As I researched my upcoming book on innovation, I was struck by how much innovation there has been in telecommunications in the last decade. Alexander Bell, he of patent 174,465, must be looking down in awe. Apple, its app store, GoGo wi-fly, Cisco telepresence, the equipment innovations from Ericsson and Nokia-Siemens etc etc.
And yet sitting in the middle of all this, traditional telcos have not innovated much.
It hit me again yesterday as Google showcased in its HTC NexusOne launch that you can dictate into any text field. Other voice based innovation has been coming from Nuance Communications which has been progressively improving voice recognition for years. From Plantronics has been capturing voices including Neil Armstrong’s famous words from the moon landing. Skype and others who have been raising the bar around IP based voice.
Few of the voice based innovations are coming from telcos who make trillions from it! So, T-Mobile plans to subsidize the NexusOne by $ 350 – that’s $ 14 a month with a 24 month contract for which the early termination fee may be as high as $ 550. That is if you qualify for the subsidy which has its own version of rules. Yes, innovation in fine print! You can use it with AT&T’s network if you want to use its Edge, not 3G network. People will line up for that!
Notice I said traditional telcos. A new generation has emerged, particularly in the developing world which is learning to make money at an average revenue per user (ARPU) of $ 10 to 20, whereas most of the traditional Western guys are unhappy with theirs in the thousands. And doing creative things to deliver -like Bharti in India is outsourcing even its network to equipment manufacturers so it can turn its fixed overheads variable.
Traditional telcos keep swearing they don’t just want to be a “dumb pipe”. It’s unfair but when you are standing next to Apple and Google, you better be running as hard and smart. Otherwise, you just have to accept dumb just looks dumber by the day.