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Wednesday, July 29, 2009

Is the "subscription" mentality holding back the telecom industry?

Whenever I see discussions about new network technologies like LTE or WiMAX, the usual metrics and terms always crop up: subscribers, ARPU, "per month" and so on.

Yet I've had a nagging feeling for some time that it's this focus on subscribers and subscriptions that is holding back the telecom industry, especially in mobile. It's frozen into business models, standards, architectures, financial reporting and expectation, remuneration and bonus structures and countless other facets of the industry.

A couple of months back I pointed out how this mentality leads to standards that further entrench existing business models. I've also highlighted what I refer to as The Tyranny of the SIM Card on numerous occasions. It's no coincidence that the S in SIM stands for "subscriber".

Now obviously subscription models are certainly desirable, whether they are on a long-term contract basis or a prepaid model. But the notion of an ongoing, regular "monogamous" commercial relationship is not necessarily necessary or appropriate, especially for data connectivity.

The main benefit of "subscription" relationships from the end-user standpoint is a consistent phone number, and in fixed telecom a consistently-managed piece of wire. Having an easy payment mechanism is useful too.

But we already benefit from many other telecom services than those we "subscribe" to ourselves. They're embedded around us in daily life: credit-card swipe machines, hotel broadband services, WiFi hotspots, click-to-call websites and so forth.

As individuals, we don't "subscribe" to electricity, yet it's all around us, and we use it multiple times a day, with multiple individuals or companies or governments picking up their share of "our" usage fees. Imagine if you had to have roaming agreements, that meant you paid a fee for your implicit electricity consumption when you sat underneath another person's or company's light bulb.

I'm wondering if this is a model we should look at for telecoms as well. If I'm in a bar, trying to tell a friend how to find it, why am I doing it on *my* phone? Why not the bar's phone, as that instance of communications is part of the bar's implicit business model?

Certainly, there's a huge argument for embedding data connectivity into devices - why should I need a "subscription" to connect my PC to mobile broadband? Maybe Samsung or the retailer should bear the cost and administrative overhead?

I think this will happen gradually, and with it I also see the supposed link between "subscription" and identity evaporating even further. I think Google gets this with Google Voice - why should a network operator presume to "own my identity" simply because they provide me with a number?

Whenever I see "subscriber" numbers for LTE or 4G, stretching out to 2015, 2020 or beyond, I see someone who's blinded by the subscription philosophy. I think by 2020, it will be a concept seen as quaint or niche, rather than typical. Yes, I know it will make all the business model spreadsheets messy, but that's tough - I just don't think subscription-type relationships are the way people will consume most of their communications in future.


Fazal Majid said...

This reminds me of how the connection-oriented model persists in Bellheads, or how deeply call duration based pricing is entrenched in regulatory regimes.

The Amazon Kindle bundles connectivity (from Verizon) as part of its purchase price and is a great example of the way forward.

Andre said...

Isn't this close to some of the pro-VoIP arguments? Or perhaps even close to things like google voice and others?