Editorial: The Mobile Data Business Model is Broken

A new rumor, that a group of companies wants to create a walled-garden-style search engine for mobile devices, is just the latest in a long string of abuses heaped upon the consumer by mobile carriers. Read on for a good old fashioned rant about the state of mobile data services in the US.

Let's take a look at the latest travesty to come across my newsreader: "Mobile giants plot secret rival to Google."

Here we go again. At next week's 3GSM conference a cabal of telcoms are planning on figuring out a way to make you pay for mobile searches by erecting walled-garden-style searches for your phone. It's not enough, apparently, for them to try to nickel and dime us for Ringtones, SMS, music services, etc. Frankly, I'm getting sick and tired of this sort of garbage.

The upshot, basically, is that these companies are unhappy that we're using sites like Google and Yahoo on our phones for free (forgetting about data costs for the moment). The very idea of getting free access to content that's unfettered and open is apparently anathema to these companies.

I wish I could say that my indignation in the above paragraphs is as powerful as it seems. Sadly, like most US consumers, I'm just plain beaten-down by our mobile carriers. It's not difficult to come up with a list of outrages that they visit upon us -- outrages which most consumers accept as par for the course:

• Increasing the price of text messages. This despite the fact that the infrastructure to send them is not only already built, but is mature. As ars technica put it, "Only in the world of mobile phones can you expect to find companies trying to charge 20 cents for less than 1Kb of data."
• Cingular and Helio create for-pay services just to use MySpace. More on this in a bit, but for now let's just point out that this is a manufactured need, if MySpace would just clean up their flash-ad-addicted act, using MySpace from a regular old browser would be fine.
• Creating network-specific music services that, in effect, ask you to pay for your music twice.
• Having byzantine, kafkaesque, and ever-changing cost structures.
• Let's not even discuss the 'subsidize your phone with a 2-year contract' business plan, I don't want to punch my monitor.
• Literally breaking devices by turning off functionality like OBEX Bluetooth built-into phones (I'm looking at you, Verizon).
• One Word: Ringtones.

Let's stick with ringtones for a second. Most feature-phone users don't blink twice at paying $2 or so for a cute little ringtone. Why do people pay for these? Simplicity, mostly. The carriers have created a service that's relatively easy to use and doesn't require much technical skill. So what's the problem with that? The "technical skill" part. Creating ringtones from your own music library and loading them onto your phone should be a simple, painless process. Yet I challenge you to find 1 person in 10 who has done this, or even knows how to do it with their phone. Purchasing ringtones is a manufactured market.

Why do we pay for ringtones? Is it the licensing fee? It shouldn't be. In this author's opinion a short ringtone falls pretty safely into the Fair Use category of copyright law. No, we pay because the technology to easily load ringtones onto your phone is obfuscated either by deliberately breaking your phone's ability to load them or (more charitably) by spending time on creating the service instead of spending time enabling the consumer.

At this year's CES, I attended a panel of executives from various carriers and device manufacturers - the topic was finding ways to increase and expanded data services offered by carriers. During this panel there was a general consensus that ringtone services were far and away the biggest success in this field. The carriers are very happy with the ringtone business model, so happy they want to apply it to other areas--like using a search engine on your mobile device.

Here's where things get sticky for the carriers, however. Because we already have perfectly good search engines available to us on our phones - search engines we don't need to pay to use. Mobile carriers are desperate to find ways to manufacture a market out of this situation, to wit:

The term here is "walled garden", and if you haven't guessed by now I'm against them. So are most consumers - at least when it comes to the internet as we typically think of it. Many internet users are fighting tooth and nail to keep the internet open - to maintain net neutrality; yet many of these same users often don't think twice about paying two bucks for a ringtone, or 15 cents for a text message, or a subscription service for maps and directions from telenav, and so on. Somehow, these carriers have managed to pull the wool over our eyes.

We need to disrupt this business model, break out of these manufactured markets. Sadly, I don't know how just yet. Perhaps when WiMax covers more areas we'll be able to just switch over to some sort of Skype-like system that can work anywhere there's an internet connection. I wish I had the answer. Instead, all I have is an anecdote:

I'm reminded of the situation many users (myself included!) were in 5 or 10 years ago. We were paying a premium to use AOL. AOL was, for many folks, the internet. I still remember when the scales fell from my eyes and I realized I didn't need AOL, I could just get myself a connection to the internet directly, so to speak. After that, I looked down on those 'AOL Newbies" who blindly paid extra every month for practically non-existent services, not recognizing that there were plenty of free alternatives elsewhere.

When it comes to mobile data services, we are all AOL Newbies. I only hope that technology advances enough in the near future for me to have the scales dropped from my eyes once again.