Tuesday, October 23, 2007

Walt Mossberg Raises the Red Flag of Revolution

A colleague of mine pointed out to me an interesting blog post by Walt Mossberg this morning:

A shortsighted and often just plain stupid federal government has allowed itself to be bullied and fooled by a handful of big wireless phone operators for decades now. And the result has been a mobile phone system that is the direct opposite of the PC model. It severely limits consumer choice, stifles innovation, crushes entrepreneurship, and has made the U.S. the laughingstock of the mobile-technology world, just as the cellphone is morphing into a powerful hand-held computer.

Up until the 1970s, when the federal government intervened, you weren’t allowed to buy your own landline phone, and companies weren’t able to innovate, on price or features, in making and selling phones to the public. All Americans were forced to rent clumsy phones made by a subsidiary of the monopoly phone company, AT&T, which claimed that, unless it controlled what was connected to its network, the network might suffer.

Well, the government pried that market open, and the wired phone network not only didn’t collapse, it became more useful and versatile, allowing, among other things, cheap connections to online data services.

I suspect that if the government, or some disruptive innovation, breaks the crippling power that the wireless carriers exert today, the free market will deliver a similar happy ending.
At the SIIA Changing Landscape seminar on mobility last month, D. P. Venkatesh pointed out that Apple is a odd choice to lead the anti-oligarchy charge. It's model is based on it owning the entire software stack to the exclusion of anyone else. Although, Apple just announced that they will eventually allow third party programs, this seems like too little to late. After all, my three year old PocketPC (on Verizon, widely acknowledged as the "worst" carrier in terms of openness) easily allows third party applications.

Now, switching it from one carrier to another might prove a challenge...

However, Walt's economic instincts are correct. More competition will bring more innovation, and greater value at lower prices. And you can bet that the carriers will fight tooth and nail to prevent that from happening...

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