The Mobile Device Paradox

I’m a huge fan of paradoxes. I know some people are partial to your classical conundrums, like Fermi’s or Zeno’s chestnut about the arrow that never reaches its target. Those are a bit too high-brow for me. I prefer your more pedestrian paradoxes. My favorite at the moment – a partiality likely influenced by the holiday season – is the unexplainable force in the universe that causes humans to believe charm and intelligence increase proportionally to the amount of alcohol consumed, when, of course, just the opposite is true.

It’s likely that quite a few telecommunications executives will be testing the above theorem on a pretty frequent basis in 2011, as they will be driven to drink by the onslaught of newfangled devices that find their way into the hands of millions of subscribers, all anxious to download services that clog operator networks but contribute next to nothing in the way of ARPU. Given the expected surge of end devices, inebriation seems like a rational strategic response from operators in 2011. Some industry observers have gone so far as to designate the next 10 years as the decade of the device. And it’s not just smartphones and e-readers we’re talking about. It won’t be long before nearly every consumer is associated with dozens of connected devices, including televisions, automobiles, home monitoring systems, healthcare equipment and the like.

It amazes me that as recently as two years ago the industry’s idea of convergence was equipping each subscriber with a single device that would work across all access networks. How many startups were launched with the idea of delivering technology that enabled subscribers to bridge personal, professional, fixed and mobile domains with a single device? While access agnosticism is still an undercurrent of the most recent convergence movement, the idea of a Swiss Army device has been chucked out of the business model, mostly by device makers more-than-savvy to the profitability flaw in a one-to-one subscriber-to-device ratio. Nope, the one person, multiple device (OPMD) model is definitely the way to go.

Considering what the introduction of the iPhone did to AT&T’s pipes, the prospect of subscribers armed with a quartet or more of bandwidth-sucking devices is ample enough justification for telecom execs to start tilting back a few. The reality of the situation, though, (and here’s where the paradox comes in) is that the greater the proliferation of devices, the better the prospects of operators of tapping into a new revenue stream and capturing a more prominent position in the communications value chain.

Call it the Device Paradox: The more device makers flood the market with products, the more dependent subscribers will become on their service-providing operator. The decade of the device turns out to be the operator’s best chance to capture customer loyalty. Here’s why:

Without question, the most unique attribute of the telecommunications operator is its direct link to the subscriber – whether fixed or mobile. Currently, this unique asset is being exploited by device makers and over-the-top competitors that have treated this incredibly costly infrastructure the same way FedEx treats the streets its trucks use to reach millions of homes each day. As the number of devices proliferates, however, owning the direct link to subscribers, as well as related assets, gains additional value. Much of the force behind the rising value of operator local pipes is related to a diffusion of responsibility. Subscribers who interact with 20 different connections are going to naturally seek simplicity in the management of those connections. Who other than the only entity with the ability to provide a centralized, subscriber-based (rather than device-based) service will subscribers turn to for simplification?

Being able to deliver a three-screen experience, with on-the-fly hand-offs between all screens, is a pretty compelling value-add for operators. When you consider that subscriber will eventually need content and identity coordination across dozens of connections, the telecom operator becomes the only game in town.

But the potential ascendancy of the telecommunications operator in the communications ecosystem goes beyond simple growth in the number of connected device. Paralleling the surge in devices is the surge in importance of information displayed and transmitted on these devices. As connectivity becomes more immersed into lifestyles, subscribers will require a trusted entity to serve as a guardian and facilitator. As valuable as playlists and television programming are to some subscribers, mobile and fixed connections will in the near future be the conduits for the transmission of actual life-and-death information. It is the operator that subscribers are likely to turn to for the timely and sensitive transmission of health information.

In short, as the connected world becomes wider and more deeply entrenched into a subscriber’s lifestyle, the operator emerges as the natural aggregator, or facilitator, for all the pieces that make up a connected life. Imagine a world in which device makers and OTT players, though still powerful, become back-up players to high-profile operators with off-the-chart Q ratings among subscribers. Now that would be a real paradox.