A Cambridge perspective
on the digital world
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April 2002
Over the past decade, the telecommunications industry, together with leading analysts, have painted a rosy picture of how telecoms will be central to all our lives. But the hard fact is that nearly all new telecom applications involve third parties. Three-way relationships are notoriously tricky, and often emotionally fraught.
For many operators, involving a third party is as difficult as inviting another person into a marriage. However much you like them, you may not want to get that intimate. As well as sharing intimate moments, they will see you first thing in the morning, without your public face. And how do you cope with sharing the bathroom? The third party may bring in extra income to the household, but how do you divide it up without continual squabbling? For some, the experience has proved all too much.
Yet if operators are to escape long term decline, they have to make three-way relationships work.
In Japan, NTT DoCoMo solved the problem by creating a framework that defines every detail of the three way relationship, so that each party - operator, subscriber and third party information provider - knows exactly what to expect. This means not only the logistics of who does what to whom when, but a common view of roles and responsibilities, and of what each party contributes to the relationship. The Japanese version of intimate formality works, and works spectacularly - a success acknowledged by the unprecedented choice of NTT DoCoMo for the Chairman's Award of the GSM Association.
The award is unprecedented because DoCoMo's i-mode has always been seen as a competitor to Europe's GSM technology. But the lessons of i-mode - particularly the lesson of how to set up a three-way business model that works - are so important for the industry as a whole that few would quarrel with the GSM Association's choice.
In comparison, a recent industry meeting in London heard the view that European operators were schizophrenic - in particular they had not decided whether in the new world of telecom applications they want to be providers of content, or carriers. Of course it is perfectly possible to be both; but to be unsure of what role you want to play, and to switch roles and policies at the drop of a hat, creates problems for all concerned. Capriciousness is not attractive to those looking for a long term relationship.
The shape of next-generation telecoms is starting to emerge, and it will involve a new applications layer - with third party involvement - on top of what we know today as conventional telecommunications infrastructure. New applications will blend intelligence, a wide variety of content, and detailed knowledge of individual needs, with the basic ability to get information where it needs to be, in the form that will be most useful.
Until the industry finds a generally accepted way of managing the three-way (and multi-way) relationships needed to deliver this, it is likely to be individual applications that make the running. This may not be a bad thing: the idea of telecoms applications is new enough that we may need a few examples of this new breed before making any general pronouncements on how best to manage them.
For now, applications are likely to emerge on a case-by-case basis, with relationships forged to meet the needs of the moment. A few of these applications - current examples are i-mode, text messaging, and wireless email - will be spectacularly successful. They will help to set the telecoms agenda for the next decade, and propel those involved beyond the national arena, where telecoms has traditionally had its place, to global success.
International adventures by telecoms operators have a very poor history. However good they think they are, it is difficult to do conventional bread-and-butter telecoms that much better than those who are already on the ground. But possession of a genuinely novel application, that provides a new way to create value from the basic building blocks of telecoms infrastructure, gives a telecoms player something that has real global value - as i-mode has done for DoCoMo.
