How big is the mobile opportunity?
Another area where the modular approach is starting to have an impact is in the telephone service arena. Traditionally, telephone service was offered on a land line and was divided into local service, long distance, and extra features like caller ID, call forwarding, etc… The model was predicated on the concept of one device (the phone) receiving a package of services. The mobile phone business started having an impact by untying the phone lines from the wall, making the concept of localization a relatively moot point. Once localization was broken, the differentiation between local and long distance disappeared which left a division only between connectivity and extra features. Since most of the signals going over the air became digital, the cost of delivering extra services dropped to almost nothing, destroying the competitive value of such offerings. While mobile phone service made headway against traditional land lines, a new set of telephone offerings appeared on the Internet: Voice over IP. With VoIP, telephone just becomes a software issue, unbundling telephone from the concept of a telephone network and dropping the connectivity issue altogether. While mobile phones were tied to a particular phone network, VoIP phones are not tied to any network:…Read More
Having looked at how the modular by design approach impacted broadcast television, let’s now look at its impact on cable TV. The FCC and the cable TV industry recently came head to head when it comes to a la carte pricing . The concept of a la carte pricing is that consumers would be able to buy any TV channel in a model instead of being forced into buying a bundle of shows as part of the standard offering. The cable industry contends that a la carte pricing is bad because it will wreak havoc with the economic model of the cable business. It’s true that it will do so as large media companies like Viacom and Walt Disney currently force cable operators to broadcast their less popular channels in exchange for the rights to broadcast their top properties, like MTV or ESPN and will no longer be able to do so if a la carte becomes a reality. They will also have a harder time selling an audience package to their advertisers as there will no longer be any guarantee that buying an ad in a package that reaches MTV and Spike will ensure the same kinds of hits.…Read More
I’ve been looking at the different trends in digital media and have started developing a common theory in terms of the issues relating to music, TV, phone service, weblogs, and software and the impact the Internet has on all those business models. From there, I came to a conclusion that what the Internet does well is break apart what were once aggregated products in its smaller components, wreaking havoc with the economic models established around the bundling concept. In this entry, I analyze how the concept of modularity is impact business and how they can react. What is a module? A module is the smallest logical unit of a product. Modules can generally be bundled in larger groups to create a new product. For example, if you look at the music business, a song would be a module and an album would be a group of modules. A module is small and therefore is always the enemy of big. Because it is small, it moves fast. Because it is small, it sometimes needs to associate with other modules to create something big. Because it is small, it is inexpensive and because it is inexpensive, it resists bundling. What is the…Read More
The recent announcements of changes in the campaign management of the Dean presidential campaign raise some interesting questions. As political observers know by now, Joe Trippi, the man credited with creating a new political approach by using the Internet, has been replaced at the head of the Dean campaign by Roy Neel. In: Telecom Insider The impact of this change goes much beyond a simple change of management. Neel was president and CEO of the USTA, which bills itself as “the voice of the converged telecom industry”. The USTA and the Internet crowds have often been on opposed end of the political spectrum. Historically, the USTA has been the organization that protects the Baby Bells. For example, the USTA believes that IP telephony should be subjected to the same charges as regular telephone carriers and does not support Wireless Number Portability. Granted, it is unfair to look at the current record of an organization and use it to paint a negative image of a former president. Maybe the organization changed radically from when he was their president. So let’s look at his record: Neel is against regulations of telephone companies but against sharing lines, which he sees as anti-competitive. Here’s…Read More