Blog of Wade Making Connexions

How the Australian Carriers Missed It

With the launch of the iPhone, a movement has begun—Mobile Open Internet Access. This movement is going to really hurt the Australian Telecommunications Industry due to their investment in The Walled Garden. I’ll demonstrate, from a slightly insider’s perspective, their extensive investment in this Walled Garden and how they got it wrong.

The Carrier’s Walled Garden was set up in conjunction with the network providers and the handset makers themselves. Why is everyone on board? Because it’s in their best interest to keep the users in the Walled Gardens. Ericsson, the builder of many mobile networks in the world, and supplier of many handsets, Does not see itself as an infrastructure company, but as a Content and Services company. They are not alone in this mentality.

Carriers, such as Hutchison/3, see it’s core market not in the voice industry, not in the data industry, but in the same space as the infrastructure providers - The Content Industry. I have no doubt, having also used Optus ‘Zoo’, and Vodafone ‘Live’, that the same games are also being played by these carriers.

By keeping the Wall up, users only have access to internal content. This content is double charged 1 at premium rates. Billing per use, per week, per month, with nowhere else to go, and often recurring costs, is a great revenue model. Who wouldn’t want to get in on that?

The consumer was sold short. By limiting access to the internet, and degrading the internet experience, they pushed us to their own internally provided content. I can’t count how many high level meetings I attended where this was the plan or strategy. Even concepts like Three’s X-Series, which “pushes barriers” are crippled in relation to the open internet counterparts.

I questioned the principles of closed systems and network deployment so often I lost hope of them seeing the light. Management just didn’t and don’t get the internet. They don’t understand the principles of open unfettered access. Net Neutrality is another example of the general carrier mindset.

Sometime around mid last year, the noise for open internet access finally got so great, that the marketing departments realised that there was a ‘mobile broadband’ vertical to tap into. Marketing saw their existing 3G network would be able to support an active internet userbase. They saw more money. Yes, Mobile Broadband was born not through business folks, nor a philosophy of providing access now that they could. It was a Marketing Rush To Market.

Now the carriers are all playing catch up, some with engineers flying all around the country re-engineering points of presence, upgrading links and routers to facilitate internet traffic, etc. Links are always often over maximum capacity. It’s obvious that the upper level management don’t understand the internet and it’s operation. If they did, all this would have been built in, instead of being retrofitted at extremely high costs. This again, is across all the local carriers.

Their networks were not designed to carry internet traffic. The core mobile networks have only recently been migrated from an ATM based network, to an IP/MPLS core. With this move, the core networks, and their traffic profiles, now reflect an ISP more so than a mobile provider. With the shift to an ISP model comes the issues associated with running an ISP.

The carriers did not, and still do not, have the required understanding or mentality of an ISP. Basics in NANOG101 are still extremely foreign concepts. Governance and Legal issues such as privacy and accountable logs, requirements of running an ISP, are beginning to be addressed over a year after launch.

Now, with the iPhone, the Carriers are starting to wake up to how wrong they have been. Their Walled Gardens are rapidly crumbling down. The millions invested in content servers and are going to see a huge chunk of their revenue dry up. Who would pay for data charges, and content charges, when there’s better content to be had on the internet for free?

  1. Double Charged; First Charge – the user pays for data transfer/transmission costs. Second Charge – The cost/price of the application/ringtone etc

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