Wireless carriers are getting left behind, and it's their own fault

Mike Dano

BARCELONA, Spain--Wireless carriers here at the Mobile World Congress trade show are voicing deep concerns about how over-the-top (OTT) players are cutting into their core businesses, and how they need to innovate more quickly to compete. I completely agree. Mobile operators are getting left behind, and they don't appear to be doing much about it.

What's worse, some operators (mainly European ones) are actually complaining about the situation, and are even floating the idea that OTT players like Skype, Facebook and Amazon should pay them for the network traffic they generate.

"When somebody watches YouTube on a mobile phone and ends up [with a] big bill, he curses under his breath at the telecom operators," Sunil Bharti Mittal, CEO of Indian carrier Bharti Airtel, said during a keynote address, according to CNET. "But YouTube is consuming a massive amount of resources on our network. Somebody's got to pay for that."

A number of other operators offered similar assessments. "This imposes a big burden on mobile operators," said the CEO of Telecom Italia, Franco Bernabe. And AT&T Mobility's (NYSE:T) John Donovan said the carrier is considering a way to let OTT players like Netflix pay for the data traffic costs generated by their streaming services, according to the Wall Street Journal.   

But the idea that companies like Amazon and Netflix should pay for the traffic they generate is silly. Why should they? Users already pay for that traffic, and there's no good reason for that scenario to change.

The result is that users are aligning themselves with the OTT service providers and against the mobile network operators. As well they should be: Mobile operators are doing nothing to actually help their customers.

Take Pinger, for example. The company provides IP-based calling and messaging services that are free to users (Pinger makes money from ads sold inside its app). Pinger's service is simple and easy to use, and it combines emails, voicemails and text messages into a unified list. It's an OTT player at its best. Meanwhile, wireless carriers are still charging users for calls that are forwarded to a landline number!

Here's another example: Wi-Fi calling. Wireless carriers have had the capability to provide voice calling over Wi-Fi networks for years, but have chosen not to support the technology. T-Mobile USA, through Kineto Wireless technology, is one of the few wireless network providers that has quietly offered Wi-Fi calling, but the carrier hasn't done much to promote the service. With all the noise about network congestion, and integrating Wi-Fi into the macro network for offloading, Wi-Fi calling remains a cheap and easy way for wireless carriers to innovate. But are any doing so? The answer is no.

Interestingly, some operators are moving forward by offering their own OTT apps. AT&T Mobility offers an Android messaging app that unifies voicemails, texts and emails. The carrier also offers an international calling app that undercuts its standard international calling rates. But one executive who asked to remain anonymous said that AT&T isn't actively promoting its international calling app for fear that it will become too successful.

That's exactly the kind of thinking that will relegate wireless carriers into the role of a simple transport provider. Imagine an LTE future of all-IP communications: Such a future will allow users to conduct all of their calling and messaging through whatever service they wish, be it FaceTime, Skype, Pinger or whatever other smartphone icon they are comfortable with. If wireless carriers can't act quickly enough to lure users into a carrier-branded calling and messaging experience, then there's no reason for users to think of carriers as anything other than a dumb pipe. It's their game to lose, and wireless carriers--at least right now--are definitely losing. +Mike Dano

P.S. Here are some tidbits I've heard at the show:

  • According to Broadcom, 99.98 percent of all Internet traffic--wireless and wireline--travels over a Broadcom chip at some point.
  • Cisco CEO John Chambers kept calling Shaw Communications' Dennis Steiger "David" during a Cisco press event until Dennis corrected him. Chambers apologized profusely.
  • Intel CEO Paul Otellini accidentally dropped an s-bomb (sh*t) during the company's press conference, to the glee of most in attendance.
  • Sprint Nextel (NYSE:S) CEO Dan Hesse said during his keynote appearance that he has a deep affinity for kung fu master Bruce Lee.

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