Fast Forward: William Quigley

Clearstone Ventures

Investing in the mobile industry isn't for the faint of heart. In some cases, fortunes rise and fall at a staggering pace. Mobile ESPN's quick demise is evidence of that. In others, so much hype is attached to new concepts that actually require long gestation periods. William Quigley, managing director at Clearstone Ventures, has invested in companies targeting long-awaited segments such as fixed/mobile convergence while also keeping an eye on how carriers address mobile content. Telephony Editor-in-Chief Dan O'Shea recently spoke with Quigley about his views on investing in the mobile industry. The interview, conducted one day before the decision to shut down Mobile ESPN, also veered into what Quigley, a former Disney executive, thought of his former company's mobile aspirations.

On Disney's efforts in the mobile virtual network operator space:  I've tried to talk to some of my friends at Disney about what's been going on there. The thing about Disney is that it's still primarily a studio culture — it's that and theme parks, but the studio culture is essentially the part of the business that is responsible for the mobile initiatives. I don't think Disney is very adept at vertically integrating businesses. With Mobile ESPN, I think the price was too high to start. Forty dollars per month is a lot to pay for content — some of it unique, but some of it available elsewhere. There's no compelling enough reason they've come up with to pay that much, and I'd think they'd want to drop that to around $25 a month. I think [Mobile ESPN's difficulties] show that people aren't willing to pay that much for a pure content approach. I think they will pay more and stay longer with a provider of a quality network.

On investing in mobile content and video:  I'm concerned about the walled garden approach and how soon the mobile carriers open up their walls to other content. With mobile video, it's early, and there are various ways to still participate as an investor — on the semiconductor side, on the device side, on the transport side and on the content and digital rights management side. Actually, in semiconductors, it's not early, and we would probably not invest right now in that. In semiconductors, you have to be very early and very lucky about the chips you're building and what the market is like on the horizon. On the handset and battery side, you have a lot of companies already. On transport, I would say maybe that's an interesting investment, especially with SIP coming, making it more efficient to connect and monitor transmission quality. If you invested, it would be in products being sold to the carriers, but then that brings its own set of challenges and issues. Content and DRM applications — if we were going to invest in mobile video right now, I think that's where we would invest.

On fixed/mobile convergence:  The broadest and biggest theme we're looking at right now is fixed/mobile convergence. There's the convenience element and also the productivity boost to be gained from convergence, but the cost reduction aspect of it is compelling. We have invested in three companies [DiVitas, Meru Networks and Sync Voice] in that area thus far. I made my bet on the enterprise. In the U.S., I don't think you see carriers doing a lot with fixed/mobile convergence right now. I've invested in companies that have sold stuff to carriers in the past, and that's a five-year process. I'm not optimistic that in the next two or three years, a lot of money is going to be made off carriers' fixed/mobile convergence services. T-Mobile has been aggressive, but they aren't having to worry about commoditizing their landline pipes. Carriers here still need to educate themselves about [IP multimedia system] as a framework and making interoperability a reality. Elsewhere in the world, it's very different. In Japan, carriers like DoCoMo and KDDI have been very aggressive [about FMC services].

On the venture funding environment in the telecom industry:  I'm kind of happy that most VC firms have chosen to focus on the consumer Internet segment. Many more billions of dollars were lost on telecom when the bubble burst than on the Internet, and that's why for telecom, there has maybe been a slower resurgence of venture investment.

ONLINE

For more about Mobile ESPN, visit our Web site and search using the keywords “Mobile ESPN.” For further coverage of fixed/mobile convergence, click on the IMS or Wireless One-stop pages.
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