Your wireless carrier (in the U.S., probably AT&T or Verizon Wireless) has a lot of control over the handset you can use and the applications that can run on that device. In fact, wireless carriers routinely ask for (and get) an enormous slice of the revenue from applications that work on their networks, and they force handset manufacturers to jump through all kinds of hoops in order to be allowed to sell devices that can connect to these networks. (You can’t, usually, buy devices except through the wireless carrier itself.)
There has been a great deal of consolidation in the wireless carrier market: twelve wireless carriers that were independent as of 1999 have combined (through merger, spinoff, or joint venture) into four large wireless carriers: AT&T, VZ, (and, far behind in terms of size) T-Mobile and Sprint. AT&T and VZ together control more than half the market and the lionÃ¢â‚¬â„¢s share of new subscribers. The competitive picture isn’t great — AT&T and VZ actually charge more per minute than other, smaller carriers (like Sprint).
Until the FCCÃ¢â‚¬â„¢s 1968 seminal Carterfone decision, which allowed non-AT&T equipment to be connected to the telephone network, consumers were not free to buy and use devices of their own choice for ordinary telephone communications. Carterfone led to the broad use of the modem and the fax machine, and arguably the birth of the commercial internet. But this open attachment regime has not to date applied to the wireless world, as either a legal or practical matter. The wireless carriers are in complete control.
This has had bad effects on the ecosystem of the wireless world. It’s essentially a closed system, for both applications and devices. We’ve gotten used to locked phones that cannot be switched between service providers and two year contracts with heavy penalties for early termination. Here’s the Washington Post from this past summer:
Currently, the major U.S. wireless carriers, including AT&T and Verizon Wireless, largely decide which Web sites, music-download services and search engines their customers can access on their cellphones. This is accomplished by wireless companies determining which cellphones will receive their services: AT&T, for example, is the only carrier available to users of Apple’s iPhone.
This isn’t a great situation for consumers or innovators.
Google’s paired announcements yesterday were aimed at addressing this situation in a way that will – ultimately – be very good for Google.
First, they said they were releasing a software “stack” – an open software platform called Android – that would be available under an open-source license. The idea is that anyone could adopt that platform (which includes an operating system, middleware, a user-friendly interface, and some applications) and use it on their phones or in their networks. They’ll be releasing tools for developers to use in writing for that stack, which will (they hope) spur the creation of impossibly cool applications that everyone will have to have. They’ll have big developer conferences someday for Android, just like Microsoft does, creating buzz, t-shirts, and a general sense of well-being and connectedness.
Second, they announced a large consortium of companies that will help in further developing Android and pushing it out into the world – the Open Handset Alliance. It’s significant that this group includes T-Mobile and Sprint, the smaller guys in the U.S. It’s also significant that some large handset manufacturers (but not Nokia, why?) and chipset creators are involved too. This will give these guys courage to fight the depredations of the current breaking-kneecaps wireless carrier situation in the U.S. I bet the handset manufacturers are feeling some relief. There’s strength in numbers. This is like unionizing to challenge The Man.
Yes, Om Malik is right, this is a big PR move. But the goal is to raise things up a level, to make this platform so ubiquitous and crammed with so many great applications (including Google ad-serving thingies) that the incumbents won’t be able to avoid it. Now, nothing guarantees that this platform will stay open. In fact, VZ could adopt it and close it to applications it viewed to be competing with its core services – like Skype. But the hope is that this kind of modular approach will become the norm in the wireless world.
In fact, the goal is greater than that – the goal is to make the wireless world much more like the PC world, where there is no necessary connection between transport and content and anyone can introduce the new cool thing.
This clearly helps Google. Of course it does. Why would they do it otherwise? There will be new landscapes to plaster with ads, new ways to make money out of disorder. We won’t be able to find a thing or a person we need without Google’s help.
But this initiative also leaves room for new Googles to show up in the wireless ecosystem, and to take advantage of new kinds of cheap, portable devices that are much better than what we’ve got now.
Maybe I’ll finally be able to afford a cool phone.