone or a “free for all” a.k.a. Neo1973. Nearly 3 Billion devices and growing – surely there is a market for both!

  5. Shai says:

    Mark, Gad:
    Most users agree with you: they just want internet on the phones. But the carriers are a business and they want to maximize revenue. So if you take away their “smart pipe revenue” (e.g. a cut on music downloads) then they will raise the prices of regular bandwidth. I’d be happy to let the carriers split the money on music downloads (since i’m not in the demographic that is going to use that) and in turn, end up with cheaper rates for basic internet.

    Todd:
    Good point. We should give consumers more credit. And, yes, there’s room for both models, and also hybrid models between them. That’s where I was going with “there’s more to pipes than smart vs dumb”.

  6. [...] [This is a continuation of posts inspired by the NMS Connect conference. See also: There’s More to Pipes than Smart vs Dumb.] [...]

  7. Daniel says:

    I couldn’t understand some parts of this article ’s more to pipes than smart vs dumb at Call the Cloud, but I guess I just need to check some more resources regarding this, because it sounds interesting.

  8. [...] This issue connects back to the long running smart pipe vs dumb pipe debate that I wrote about here. But it also connects with the central question of what model works best for adding innovative [...]

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>