The carrier coup must be stopped

03. Juli 2009
I have good news and bad news. The good news is that mobile broadband wireless Internet connectivity is being baked into a wide range of consumer electronic products, from netbooks and media players to GPS devices and digital cameras. Just about everything will be connected to the Internet from just about everywhere.

The bad news is that cellular carriers like AT&T, Sprint, T-Mobile, Verizon and others intend to take advantage of this trend to seize control of the industry.

Consumer gadgets that connect to the Internet using cell phone data networks are very complex from a marketing point of view, because they represent two products, not one. Like a cell phone, any mobile broadband-connecting product involves the sale of the physical hardware and also a subscription to a wireless data service.

Here are three basic models for selling these combined products.

1. In the original cell phone model, the carrier is dominant, lording over the whole process. The carrier chooses which handsets it will sell or not sell. The consumer gets a discount on the phone in exchange for entering into a two-year contract for service. The handset maker is merely a supplier to the carrier, which is selling the product to the consumer.