Tuesday, December 5, 2006

A Choice to Make

If, or perhaps just "when" SIP mobile devices get traction in the mobile market (Disruptive Analysis argues naked SIP device adoption will outpace IMS), mobile operators will face a choice. Do they "play nice" and allow third party entities to set up SIP sessions, or do mobile providers want to impair or block such sessions. The issue isn't "whether" they can do so. The issue is "will" they do so. Organizational DNA will scream "block," more so in the U.S. and Canadian markets than in Western Europe, we suspect. The current user agreement for Verizon Communications 3G service already bars its use for VoIP, for example. Ultimately, this strategy seems likely to fail.

And there are a number of scenarios that could produce an "open" result. The industry might find that enough revenue is captured from walled garden services that the value of a "naked SIP" feature, though it causes some revenue loss, is tolerable, and more than offset by the good will an open approach offers. Mobile providers might find that the financial results aren't so pleasing, but just one mobile provider of reasonable influence has to go "open" to put pressure on the others. Or, conceivably, if not likely, the market might evolve in ways that make open, third party offerings a mere annoyance, not a significant revenue challenge, and therefore not worth blocking. Regulatory barriers to such action might someday arise as well, as interconnection frameworks are applied to some SIP-based services.

And though not every potential or existing customer will even notice that a service is a walled garden, an increasing number will be aware that this is the case, and won't like it. This market segment provides just enough revenue at the margin to create pain if its business goes elsewhere. So in the end, third party SIP apps will function on IMS-based mobile devices, outside the walled garden.

Since Ericsson and Intel are collaborating on an extension of IMS to notebook PCs, there's another logical path for third party apps, even though IMS tends to be seen as a "closed" or "walled garden" approach (for business strategy reasons, not technological reasons). Still, there's arguably a higher barrier to service provider blocking for any features and services that are popularly seen as "computer" features, rather than "phone" features, in both the popular mind and regulatory bureaucracies. Still, there will be choices to make.

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