The iPhone's early legacy

One thing that Apple has managed to do with the iPhone, apart from giving marketing departments the world over an inferiority complex, is to focus attention on the closed nature of wireless networks. One of the biggest complaints is that the iPhone is locked to the AT&T network in the US and can’t be used on other mobile networks, while at the same time the phone has to be activated by AT&T to use many of its features. It also doesn’t allow you to download and use third-party applications.

In other words, it’s a classic “walled garden”. And the idea of locking the phone itself to the network is nothing new either, although it seems to be more prevalent over in the US than it is in Asia now. It used to be more prevalent in parts of Asia too. For example, Thailand used to be notorious for using IMEI locks, giving the boys down at one well-known retail outlet a regular source of revenue by unlocking the codes so that they could be used on any network.

Thankfully, that seems to be a thing of the past now and in Asia you can generally buy any phone (iPhones excepted) from any shop and use it on any network. As it should be. In fact, it looked for a while there that wireless operators were moving away from the closed network trend, with carriers like Hutchison earlier this year announcing that it was “tearing down the walled garden”. That followed its “X-series” of services that includes mobile Skype and other popular Internet services for its 3 mobile brand around the world, including in Hong Kong and Australia.

The US is well behind the rest of the world in this regard, however, with most consumers buying subsidised handsets that lock them into an exclusive contract. Now the iPhone seems to have taken the “open” cause back a few steps further, although I doubt the trend will take off in this part of the world.

One influential voice pushing for open networks is Bob Frankston, who is probably best known for co-developing the first spreadsheet, VisiCalc. Now among other things he is a popular commentator and advocate for the user’s right to access any service they want, with the network limited to providing the channel to get to such services.

As he writes in a post on his web site (www.frankston.com/public/?name=OurInternet) , the current telecom model gives control to the carrier at the expense of our own communications need (ie, the ability to use the applications and services of our own choosing). “We must not tolerate being forced to buy services from providers that have a stranglehold on our wires – whether they are physical wires or radios. Today our ability to communicate is limited by the unenlightened business needs of the carriers. This is intolerable and inexcusable,” he writes.

According to Frankston, the biggest impetus for change will come from investors who realise they have far more to gain if the carriers were not in the position to limit opportunity. The other argument is that applications like Skype that run on top of the service provider’s network are fine, but who pays for the investment in future infrastructure? It was brought up in an interview I had last week with Keith White, Alcatel-Lucent APAC security services director, who suggested that such services were threatening the business model of the carriers, which then wouldn’t be able to fund network expansion.

It’s probably the most pressing argument in the telecom world today and runs into the whole network neutrality debate (whether carriers should be able to favour certain applications or services over others). And of course there are no easy answers. Telecom providers are seeing their revenues eroded by new services such as VoIP, but many are adapting and there are no shortages of new entrants willing to give the user what they want. New business models will appear and some players may well go out of business.

In the end, it all boils down to competition. Apple has plenty of competition among device vendors, which is why I don’t think it will be able to keep it’s closed model of doing business with the iPhone, particularly when it comes to Asia. It would be great if we had the same level of competition among networks, particularly if the newcomers decided to embrace an open model. Perhaps then we’d have no need of net neutrality legislation.