The press surrounding the emergence of smartphones rightly focuses on the advanced features and functionality these new gadgets offer. This very interesting InformationWeek piece says that these devices, and the 3G networks on which they ride, also will lead to important changes in the relationship between carriers and their subscribers.
Today, carriers provide cell phones on a loss-leader basis and, in return, largely control the features that are available to users. They also decide which devices will be allowed on their networks. This is an increasingly unsatisfactory as business and consumer users covet sleek new devices that in many cases can't be used on their networks. Carriers' rationales, which often focus on security and reliability concerns, do little to quell customer dissatisfaction.
The story says that the Federal Communications Commission and Congress are showing little interest in mandating that carriers "unlock" phones. Unlocking makes it easier for a device owner to use it once he or she switches carriers. There also is no regulatory push to preclude carriers from blocking features -- such as Wi-Fi -- a particular device is inherently capable of providing. In other words, control, at least at the regulatory level, will remain with the carriers.
On the other hand, the marketplace is persuasive. The potency of 3G networks and the convergence of the consumer and corporate markets -- smartphones, with a tweak or two, can be used by either constituency -- means that carriers are answering to groups that are increasingly unwilling to accept artificial boundaries that mainly exist to serve the carriers' interest. This is evident in increasing efforts to help people unlock their phones.
The likelihood is that carriers will more often bow to consumer and business demands as a way to win market share from competitors. Though phone companies are resistant to change, evolving from control freak status is in their best interest. It will free them of the ill will they now generate by placing artificial boundaries on attractive features. It also will allow them to work with vendors to squeeze more revenue out of their networks.
The bottom line is that the way in which carriers currently run things worked fine when cell phones were rudimentary communications devices. This structure won't endure as ever-more sophisticated generations of powerful phones and users emerge.
Business customers must make sure agreements with carriers allow them to take advantage of changes in rules concerning unlocking and feature blocking. The emergence of powerful networks and sophisticated devices likely will set off a chain reaction that will change the relationship between carriers and their subscribers. Businesses must make sure their contracts allow them to take part in this enticing future.