Apple, Google rule wireless ecosystem – not operators: Entner

Roger Entner

The death of intercarrier Rich Communications Services (RCS) happened slowly at first, and then very quickly. The demise signifies another loss for consumers and carriers but a win for Apple and Google.

The fact remains that the current fallback solution for SMS and MMS requires a replacement because the technologies are deeply rooted in 2G and 3G solutions and thinking. The global operator community recognized this need as far back as 2008, when they started a steering committee that published a standard in 2016 to ultimately replace SMS/MMS.

In the interim Apple, recognizing the same weaknesses in the SMS/MMS standards, launched iMessage in 2011, making it the standard messaging app on iPhones, iPads, and Macs. As we can read in the documents around the Epic-Apple lawsuit, Apple considers iMessage a significant differentiator vis-à-vis its competitors and does not want to diminish that differentiation.

For a short time, it was contemplating providing a cross-platform solution similar to what they had done for iTunes, but the temptation of deepening the moat between Apple customers and the rest of the world proved too strong. Meanwhile, Google threw its weight behind the RCS standard and implemented it in Android’s messaging app, as it saw the large opportunity to extend interactive advertising and e-commerce to messaging.

To complicate things further, the rollout on devices has been uneven – and unevenness is the enemy of a common standard platform. Some device manufacturers like Samsung implemented it in their messaging app, while others did not. Samsung made a deal with Microsoft allowing Samsung to integrate RCS from its devices on Windows 10. Other Android devices with RCS will not work with Windows 10.

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The RCS trainwreck highlights the lack of power mobile operators have over the large swathes of the customer-facing mobile ecosphere. The carrier-led consortium went nowhere because neither Apple nor Google or handset manufacturers like Samsung saw any upside in leveling the moat between their operating systems and around their devices.

Twenty years ago, mobile operators could tell device manufacturers what features they wanted in devices and how it should work, but those days are gone. Apple’s success with the iPhone fundamentally changed the power dynamic between operators and device companies. Some have applauded this shift as they view operators to be the source of all evil, conveniently forgetting that only the operators have a holistic view and interest to bring a uniform user experience to customers. Some critics are preferring this lack of interoperability to a least common denominator solution that would serve everyone, completely ignoring the self-interest of the other ecosphere participants in this mess.

Apple, Google and Samsung are much better served by driving their own priorities home to strengthen their own ecosphere. The reason why operators are at times infuriatingly slow and difficult to work with is that operators have to be very risk averse in order to ensure a flawless user experience since anything negative that will happen is going to be blamed on the operator.

T-Mobile was just the first one who surrendered to this reality. Several weeks ago we wondered why T-Mobile would suddenly switch its data collection practices from an opt-in to an opt-out model. The carrier critics were already getting their pitchforks and railing against T-Mobile’s aggressive marketing to its customers. Now we know that it was simply the price for Google to provide RCS services to T-Mobile. The pitchforks quickly disappeared since the media outrage is generally only reserved for operators. As the Romans already remarked more than 2,000 years ago: Quod licet Jovi, non licet Bovi.

With great power comes great responsibility, but the device manufacturers and ecosphere providers have none. Consumers have recognized this, and as we have shown in a previous survey, there is broad support among Americans to institute net neutrality-like regulation – between 55% and 80% depending on the criteria - on companies that make money through the internet as well as to require these companies to help fund internet access for low-income Americans.

The best service the Biden Administration could provide to the American people would be to broaden the scope of its net neutrality drive. The “net” refers not only to network providers, but to every participant in the internet ecosphere. It is the edge providers - the Googles, Apples, Facebooks, and Amazons of this world - that are increasingly shaping the American user experience and now have greater power over Americans than internet service providers.

The edge providers have become the true gatekeepers of the internet age, as in many places there is more meaningful choice among mobile internet providers and even network providers than there is a meaningful choice between social networking providers or search engines. For example, when a consumer buys an Apple device they are caught hook, line, and sinker in Apple’s ecosphere and its choices for more than just the device purchased. Not only can apps be purchased exclusively through the Apple App Store, but the consumer must also use Apple’s payment processing system, ideally using the Apple credit card.

Apple is a gatekeeper that charges 30% for the privilege of being able to reach its customers. Any ancillary payment streams? 30% please. If you are a small company with less than a million-dollar in App Store sales it’s still 15%. This cut in commission will probably lower Apple’s App Store revenue by roughly 2%, hardly a substantial decrease and it only came as Epic was ramping up its anti-trust lawsuit.

If a company that programs its own apps for the iPhone wants to get that app on the device for its employees? That’s $250, please. At least with Google’s Android you can side load apps, but the rest isn’t any different. This is an even more comprehensive monopolistic power than Ma Bell had in its heyday.

By basing net neutrality on Title II, the Biden Administration will skew the market place even further in favor of the largest companies in the world that have run roughshod over Americans in a myopic focus on making more money regardless of the consequences, outmaneuvering and hoodwinking American consumers, regulators, and politicians alike.

Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner and catch him on The Week with Roger podcast.

"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not represent the opinions of Fierce.