The next big thing is about to happen. If you noticed, that is. Phone OEMs like Apple and Samsung crushed the economics of phone buying, hitherto completely dominated by the carriers, with little or no say from the OEMs, even on their own profitability. Even the mainstream devices were feature-locked and enabled only with the carrier’s blessings. In other’s words, in the game of “who needs who”, the carriers had the winning hand.

Apple made a beginning of a new era when the “carriers needed the OEMs”, taking a fixed percentage of the monthly subscription revenue. Starting 2007 up until now, most changes, significant as they were, that have happened only alter the financial dynamics.

Now begins the technological breakthrough.

Consider the following 3 news updates over the last couple of months –

  1. Apple releases something called the “Apple SIM” — where the SIM circuitry will be integral part of the phone, not requiring a user-serviceable slot. This basically marks the death of the SIM card as we know it, and all phone subscriptions will be software-based.
  2. Google is announcing their MVNO service — Taking advantage of the low-cost unsubscribed bandwidth the carriers have anyways spent a lot of money on, Google intends to expand its reach of providing internet connectivity to more people, and in the process expanding the overall clout of Google, not unlike the already rolled-out project called Google Fiber. Perhaps unnoticed by many, this service will further broaden the capabilities of Google Voice, a limited functionality service where a user’s phone can be virtualized, but could not make a dent in the market until now.
  3. Another Tier 2/ Tier 3 regional wireless service provider announced a data-only package — already available tablets and similar devices, but only as part of a package plan — where your primary phone could easily become your favorite calling app such as Skype.

These updates, along with the fact that WhatsApp (and similar apps) practically destroyed the SMS economy, I see the following happening in the next 3–5 years.

  1. Wireless providers will be reduced to nothing more than businesses that install large wireless infrastructure and lease it to other people that sell services. In other words, you just won’t a “AT&T service” or a “Verizon service” as we know it today.
  2. The actual wireless service will be provided by 100s — perhaps 1000s — of companies that provide transparent and integrated service. Many of these will already have ecosystems on their own — examples are Apple, Google and Amazon.
  3. In all likelihood, the overall spend from a consumer standpoint will go up or stay the same or be bundled into other services. For example, you may be going to an Apple store and buying the phone as well as Apple’s own wireless service on a variety of financial arrangements. Another example — Amazon may provide a Fire Phone and Amazon Wireless Service and a Prime subscription — all for a bundled price.
  4. The primary identity of a phone — the phone number — will likely be associated with the user account and be deployable to any phone by simply logging in to it. In other words, if I forgot or lost my phone, I could borrow your phone and login to it, loading not only my phone number, but my entire collection of contacts, mails, apps, music etc..

The wireless providers have every reason to not make this happen. If it does, they have every reason for them too to be one of those providers, effectively sharing the pie with the Googles and Apples of the world. They would have a strong disadvantage to begin with, since they are used to decades of steady flow of revenue, from helpless users, 2 years at a time.

The second reason this won’t happen is there is just no reason to be in the business of managing pipes, transmitting tons of information, with no “skin in the game”. This is the same reason Verizon, Comcast etc.., are fighting against Net Neutrality. It is not about money. Well, it is, but not exactly. It is about keeping an avenue open where they can innovate further and “nickel and dime” us further.

So while it may appear to you that companies are just fighting to make more money and it may appear to you that they are burning midnight oil to see the smile on your face, the consumer’s, the actual fight is a bit like seeing sausage being made. Regulations and corporate lobbying will be a big part of this. As things happen, I will reflect on this post, or otherwise on this blog.