Defining open mobile

So what does it mean to be open in the mobile industry? Google's chief Internet evangelist — and sire of the Internet — Vint Cerf contends that putting a definition on open is a pointless exercise. “Open” can apply to operating systems, platforms, APIs, software and standards. Even Google, the industry's largest advocate of openness, is closed in many ways, Cerf admitted in his Open Mobile Summit speech. For instance, Google Earth has open APIs, which allow developers to build applications on Google Earth, but the program itself is closed to all but internal Google developers. “You're trying to take the word and decide in some absolute sense if something is open enough or closed enough,” Cerf said. “You can be open in different ways.”

To that end, consider upstart WiMax operator Clearwire, which is often cited as being the open antithesis to the closed wireless operators — no contracts, no subsidies, no restrictions on applications or devices, and no caps on bandwidth. Compared to the walled gardens, data caps, contracts and certification programs of the traditional operators, Clearwire appears to be their polar opposite. But according to Julie Coppernoll, marketing director for Intel's WiMax unit, where Clearwire and the wireless operators want to wind up is not that far apart.

Clearwire — which counts Intel among its primary investors — is kick-starting its business with open access, taking advantage of its enviable spectrum holdings while contending with the relative immaturity of the WiMax device and application ecosystem, Coppernoll said. Meanwhile, operators exist in a world where they have always controlled and managed the applications, services and experience of the customer. Just as 3G operators are moving toward open access, Clearwire will eventually offer specific services and applications to its customers — essentially an “unwalled” garden, Coppernoll said. “Carriers had to have the walled garden so they could manage their networks,” she said. “Clearwire has the spectrum to offer the open ocean, but it wants to provide a wide beach on which its customers can get services. There's a big collision that's going to happen as those two business models meet.”

In a similar vein, Ibrahim Gedeon, chief technology officer for Telus, believes open access on wireless networks is inevitable, but that doesn't mean networks will be reduced to a dumb pipe in every instance. In many cases, customers will want to get their services directly from an operator like Telus. In other cases, services will come from other providers, but they'll tie into Telus' network APIs to enable those services. And in many cases, those services will be completely over-the-top, using Telus' network merely to transport their bits, Gedeon said. “Customer will rely on us for coverage, care, applications that impact their subscriber profiles and lastly their ‘network-aided’ business applications,” Gedeon said. In the end, he added, being the “smartest dumb pipe” in the industry is a pretty good business model.

Ultimately operators will make their money not by foisting applications and services on their customers, but by providing a safe and secure environment for customers to find those apps and services on their own, said Steve Elfman, president of network operations and wholesale for Sprint. Sprint's view is “pretty much the open Internet model but with some restrictions,” Elfman said. That doesn't mean banning applications from the network because they compete with a Sprint retail service or consume too much bandwidth. Rather, applications need to be legal, they need to have some provisions for parental control, and they can't cause harm to the network or customers on it, Elfman said.

Rather than ban Google Voice, for instance, Sprint is instead encouraging its use, exempting the application from the 20-cent-per-call forwarding fee it typically charges for rerouting a call. As for managing bandwidth, Sprint, like most other operators, has instituted data caps, which prevent any user from taking up more than their fair share of network capacity. But Elfman said caps, too, will eventually fall by the wayside, giving way to even more sophisticated quality of service and traffic prioritization approaches to bandwidth management.

While the pressure is high for operators to move toward more open networks, operators are not being forced to go there — at least not yet. Though the debate over net neutrality is raging, only Verizon Wireless faces an explicit requirement to open up its network, and that requirement applies specifically to its future LTE network. Carriers aren't adopting new open business models out of altruism. They're driven by the potentially enormous sums of money to be made in this new, more open mobile ecosystem.

A lot of that money will come simply from mobile broadband data plans — from the bit pipe models operators have resisted for so long. “Just because of the law of large numbers, that probably will be the biggest source,” VZW's McAdam said. “Access to the network has always been the big revenue producer, whether it's been voice or data. But it's up to us to create that broader portfolio of revenue sources so we're not held hostage to one of them.”

Operators are still figuring out exactly what those other revenue sources will be. McAdam identified ad revenue sharing with content partners and deck placement as opportunities on the walled garden side of the equation, but even on the open side of the network VZW can charge for access to its network location APIs or for carrier billing, McAdam said. VZW isn't swapping one business model out for another; rather openness is an additive, he said. It brings in a completely new set of subscribers and revenues while increasing awareness and demand for its managed applications platform. When the 4G network launches, the benefits only increase, as the cost of operating the VZW data network goes down and the individual capacity it can offer to customers goes up, he said.

Ultimately, McAdam said, Verizon Wireless isn't being dragged kicking and screaming into the new open world order. It's charging headlong into it. “I don't believe you ever win by being defensive in a high-tech industry like this,” he said.