Eric Raymond has been writing almost exclusively, of late, about the future of cell phones. Particularly as it relates to Android versus iOS and which one will ultimately become the dominant mobile OS. Along the way, he’s noted a couple of times that he believes that smartphones will ultimately lead to cellular providers becoming basic “bit haulers.” As I read this post from John Gruber about Facetime on the iPhone 4, I’m wondering if the pieces aren’t coming into place that might force this issue in the nearer term.
My thought here is pretty straight forward. Smartphones are data hogs. They support email, browsing and now live video feeds in addition to voice capabilities. In all likelihood, their throughput needs will only increase with time. An important element of the newer generation of smartphones is their support for Wi-Fi- a wireless standard that supports better data throughput than cellular. Another advantage is that the frequency range used by Wi-Fi is unlicensed- meaning and Tom, Dick or Harry can go out, purchase a access point (AP) and setup a wireless network. In fact, lots of people have, just do a scan in a random area to see what’s there.
So with all the Wi-Fi enabled smartphones, users have a means to access the Internet that completely circumvents the cell providers. I think it’s important to note that cell providers have to go along with this arrangement because their cell networks cannot handle the load of all their smartphone users surfing the web through their cell networks. AT&T’s recent decision to nix their unlimited data plan is evidence of their network’s load limitations. My point? They’re not likely to start locking down Wi-Fi usage or outright removing it from smartphones.
I think a key point that users will have to become more aware of is that everything is data in the digital world. Most importantly, this includes voice. Why is this important? For one, this realization would lower the barrier of reservations in switching to VoIP solutions (Skype and Google Voice). Second, and perhaps more importantly, I think users would become a little more outraged at the double-whammy pricing by cell providers. The fact is that using Wi-Fi and a Skype app, a user can make a phone call without using the cell providers network. Coupled with the fact that a Skype user can get an ID that allows incoming calls for $60 a year and a coverage plan that includes all of North America for $2.99 a month, I think there’s plenty of reasons for people to make a go of Wi-Fi only smartphone usage. Contrast with an all-data plan from Verizon for $50 a month and I think it’s safe to say there’s some incentive there.
In this scenario, the only recourse cell providers have is to open their networks and essentially become wireless ISP’s. The big advantage they bring to the table is coverage. A user can be in their car and still get access to the Web using a cellular network. This is possible using Wi-Fi(only in urban areas), but much more spotty and prone to connection loss- frankly, to the point of not currently being a real viable alternative. Of course, with the cost savings of using Wi-Fi, enough people may decide that it’s OK if they just pull off to the side of the road, or into that Starbucks or McDonalds to make that phone call.
Are we there today? No.
What will it take to get there?
Wi-Fi only usage of smartphones would have to start noticeably taking a bite out of cell providers pockets. I’m not sure if it’s possible to purchase a cell phone that doesn’t have some kind of service plan with it. If this limitation is the case, then clearly this is the first step. With hardware-only providers out there, such as Blackberry, Apple and Nokia; to name a few, there aren’t necessarily a lot of obstacles there. After that, I think Wi-Fi build out would have to improve. This point is murkier but basically, the limitations imposed by Wi-Fi only usage needs to decrease to a point where a significant portion (15%, 20%?) of smartphone users feel its a worthwhile trade-off. I think the cost difference, as noted above, is already compelling. The bigger issue here is Wi-Fi ubiquity, or lack thereof for the now. But given how cheaply Wi-Fi networks can be established, I don’t think it’s insurmountable. Once there, the cell provider changeover would be pretty fast as the incentives to not lose current customers, to grow their subscriber base, and to recapture those who left would be too large to ignore.
Then the battle shifts to one between wired ISP’s (cable, DSL) and wireless ISP’s. But let’s get there first, shall we?