Daily Dose of iQ: "Mobile operators will lose voice services to mobile platforms"

Sep 13, 2011 — Allan Pulga

Two days ago (Sept. 11), GetJar CEO Ilja Laurs wrote a column for Gigaom.com, predicting a future where your mobile device would be able to make voice calls SIM-free, independently of a carrier's cellular plan.

Through the magic of Wi-Fi networks, you could make voice calls with a phone number provided by Google Talk or Skype, he writes. "No longer do you have to belong to a specific carrier -- your phone automatically picks the strongest and cheapest network option at any given time. Your network access, along with voice, app/in-app purchases and everything else are provided to you by the mobile platform provider.

"The carriers are only there to run network infrastructure and sell bandwidth to two to three mobile platform providers. Let’s face it, the only two things that still connect carriers to consumers are the voice number and billing for the network access."

Laurs foresees a scenario where we won't even need phone numbers -- we'll just make calls directly to someone's Facebook profile or other third-party apps.

Shaw and Cisco announce plans to build Wi-Fi network across Western Canada

Almost on cue, The Canadian Press reported yesterday (Sept. 12) that Shaw Communications and Cisco have struck a deal to set up an extensive and advanced Wi-Fi network in Western Canada to provide broadband wireless services.

This goes beyond the future Laurs predicted: Shaw and Cisco are bypassing the existing Canadian carriers to operate their own network infrastructure and presumably undersell the carriers, which would certainly steal subscribers away by the thousands. The new Wi-Fi network would allow Shaw customers to connect to the Internet via "thousands of access points across Western Canada." They won't need cellular (for voice or text) or 3G (for Internet access) anymore.

"Canadians' use of smartphones and tablet devices has grown exponentially over the years and more than ever, consumers are relying on Wi-Fi to explore the Internet, connect with loved ones and enjoy entertainment," Shaw president Peter Bissonnette said in a release.

What does this mean for wireless carriers and retailers?

A consumer-led shift away from "carrier wireless" toward "cable/Internet Wi-Fi" for voice, text and Internet communication could have profound effects on North American wireless carriers and retailers alike.

Much of carriers' and retailers' profit is generated through contracts and phone activations (for carriers), as well as through commissions (paid to retailers by the carriers).

But if millions of North Americans choose to buy "unlocked" phones -- as millions of users already do, and have been doing for years, around the world -- carriers and retailers will be forced to change their business model. The existing co-dependency between carrier and retailer would deteriorate because consumers would just need the phone itself, SIM-free and contract-free.

The wireless market outside of North America (and especially in the developing world) is largely based on prepaid (which still operates on SIM cards, granted) and already operates this way: retailers just selling devices. Anybody can do it, really. How will retailers differentiate themselves if the North American market moves in that direction? It will definitely place a greater emphasis on customer service and the in-store experience.

Big questions to consider:

  • Is Laurs correct in predicting it's only a matter of time before a U.S. carrier "cracks" and starts selling bandwidth to Google, Microsoft or Apple?
  • Are carriers ready to compete on just infrastructure and bandwidth?
  • Are retailers ready to compete on just service and selling devices?

Let's get a good discussion going here. Please post your comments below.

Topics: Wireless Trends, Mobile Industry, Customer Experience

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