op-ed contributor

Static on the Dream Phone
Published: December 15, 2007
David Plunkert
THE Internet and the cellphone are on a collision course.
In the future, the cellphone and similar wireless devices, not the personal
computer, will be the primary interface to the cloud of information services that
we now call the Internet. The demand for Internet-style applications on the
phone — e-mail, maps, photo and video sharing, social networking and even
Internet telephony — is exploding.
Meanwhile, cracks are appearing in the control that cellular carriers have long
held over their networks. Verizon announced last month that it will open its
network to “any application and any device” by the end of next year.
But while Verizon’s pledge sounds promising, the language in which it is couched
makes me wonder whether Verizon understands what a true open platform looks
like. The announcement states that “the company will publish the technical
standards the development community will need to design products to interface
with the Verizon Wireless network,” and that “devices will be tested and
approved in a $20 million state-of-the-art testing lab.” It’s not yet clear what
standards developers will need to follow to write applications that work with both
the device and the network, and who will control those standards.
This is not “open.” It’s just a little less closed. A true open platform like the
Internet doesn’t have certification of trusted devices or applications. Developers
get to do anything they want, with the marketplace as their only judge and jury.
Both the personal computer and the Internet flourished in an environment of
free-market competition. Tim Berners-Lee did not have to submit his idea for the
World Wide Web in 1991 to a “state-of-the-art testing lab.” All that he needed to
unleash a revolution was a single other user willing to install his new Web server
software. And the Web spread organically from there.
There’s a lesson here for Verizon and other cellphone companies. Like the open
architecture of the personal computer, the open architecture of the Internet
didn’t mean the end of competitive advantage. What we learn from the history of
both is that open platforms engender “winner takes all” network effects. Once a
company gets a first-mover advantage, the mass of users adopting the company’s
application or platform makes that product more attractive to the next user.
The free-for-all that I.B.M. started in 1981 when it published the specifications
for a personal computer that anyone could build ended up with Microsoft as the
dominant software provider for the PC. The online free-for-all of the ’90s and
early ’00s is leading us in the direction of dominance by a few huge companies
that have learned the new rules of the Internet economy.
For the current generation of Internet applications, sometimes referred to as
“Web 2.0,” the data collected from users is the true source of competitive
advantage. And the first movers, the companies that understand and apply this
insight, have services that get better fast enough that their competition never
catches up.
The power of a social network like MySpace or Facebook isn’t in its software or its
control over which applications get on its platform. It is in the critical mass of
participating users. Ditto for eBay, Skype or YouTube. Even less obvious cases
like Amazon, where user annotation makes for the best product catalog in the
world, and Google, whose search index and ad auction are both driven by user
participation, show the power that comes from harnessing the collective activity
of everyone who uses the service.
Cellular carriers need to embrace this insight. Winner-take-all profits can be
achieved by opening up their networks and then harnessing community
contributions (including the contributions of software developers) to improve —
or invent — new services. Google is trying this with its new Open Handset
Alliance, which combines an open-source phone platform with an Internet-style
application development model.
Imagine, for a moment, that Verizon were to think like Google or Amazon. It
could give you access to your entire call history, every phone call you have sent or
received, not just your last 10 phone calls. It might build an address book for you
based on everyone you had ever talked to, with top results for the numbers you
call most often.
And what if this phone company opened up its databases to developers of
software applications? We could soon see mash-ups of your call history with the
address books from your personal computer, your telephone and your social
network. Now imagine a user community turned loose to annotate that data.
Consumers would flock to the best software, made by independent developers
that a cellular network would enable by building a true Internet-style open
platform. Goodbye to user-unfriendly service contracts as a way to keep
customers captive. Who would switch carriers when so much knowledge about
your social network resided on your phone company’s servers?
In short, the race is on for competitive advantage in the truly open cellular phone
network of the future. Verizon hasn’t moved far enough — yet. If the cellular
carriers don’t act, Google and its partners will beat them to the prize.
Tim O’Reilly, a publisher of computer books, is the co-producer of the Web 2.0