Joi Ito is an influential guy in new media circles, and he’s fretting about Mobile Internet. In his post “Is mobile Internet really such a good thing?“, he draws attention to some of the fundamental differences in business models between wired Internet and mobile Internet. It may all be IP packets at a technology level, but the way money flows around is very very different, and that’s what Joi is concerned about.
To briefly summarise his thoughts:
- The mobile internet ecosystem is very regulated; either by government and law, or by the network operators and their own business plans
- The operators are driven to pursue revenues “above the wire” (from applications) because the cost of their spectrum and networks is very high
- A significant amount of money goes to vendors to make the network equipment – (infrastructure and, I guess, handsets)
It’s these issues which make Joi wonder if models that work on wired Internet will successfully transfer to mobile Internet.
I think that if we move over to mobile too quickly we’re risking moving our game to a platform where the DNA is not what we’re used to on the Internet and most importantly, putting money in the pockets of people who do not redistribute it to startups, but instead feed giant vendor ecologies instead.
To me, the obvious differences between wired and mobile Internet are:
- You pay for your computer and you probably expect to keep it for 3-4 years. You don’t pay (directly) for your mobile phone, and you probably want to change it every 1-2 years to keep “in fashion”.
- Your wired connection is probably pretty cheap for your ISP to maintain, and has a significant amount of capacity that can be dedicated just to you. The spectrum for your mobile connection probably cost your Telco a huge amount of money, has to be shared amongst everyone in your immediate vicinity, and probably isn’t that spacious.
- Because of the two reasons above, your wired ISP probably doesn’t see itself as a significant content provider and certainly wouldn’t try and take a cut of all the transactions processed across “the Internet”. Your Telco probably needs to create “above the wire” application based revenue to make their business plan stack up, and keep the money flowing to pay for new handsets and new network infrastructure.
It seems to me that the ideal mass-market mobile application would benefit from a network where:
- The users pay for their own devices, and expect them to last some time
- The network operator has low infrastructure and spectrum costs, and offers widespread coverage
Hmmmm… I wonder what technology could possibly fit that bill. Answers on a postcard please, copied to Joi Ito.
Seriously, it does serve to highlight again that a broadcast technology has unique strengths, even in a world apparently dominated by bi-directional IP. If you can come up with a set of applications that can be broadcast (or combined with a lightweight use of IP), then you’re going to have a massive advantage over the guys relying on the Telcos to enable their business plans.