Hak Pak Sak

Stephen Lewis on Infrastructure, Identity, Communication, and Change

Whimsy Trumps Solipsism Trumps Arrogance

Posted by Stephen Lewis on May 8, 2007

A few days ago, on Confused of Calcutta, JP Rangaswami posted a piece about customer emancipation in which he described the irritation phrases and concepts such as owning content, owning customers, and owning pipes awakens in him. JP’s comments prompted me to think back on my years in the telecommunications sector and my many more years as a mobile telephone user. Instead of irritation, my reaction was a sad shake of my head and a glum look at my wallet.

Mobile providers indeed “own their customers” and shamelessly charge accordingly. I am writing this post from the Republic of Bulgaria, a country with Europe’s second lowest per capita income but with the continent’s highest charges for GSM services. A decade ago there was only one GSM provider in Bulgaria. With a naïve faith in the beneficence of competition and the efficiency of markets, many Bulgarians expected that the entry of new mobile operators into the fray would cause charges for basic — and, in an emerging economy, critically necessary — services such as voice traffic and SMS to plummet. Instead, the result was, and continues to be, a plethora of confusing price plans, hidden interconnect-charges, and an infuriatingly slow, barely noticeable decline in monthly bills and prepaid charges.

Thankfully, however, mobile providers in most countries have not taken as great advantage of their wish to own customers as they might have. Operators have been too inept or too solipsistic to dream up content or services attractive enough or useful enough to tempt consumers into paying for, let alone using. Back when WAP was introduced almost a decade ago, mobile phone manufacturers and GSM operators waxed euphoric about a plethora of location-based “push” services that WAP would occasion. These were to be based on complex, never-realized profiles of users’ identities, lifestyles and purchasing patterns. Such services never materialized. In the sage words of an Australian commentator: “WAP was CRAP.” GPRS, touted as Generation 2.5, proved no better.

The ultimate debacle was UMTS, Generation 3.0. Mobile operators worldwide flocked to auctions for UMTS broadband frequencies without giving as much as a thought to the services they would offer on them. It was a classic case of being seduced by technology rather than focusing on the customer. Bidding amongst operators for UMTS frequencies became so hysterical that license fees were pushed into the multi-billion Euro range, creating the greatest investment bubble since the tulip mania that nearly destroyed the economy of northern Europe in the 17th century. Proud winners of UMTS auctions waltzed home with “dark” frequencies for which thay had no specific uses in mind. To this very day, every time we place a mobile call or send an SMS at inflated prices, we are reimbursing operators for their folly. As to the one universal benefit that UMTS could offer, i.e. high-speed mobile internet access, operators indeed control the pipes and, until now, keep their fees correspondingly exorbitant.

From personal conversation, I know that JP (rightly) finds SMS charges to be artificially high. Still, SMS was a dark-horse winner that operators never expected to succeed. Despite its pricing, the universal popularity of SMS (outside of the US at least) was in large part a customers’ revolt against the high cost of mobile voice telephony, especially in international traffic. The other unexpected mobile money-maker has the ring-tone business. As exploitative and artificially overpriced as ring-tone sales may be, they at least targeted customers’ desires, albeit in this cause the irrational but wonderful human weakness for whimsicality.

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