Posted by: Mark Hawkins | January 6, 2010

Nexus One reignites smart pipe debate

The neverending debate surrounding whether mobile network operators should be dumb-pipes or smart-pipes has been reignited in this highly mobile newsy first week of 2010.

In very short: the debate concerns whether mobile networks should concentrate first and foremost on supplying robust, reliable connectivity to their customers, and relegate the priority of services which they wrap around this. Some argue that such services are not their bread and butter, they don’t do them well so they shouldn’t try.

With the long term evolution of connectivity heading towards IP rather than cellular networks, it’s understandable if networks want to get their fingers rammed in as many pies as possible, as soon as possible, whilst never losing focus of the connectivity issue. With O2 investing £100M to improve its smartphone squeezed 3G network, and main revenues still resoundingly being voice and SMS, this won’t be neglected anytime soon.

But yesterday key threat Google bared its gleamingly sharp teeth. A physical unveiling of their Nexus One handset at The Big G’s California HQ was complemented with an online launch of the device which was so potentially complicated, yet so exceptionally clean and clear, you could almost bathe in it.

Consumers can order the new handset in a mere six clicks directly from http://www.google.com/phone. Given the choice to either buy the device outright and insert your own SIM card, or get it financed by a compatible mobile operator or carrier who supplies your connectivity, the operator is effectively demoted in the purchasing process.

Commentators have suggested that the shrugging off mobile operators is a byproduct of Google’s renewed focus on mobile advertising – as hinted at by their acquisition of Admob before Christmas and newly countered by Apple’s acquisition of Quattro Wireless just yesterday. That’s where the bucks are; not so much in device sales. And mobile advertising is another area where some argue that mobile networks have tried to play smart, but not yet to cover themselves in glory.

So we return to the dumb-pipe / smart-pipe debate.

O2’s original exclusivity of the iPhone helped it earn Apple shine by osmosis. The festive period just gone has seen another joint venture in Apple iTunes’s 12 Days Of Christmas promotion, whereby a single piece of iPhone / iPod friendly content is given away each day: a music track or video, a television episode, a game or application.

Personally I’ve enjoyed it and found the experience pretty smooth, receiving daily push notifications to the application on my iPod Touch, connected via WiFi. Some of the content hasn’t floated my boat, some has, yet it has seemed reasonably wide in appeal, as far as the i-userbase goes.

However, my understanding is that the 12 Days of promotional giving hasn’t fostered much true love with O2 customers. The UK mobile network has been promoting the piece of content each day via SMS messages to its iPhone customers, but the key opt-out or unsubscribe mechanism: “Reply STOP to stop receiving these messages,” seems not to be working. This is a basic regulation which must be adhered in the running of any SMS promotions, and a full working mechanism should always be in place. It’s an area UK Premium rate phone-paid services regulator, PhonepayPlus is especially concerned about.

When something like this goes awry on such a scale, not only does it fundamentally sting, but it damages the credibility of other similar future campaigns, makes consumers hesitant about opting in and volunteering their mobile numbers in future promotions. This is compounded by the fact that a decent fraction of iPhone users will be appropriately equipped and inclined to broadcast their disgruntlement, spreading negative messages still further.

And it gives fuel to those who claim that mobile networks shouldn’t even try to be smart and add such services and campaigns around their bread and butter of providing reliable connectivity.

So you can see why Google, Apple and perhaps even Microsoft (at the back), might be whetting their lips: mobile advertising, services, and fairly long-term evolution of connectivity.

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