Applications and services are fundamental to 3G-4G operator revenues. Understanding how these are offered to the public is only part of the story. The gulf between creation and offering up applications still exists: the mobile service model has opened up by providing data and devices, but the control of products and service offerings limits opportunities for developers, particularly for applications and services that compete directly with mainstream packaged offerings. 

The Internet has evolved as an open bandwidth model. The early attempts to coral users onto web portals such as AOL were dissolved in the pool of rapid evolution of web services and content. AOL was once seen as a dominant force of Internet development and control of content and subscribers – the nexus for the leading applications and content on the web. In a stunning move in 2000, AOL acquired Time Warner media and cable access giant Time Warner for an astounding price of US$182 billion in stock and debt, creating a US$350 billion dollar enterprise. At the time, many saw the new behemoth as likely to dominate the combined vision for Internet web portal access and media creation and delivery far into the future, creating such a powerful competitive force that few could entertain compiling a similar conglomerate to go up against it (See: AOL and Time Warner to merge).

What happened to the vision of AOL-Time Warner?

What happened to the vision of the conglomerated AOL-Time Warner Empire was that creativity and choice could not be generated within the confined walls of a top-down organization regardless of how much money or talented people were amassed behind the efforts. The creative forces of an open, thriving, user choice and participative web environment could not be contained within the corporate organizational structure and methods of design and commercial development. The lesson here is that what it takes to create an efficient cable or Internet network infrastructure is not sufficient, or diametrically incompatible with the creativity expressed on the open Internet and computing environments.

The most compelling factor shaking up the communications industry is the clash between organized network design and the creative force of open applications and content creation. Wireless networks must be designed painstakingly in order for them to work harmoniously over the disharmonious media of the air interface. But the requirement for rigorous control of network design has extended to the mode of control over applications development and services. A large ecosystem is needed to do the research, design, commercial development, deployment that extends to applications and services. This degree of control parallels the command and control construct of the early national Internet service providers. Open source development efforts stem from the early Internet standards and open source web browser development efforts that were much more ad hoc.

Today we see web and wireless communications coming together in ways that bring the differences between controlled network and open source development ecosystems into the forefront. The landscape has shifted to become open by degrees; management of networks has created a well-organized ecosystem of development occurring in wireless and Information and Communications Technologies (ICT), which hinges on developing new ways to create innovation in applications and services. The mechanics include device operating systems and APIs, corresponding online apps (applications) stores, and developer programs including documentation and starter applications.

While the mobile development camp marshals behind the new LTE banner, it’s important to recognize how applications that are gaining the most traction are being generated: while 4G is still embryonic, mobile applications are rapidly shifting to open source. Apple iPhone’s apps store now boasts over 320 unique programs. Still playing catch-up, Google’s Android now boasts over 180 applications. Meanwhile, Nokia’s OVI and Symbian mobile devices and portal developments combined tout just under 200 applications. Android is on track to accelerate as G1 continues to gain momentum, with new devices appearing on major service provider networks including AT&T, and G2 devices being prepared to enter the market by the second half of 2009. 

The convergence of open source web development and mobile service provider control over spectrum access, and subsequent dominance of subscribers, is leading to device partnering for control of the apps store sales channel. Can this lock-up be maintained or will it meet a similar fate as AOL-Time Warner?

We look at the questions raised and peer into the leading edge thinking and visions for how the picture for ITC may develop in our upcoming report, Sizing up the Competitive Opportunities for Verizon (LTE) and Clearwire (WiMAX). This new Maravedis research report explores the coverage, business models, range of applications and impact on current business and competitors that will develop as the Verizon LTE and Clearwire WiMAX networks roll out. Research is being conducted over the coming weeks and the report is expected to be available at the end of May 2009.

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