Mobile phones just want to be free

Your cell phone is capable of doing far more than you realize. Okay, not your phone specifically, but your model of phone could have been manufactured to perform some pretty useful tricks. These include preserving your contacts list on your computer, allowing you to more easily share photos and other media, and even tell you what talking on the device is costing you that month, in real time. What’s stopping this progress is not in dispute: Phone companies are scrambling to find ways to charge for these services.

It’s a story that sounds familiar. Two weeks ago I was fascinated to read all of the takes from readers on my music industry post. Its premise was that CD sales are falling because of a changing business model, and this changed way of doing business might be better served by removing digital rights management (DRM) protections. It’s an appealing idea if you’re Apple CEO Steve Jobs, who recently posted an essay, called Thoughts on Music, proposing this change. And it’s a terrifying idea if you’re a typical music label executive.

Similarly, if you’re Columbia law professor Tim Wu, you call the removal of cool features from a cell phone “feature crippling.” He presented a paper to the Federal Trade Commission last month, where he makes a compelling argument for using legislation to free the phone manufacturers to innovate. Currently, the features they build into cell phones sold domestically are dictated (he would say stymied) by the big wireless carriers: Verizon, AT&T / Cingular, Sprint Nextel and T-Mobil.

Mr. Wu makes his case on his blog, and in an interview on this week’s On The Media podcast. He calls the atmosphere “restrictive” of any significant application innovation, and quotes one mobile application developer who characterizes the atmosphere these restrictions have created as, “a tarpit of misery, pain and destruction.” Working every day with bright, imaginative application developers and designers, I can understand this developer’s frustration. Your cell phone really does want to be free.

The crux is how are these innovations to be paid for? Each new feature requires additional support, and that support has to be offset by increased revenue. And although new features offer an opportunity for greater profits, how do you get consumers to pay for them as a service? This argument was made in the On The Media piece by Chris Guttman McCabe, the VP of regulatory affairs for CTIA, The Wireless Association. He ultimately says regulation should not be imposed because competition and the free market is working in this industry, albeit slowly. Even Mr. Wu admits that although each of the big wireless carriers are restrictive, the degree to which they restrict this innovation varies greatly from one to the other.

It’s a tough quandary. I got extremely excited about the Microsoft Zune when I thought it could allow for the free exchange of music files and podcasts. Then I learned that DRM deals restricted sharing to “three plays or three days,” whichever comes first. After that the file you’ve exchanged goes away, even if it’s an MP3 produced by a struggling garage band that posts the very same MP3, for all the world to trade, online. Similarly, the new Apple cell phone, due for release this summer, is designed to work for only one carrier, AT&T / Cingular. That’s a big limitation.

Meanwhile, as the free market sorts this out, I’m using hacks to play music on my cell phone, and I’m using shareware and an expensive connection cord to sync my contacts list with my computer — even though both use Bluetooth. And if you want to see the photos I took last night? I only hope you use Verizon. Otherwise I can’t text them to your phone. Not at any cost.

Published by Jeff Larche

With a background that includes direct marketing and customer relationship management (CRM), Jeff Larche brings an unusual approach to his work. What these other two disciplines have in common is database marketing, and they continue to strongly influence his work as marketing technology leader.