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.