Software is going to eat the telecom industry
In the US, dealing with wireless carriers ranks somewhere between going to the dentist and taking out the trash in the list of things people enjoy doing. Because of these frustrations, smaller upstart carriers have been able to gain some traction of late, despite having worse cellular coverage. T-Mobile, the most popular among them, introduced lower cost, no contract plans. Several others have begun rolling out innovative solutions using both cellular and wifi technologies to cut costs for consumers.
However, even making the switch to these new carriers is a pain. If you have ever experienced switching carriers you will know what I mean. Unfortunately, it’s not an easy or straightforward process. When you make a switch, it often involves having to buy a new SIM card from the new provider, transferring your phone number, picking a new plan, setting up billing information, activating the phone, and more. Compare that to switching between Wifi networks, which often amounts to nothing more than going into the settings app on your phone and tapping the new network you want to connect to.
You might be thinking that this is an unfair comparison, but when you get right down to it, they both provide a similar service. They both allow you to connect wirelessly to a network. The technology underlying both is different but nothing that can’t be solved with software. That’s what is so interesting and exciting about what Apple has done with it’s latest iPads. In the iPad Air 2 Cellular model, there is now a universal SIM card. This means, switching between carriers is as simple as a couple taps. It also means that software is going to eat the telecom industry.
Marc Andreessen has a famous theory that software is eating the world. Meaning, every industry that hasn’t been disrupted by software yet, will be at some point in the near future. This has proven to be a very effective way at looking at things. Take the music industry, it has become the defacto case study when talking about software disrupting an industry. Songs are now just bits of data that are easily moved around. And like other bits of data, music is easy to download, share, and distribute over the internet. This has transformed the dynamics and business models of the music industry. It’s not just the music industry either, there are lots of other examples of software revolutionizing industries. It now looks like the telecom industry is coming up on the list.
Starting with iPads makes a lot of sense. There are no calls that can be made through an iPad on the cellular network, so the need to switch a number from one carrier to another is not an issue. Tablets are also not subsidized by the carriers, so there isn’t a need to stay with one carrier for a length of time in order to pay off the subsidy. Apple also has the ability to pressure carriers into trying new things. All these factors explain why any of the carriers might agree to do something like this.
In order to make the jump to phones, where this will truly be disruptive, there are still a lot of questions that need to be answered. It remains to be seen whether or not carriers will be able to be persuaded into doing this on phones, since they are their big money makers. There’s also the question of how to do it technically with switching carriers, plans, and transferring numbers quickly and seamlessly. Finally, the big remaining question: will consumers be willing to pay for phones without subsidies? In countries outside the US, this isn’t an issue because they already purchase phones full price. But here in the US, many people are only used to buying new iPhones at $199 because of the subsidy.
Assuming these obstacles will be overcome, having a universal SIM card will truly shake up the wireless business as we know it. Imagine being able to change your provider with a tap of your finger. The movement towards lower cost, no contract plans is great but what if those plans were minute by minute? Let’s say you choose one carrier because you like their service where you live. But when you go on a skiing trip, that particular carrier has poor coverage in that area. With a universal SIM card, you would be able to go into the settings app on your phone and select another carrier that has better coverage. Then, when you return home you can switch right back to your previous carrier and only be charged for the minutes or data you used while using each carrier.
You can imagine how this can greatly benefit the consumer. If I can change who my carrier is with a few taps, it won’t really cost me anything to find the cheapest plan that has coverage in the area I am in. Carriers will start competing on price, coverage, and speed, which will drive prices down, increase coverage, and increase speeds.
If it becomes this easy to change carriers, plans will get shaken up as well. Everything would have to be a la carte or at least data would be charged by how much you used while you were with any particular carrier. Switching plans gets easier when you are talking about iPhones because of Apple pay. I wouldn’t have to fill out a long form each time I switched carriers. Instead I could just use my thumb.
There already exists a similar model in the developing world. In places like Africa and Asia, having a phone with dual SIMs is very popular. In these places coverage is often spotty so having the ability to switch carriers on the fly has many benefits. A fully software version of this is even better. It could scale to fit any number of wireless carriers both domestically and abroad. When traveling you wouldn’t even need to visit a local shop to buy and register a new SIM card. Instead, all you would need to do upon landing would be to go to the settings app on your phone and select a carrier from the pre-populated list (based on your location) of local carriers.
Software eating the telecom industry is a very good thing.
How loyal are you to your wireless carrier? Would you want to switch carriers with only a few taps?
Originally published at alexcmeyer.com on October 27, 2014.
