Link: Flat Rate Considered Harmful

Lots of people, including for example
my CEO, say that the hand-held mobile
is going to be a crucial, maybe a dominant, way for people to
experience the Net; particularly on the other side of what we now call
the digital divide. Only there’s an economic problem.

I don’t know anyone who’s really satisfied with the quality of the
mobile Net experience; the iPhone seems to be pushing the edge of
tolerable, as long as you’re on WiFi. But still, where’s the rich menu of
multi-modal multi-media location-sensitive always-on exquisitely-personalized
applications that the hardware and the Net ought to deliver? Surely
there’s something more interesting than Blackberry-style mail?

Here’s one problem: fixed-rate data plans. With those, once the telco has
your money they really want you on the network as little as possible;
there’s no incentive to make it run faster or have better apps or lure you
into using it more. Some of the network operators have this idea that the way
to make money
is to control the relationship with the customer and extract a piece of unit of
payment that flows through a mobile device.

The conventional wisdom—and one I buy into—is that businesses ought to focus
on their core competences. For mobile network operators, those would be
bandwidth and billing. So, here’s a recipe for blowing up the mobile-network
business and making the world better and also a whole lot of money.

1. Discontinue all flat-rate mobile data plans.

2. Offer a-la-carte data at a price that seems obscenely, ridiculously,
   low.

3. Radically open up the network. Let anyone connect anything to it.
   Sell phones that make it really easy to download apps from anywhere and run
   them.

4. Build a developer ecosystem. Make it effortless to get in. Build a
   hot-new-apps social network; maybe in alliance with one of the big existing
   social nets.

5. Don’t ask developers for any money. But sell the use of your billing
   system at a really attractive rate, so people can sign up for apps and have it
   billed to their phone plan. Do it at a scale that an app can charge a dime a
   month and still make money on scale.

6. Duck and cover, because the explosion of creativity and new business
   models will cause some casualties.

Seems like a no-brainer to me.