Silicon Valley's assault on Mobile's Gated Kingdom

Re: Re: Data only

Some will be set up and their costs will be *much* lower. Suits like that.

Some exist already. Give them time...

I think you are missing some cultural telco issues Andrew

Telcos tend to be bloated bureaucracies full of unproductive staff who have very poor motivation levels due to an inability for anyone to achieve anything or to change the internal culture which stops them achieving. Many got this way by being a de-facto or royal chartered monopoly across large chunks of the globe and the mind set has not changed. Telcos are not a meritocracy where the innovative and productive get promoted, they are spat on and undermined by the herds of bovine wastrels who are still there because they can't get a job anywhere else and don't want to be shown up as useless and unproductive. The senior execs stay long enough to get a golden parachute and the good ones are gone well before it becomes obvious that their "changes" reinforced rather than addressed the underlying chronic issues.

In a telco, the investment case will be based on a 10 to 20 year lifecycle, the culture does not allow anything shorter than this, thus the need for uber standards that take ETSI or GSMA 5 years to bugger up, sorry, refine. You need standards like this if you are going to live with them for 20 years. This problem does not exist in the land of Twitter and Salesforce.

In a telco the management exist in a binary state of either;

a) No investment in new services, particularly non core, use all value added services to drive core network and billing traffic, that is our core business

b) We can't afford to be just a big dumb pipe, we must extend into the value added services, our pipes give us the competitive advantage over everyone else.

Clearly, these two result in an oscillation within the organisation rather than any sustained progress, any employee who could innovate and drive the dinosaur forward will leave in < 1.5 cycles or simply lose the will to live. Again, in an app store world this problem doesn't exist as the lean and agile app store vendor knows what they want to do and if they don't the other 5 just like them do and will out-compete them.

More cultural issues

To cap off the cultural problems with telcos;

There is no real competition in the telco world, just like petrol stations, banks and every other mature market they all know that reducing prices only benefits customers, not vendors. The telcos have armies of people who went to school, served with or otherwise know key government personnel and regulators to make sure no nasty surprises come from that direction (thus the true scale of Ms Reding's achievements). The telcos also work very hard to ensure that their pricing cannot be usefully compared to any "competitor" pricing by ensuring the plans are sufficiently different. This leads to a poorly informed customer base which produces the inefficient market they need and keeps the customers as the prey.

Combine this culture of ensuring that all changes are slow and gradual so that the big players going in are still the big players afterwards (this is what industry standards bodies are really for) and the tacit agreement that you can compete on everything but reduced price or margin and you get the modern telco market. The companies who control the networks have such vast sums of money locked up in them that they make real estate investors look high-risk.

What is asked for if the telcos are to survive this at all is for one or more of the players who own the infrastructure to change the entire culture of their organisation and even so, they'll still be too big to innovate at the speed of the small players. They'll try to do what the banks do and be parasitic in the payment stream but Apple has already demonstrated they can be bypassed for this. They'll also try to prevent really disruptive services from using "their" network but this will be a managed retreat from regulators. It will be a bumpy and unpleasant road with many pitfalls (for the customers and shareholders) but I really don't see a Telco making big enough changes to do anything other than slow the inevitable.