For a long time I’ve thought that the telecoms business was doomed, certainly in the form it currently takes. Our current mobile phones communicate digitally. The problem is that we don’t get access to the digital network, we just get a microphone and a speaker. Of course, times are changing, 3G and EDGE phones have been around for a while, but were mostly a gimmick, but now phones like the iPhone are pushing carriers to seriously think about their data facilities.
I say they aren’t going far enough. Someone is going to come along and eat their lunch. Once you’ve got a device like an iPhone — with significant on-board computing power — why do you need a voice line at all? I’ve got a landline at home, only it’s not a land line, it’s a phone plugged into a little box that plugs into the network. My landline works over the Internet. If you’ve used Skype, you’ll be familiar with the idea. Apple also make the iPod Touch; the iPod Touch is nothing more than an iPhone with the cellular hardware ripped out of it. It can happily hook up to your local wireless network though, and could (does with the right application) easily behave as a voice-over-IP phone.
So, step one in the coming revolution will be when someone makes one of these posh phones that doesn’t use the voice part of the cellular network at all. It won’t be cheap to buy since the carriers don’t want this to happen at all — they know damned well that all of their SMS and voice revenue will vanish. The phone, therefore, won’t be subsidised by the contract, just like your TV isn’t subsidised by buying Sky. Instead, your phone will be yours, and your voice line will be provided just like your email (probably) currently is: by someone other than your mobile carrier. America already have a Google voice service that lets you connect your Google identity to your mobile.
With a non-subsidised smarty-pants phone in your pocket, and a VoIP provider, you will no longer be in thrall to your mobile carrier and competition between them, and the VoIP providers will intensify. You will no longer pay by the minute for anything, instead voice, SMS, and Internet will all be just bits and bytes — and you’ll pay for them and nothing else.
That’s step one. It’s already happening, Google have recently released Android version 2, and Motorola are shipping their iPhone equivalent based on it. Android is a lot more open than the iPhone, so that’s where this sort of application is going to appear first. Google already have their voice, talk and mail services, and they are almost certainly going to be heavily integrated into Android. It’s not enough though, the mobile carriers aren’t going to let go of the money easily. Google are big enough to play dirty though. They were involved in spectrum auctions that happened a few years ago (I can’t remember if they won them though), and they have been buying up optical fibre all over the place. They’ll either use it directly, or as a stick to beat the current networks up — Google will force phones to be open, so that they can be the provider for services. They’re not doing it unselfishly, but it will have a good effect for us all, because that openness will apply to everyone. There will be scope for smaller companies to compete with Google, where at present there is no chance for a small company to compete with O2 or Orange.
Step two: eventually the same will happen to phone lines. You’ll lose your current phone jack, and instead get a network socket instead. You could argue that its already happened — every house with broadband has a network jack.
Step three: The cost of technology is always falling, and soon it will be so cheap to have a wireless router, that it will probably become part of the installation when they put the new network socket in your house.
Now, everywhere you go there will be a wireless Internet signal. In your pocket will be a phone that can connect to the Internet using that wireless signal (just as your iPhone can now). Your mobile is going to be making calls over the Internet, and the Internet is available locally and wirelessly almost everywhere you go. Why will you need a mobile phone company?