Who Cares What Consumers Want? We're the Phone Company
The WSJ's Walt Mossberg made an important point in his column last week: Service providers are hampering innovation in wireless-phone technologies. The phone networks are poor stand-ins for end users.
One reason the American high-tech industry has been able to create so many innovative products is that it was able to maintain a close, direct relationship with the individuals and companies that used its products. High-tech companies could quickly determine whether their software, hardware and online services were meeting user needs, and they could revise and improve these products rapidly and continuously.
This direct feedback loop between the high-tech industry and its user base became even better and faster in the past decade because of the Internet. The Net created both an electronic-commerce system where products could be directly purchased, and electronic forums where user comments and complaints could be better heard.
Microsoft Chairman Bill Gates has called this Internet-aided feedback loop "frictionless" because it minimizes the distorting and masking effects of the middleman. It is one of the purest examples in history of the benefits of free-market capitalism.
But in recent years, as the high-tech industry has begun to offer wireless-phone products, this connection between technology producers and users has been blocked by huge, powerful middlemen. In the U.S., the wireless phone carriers have used their ownership of networks to sharply restrict what technologies can actually reach users....
However, I believe that, in the name of valid business goals, the U.S. carriers are exercising far too much control over the flow of new technologies into users' hands. In an ideal world, any tech company with a new cellphone, or with software to run on cellphones, should be able to sell it directly to users. These customers would then separately buy plans from the cellphone companies allowing those devices to work on the networks.
But that isn't how it works. In most cases, manufacturers must get the network operators' approval to sell hardware that runs on their networks, and carriers don't allow downloading of software onto phones unless they supply it themselves. I once saw a sign at the offices of a big cellphone carrier that said, "It isn't a phone until 'Harry' says it's a phone." But why should it be up to Harry (a real carrier employee whose name I have changed)? Why shouldn't the market decide whether a device is a good phone?
This seems like a market opportunity. The first network to let consumers use pretty much any phone they want to would attract lots of new business.