AT&T Exec: No `Jihad’ Between Carriers & Over-the-Top Apps
Among startups and app developers, it’s pretty close to gospel that major wireless carriers are slow to adapt and hard to work with. One high-ranking AT&T executive says that’s changing, even if the pace may seem slow from the outside.
“We know what’s going on. We embrace what’s going on,” says Abhi Ingle, AT&T’s vice president of advanced technology solutions. “It is a transition that is not going to happen overnight.”
At a panel discussion hosted Thursday by Chetan Sharma Consulting, Ingle also said the end of unlimited data plans for mobile customers was essential to ensuring that carriers could pay for their networks.
He and other panelists at the Seattle event also agreed that carriers and outside developers will need to settle into a more collaborative working relationship over time, as mobile devices continue to spread and grow more powerful.
“It’s not a one-year, two-year, three-year change. It’s going to be a 20-year change. It’s going to be bigger than anything you’ve seen before, including the move from mainframe to PC,” Ingle says. “This is the ultimate democratization of computing.”
That democratization has upset traditional business models. It’s also spurring carriers to be more open to outside innovators as they compete with not only each other, but the software companies that offer operating systems and popular “over the top” services that other companies run on a carrier’s network..
For its part, AT&T has spent millions of dollars to open mobile developer centers in Texas, California, and Israel. That project, a partnership with major venture capital firms Sequoia Capital and Kleiner Perkins Caufield & Byers, is aimed at encouraging more developers to tailor their work to AT&T’s technical specifications.
Ingle says the company is also working to increase the amount of application programming interfaces, or APIs, that are available to outside developers. APIs give outside programmers an opening to other companies’ normally closed-off software systems, providing a place to easily plug in new applications.
For a carrier like AT&T, that could mean encouraging new ways of using assets such as user location data, or the ability to bill everyday purchases to a monthly phone statement.
“We laid down a very powerful broadband platform, and the full expectation was that there were going to be a bunch of services from that—some of them that were by us, some of them that were by others,” Ingle says.
In the past, network operators exercised a huge amount of control over the software and hardware used by their customers. The introduction of Apple’s first iPhone in 2007 smashed that model, driving power in software and handset development toward the computer and Internet companies that now run the mobile operating systems.
That has led to some competitive tension. In a recent speech, Sprint CEO Dan Hesse took a shot at some of the biggest names in consumer mobile innovation, including Apple and Amazon.com, equating them to freeloaders: “They are called over-the-top players because … they ride over the top of our enormous capital investments.”
Ingle was quick to rebut that remark when it was mentioned at Thursday’s session. He said Hesse’s seeming bitterness owes to Sprint’s own decision to continue offering unlimited data plans for customers, which AT&T moved to eliminate a few years back.
“It is a simple economics issue. This is not a good-and-evil existential matter that people make it out to be,” Ingle says. “We put $56 billion into our network over the last three years. If you think we don’t want to get paid for it, you’re crazy.”
Developers should want the carriers to get paid for that huge expense, he added, because they need the networks to keep improving and offering a growing pool of mobile computing users upon which to build new businesses. Without tiered pricing that gets more revenue from bigger users of bandwidth, he said, the carriers will remain stuck with few options.
“You have a one-way situation where your costs are going up and your revenues are flat. It doesn’t work, OK?” Ingle says. Hesse’s tough-sounding comment, he says, “is from somebody who is stuck in that paradigm.”
“We broke that two or three years ago. We took a lot of arrows in our back, but we had to. There was no other way around it,” Ingle says.
Smaller companies said more development resources from the carriers would be welcome. Mary Jesse, the CEO of Redmond, WA-based messaging startup IvyCorp, says companies seeking big business customers need easier ways of plugging into the wide array of mobile devices now available on various networks.
“In order to service enterprise businesses, you have to be able to talk to all of those devices. And that’s our real dilemma,” says Jesse, a former AT&T vice president. “And the operators can help that along by moving more quickly, but also uniting … to provide ubiquitous interfaces that bring out some of that value like location, like quality of service, like these core technical parameters that you can’t get from any other network.”
Rob Glaser, the founder of RealNetworks and chairman of mobile startup Sidecar, noted that the two sides of this equation are based on very different business models. Carriers are in a massively expensive business, and focus on getting as much guaranteed monthly revenue as possible from each subscriber.
Many digital startups, on the other hand, are focused on quickly and cheaply building a product that can attract as many users as possible, and find a way to make money from that user base later.
“Carriers are not built to service users. They’re built to service customers,” says Alex Samano, general manager of Bobsled, T-Mobile’s Internet-based calling and messaging service.
Ingle pointed out that the mobile industry is still just a few years into a series of massive changes that will take many more years to sort out. And that means there’s plenty of time and motivation for the carriers and outside developers to find a more seamless way of working together.
“This particular area is played up too much as this kind of jihad between the two sides,” he says. “It’s really not.”