Mobile Innovation

Mobile innovation in the last couple of years has been absolutely incredible. Just five years ago, all smartphones were more or less crappy. While Blackberry had the email space efficiently locked down, all other applications were really tedious to use: Internet browsers could not deal with anything but the most simple websites; games were limited by slow processors and tiny screens; usability of the usual stylus- or keyboard-driven navigation was disastrous -- these devices were just horrible to use. Today, there are multiple great products in the market that are revolutionizing the mobile space and for the first time ever provide real choice: whether you are an Apple, a Google Android or a Blackberry person, the mobile space is exciting and enabling ever-new business ideas, not least of which mobile advertising.

But the one thing still holding back mobile innovation are the networks. Those of us who use AT&T's service in any major urban area, particularly in Manhattan, know just how horrible their service is. The complaints do not focus only on dropped calls and slow data connections, though, the networks are active roadblocks to further mobile innovation. They place all kinds of restrictions on the use of their network: no VoIP, no video streaming, no tethering. And it's not just AT&T either, Verizon is little different. What is motivating these networks? For one, they are heavily-regulated, capital-intensive oligopolies -- never exactly a hotbed of innovation. But they also know how to drive up short-term revenue and boost the all-important ARPU (average revenue per user). And as long as all networks are equally user-unfriendly, they can get away with all those little annoying tricks.

What's this all mean? We should really hope for somebody to disrupt the cellular networks. It is probably infeasible to just launch a new competitor. But Google has already dipped its toe in the water by participating in the 2008 wireless spectrum auction. So maybe somebody else has another ace up their sleeve?