Why does anyone believe that a carrier will sell cheap no-contract unlimited data-only service (probably at a loss) in exchange for a non-exclusive on a phone that isn't even the best in the world? I guess it's appropriate that Stross is tackling this topic since it sounds like total fiction. :-)
The article suggested that the current structure of the telco industry would have to change "the economic basis of your mobile telephony service in 2019 is going to be unrecognizably different from that of 2009".
I think there is something to this argument. I worked for a telco OEM in 2005. Then it was possible to buy the hardware to build an "NFL" city backbone in the US for about $50 million. Adding fiber, end user access, operations and installation would clearly add much to this but it is likely that within the next decade that a wireless network with a significant nationwide footprint could be built by a company capitalized with a few billion dollars while not carrying the legacy operations costs of the incumbents. This company would likely have no problem in driving network costs to the ground. This almost happened during the first internet bubble and could this time around follow from the current cloud computing trend. Adding compute services on top of network services could help to regain some of the margins lost by commoditization of the network.
What you're talking about sounds totally awesome, except these rumors say that one of the existing carriers is going to blow up their whole business model about two weeks from now. And that just doesn't make any sense.
Stross directly explained what my startup (Avecora http://avecora.com) is trying to work towards.
The current mobile telcos provide two major things: the a) network infrastructure and b) the network experience. The infrastructure is the physical satellite/cell tower/everything supporting the mobile experience. The mobile experience encompasses the use of the network: phone numbers, SMS, digital downloads, WAP, etc.
However, the aspiration for Google (and my startup Avecora) is that the mobile telcos transform themselves into a strictly infrastructure play, essentially becoming the backbone NOT OF wireless telephony/texting/etc., BUT RATHER OF wireless intercommunication. Indeed, we want them to become completely hands-off in terms of the wireless experience, because they're good at infrastructure and making communication successful, but they're less good at innovating in the experience.
One of the reasons we don't want them controlling the wireless experience is that they have to support so much legacy stuff. My startup's big selling point is in the Avecora Network: there are no real "phone numbers," but rather it operates on a more convenient structure: the mobile network is a social network. You call a person, not a phone number.
We both do want the internet to eat the phone system, and I think it'll offer a much more enriching and integrated mobile experience than it is today, especially when so much already works over TCP/IP (VoIP, for example.) However, with phone companies already making an absolute killing in costs (my bill this month is $90) I don't see this happening anytime too soon, especially the idea of VoIP replacing voice. The carriers will take a huge loss and there's no way in hell they'll sign off on that. (I'm skeptical of T-Mobile's $30/mo data-only plan—I can just grab that and hook up my $0.021/min Skype account to it.)
The best idea, and how we're approaching it, is to price it as one Connection Package and have it be on par if not a bit less than current prices. That's the only way it will really work for both the consumer and the telcos.
Google will get there first, perhaps with the killer product, perhaps not. Indeed, we are competing with Google, and we don't have a prototype right now—but in this space, it seems like, at first, it's more about the strategy than what we've got. (Wish me luck.)
That flies in the face of conventional thinking, which says ideas are cheap and delivery is everything. Unless conceptually you've figured out such an enormous breakthrough that the solution is literally in your hands right now, you have no competitive edge over anybody, and you're working with a concept simplistic enough a thirteen-year-old could understand it. That's not a good thing, if the concept's all you've got. It means the thirteen-year-olds at Google and Skype have figured it out too.
But you're adept at saying very simple and ugly things with enough words that it sounds almost swallowable. I had to reread what you posted twice to make out what you were saying. Basically, you're admitting that Skype has an alternative that's cheaper and more effective, and that it works perfectly save phone companies don't like it. Your solution is to price gouge the same way phone companies are right now so that people will be tricked into thinking there's a profit. But phrased like that, it sounds more like a concept without an idea, artificially priced at a level beyond its actual value.
I wish you luck not for Avecora but for whatever idea you have after this. The best way to learn quickly is to pursue a wild, failing ambition. Two years from now, if you've learned, you'll have a savvy that's the envy of your peers. Just make sure that for the time being, you're enjoying your work. Then failure really doesn't matter.
