Back to basics

Commoditisation is an inevitability in the mobile industry, says entrepreneur Simon Buckingham, CEO of content firm Mobile Streams and also of Zoombak, a mobile subsidiary of investment house Liberty Media that sells cellular-based tracking devices for consumer use. What isn’t inevitable, however, is the timing of that commoditisation. And, says Buckingham, cellular carriers can delay it while at the same time reclaiming the mantle of innovation that he argues they’ve ceded to other companies in the industry.

Buckingham believes that the carrier community would be best advised to return to the fundamentals of their business. “We need to get back to the basics,” he says, “and have a look at mobility itself and the convenience that brings, which is the reason that the industry has always been successful.” Buckingham is talking about location—which for so long now has been billed as the mobile operator’s great differentiator, and for just as long has failed to deliver on its promise. That—in Buckingham’s world view, at least—could now be about to change.

Career history

Simon Buckingham has worked in the mobile content and messaging industry since 1991 when he joined the network operator group Vodafone. At Vodafone, Simon worked in many areas of the business including marketing, personnel, Vodafone’s German subsidiary, technical operations and product management for SMS text messaging. In his final role at Vodafone, he started and managed the Vodafone Business Partners Program, managing relationships with third party companies.

In January 1999, Simon founded Mobile Streams as a mobile research and consulting company, authoring the world renowned “Yes 2 SMS” research report early in the company’s history, and then using the profits from that report to build www.Ringtones.com into the first and leading mobile portal. Simon built Mobile Streams into a global mobile content company with 13 subsidiaries across North America, Latin America, Asia and Europe. Under Simon’s leadership, Mobile Streams completed its IPO and strategic investment from Liberty Media in early 2006. Simon is also CEO of Zoombak, Liberty’s Media’s mobile subsidiary (www.zoombak.com). He holds a first class BCom with German degree from Birmingham University in the UK and was shortlisted for Entrepreneur of the Year. He is based in New York.

He has a vested interest, of course. Zoombak sells GSM/GPS tracking devices that consumers use to keep tabs on the location of everything from dogs to cars. He argues that the US, where Zoombak plies its trade, is more attuned to location and its potential, and further advanced than Europe. Certainly the state-sponsored wireless E-911 initiative, which required that cellular operators be able to locate mobile handsets to within 100 metres gave location a reasonably high profile early in the decade. US society is heavily preoccupied with security and this is the angle from which much location-oriented service is sold.

But special interests aside, his view seems to chime with sentiment from other areas of the industry. A day after he speaks to MCI in May, his former employer, Vodafone, announces that it is to make network APIs available to the developer community. Location information is top of the list of assets that Vodafone intends to exploit.

“We’re at a crossroads,” says Buckingham. “The carriers are in transition. Apple have thrown a pebble into the pool and caused a lot of ripples; they’ve really changed the game. So now we need to move on and take this industry to the next level. And I think it’s important that we look at things as an industry that can enable that to happen. Otherwise, in another couple of years, the carriers will start to concede that maybe they’re not content companies and then the mobile channel will start to become a dumb pipe and you’ll have the commoditisation that we’ve seen on the internet and in fixed telecoms,” he says.

Apple is one of the companies that have run with the baton of innovation, Buckingham says. “Look at [Apple’s] patent filings. They’re the guys doing all the localisation, customisation and personalisation innovation. They’re filing patent after patent, day after day. The operators need to recognise that a lot of the intelligence in their networks, the intelligent network node, the SMSCs, the MMSCs, that the iPhone 3.0 will take advantage of, exist as enablers that they can exploit today.”

Taking advantage of these things, as Vodafone has begun to do, will ensure that carriers remain relevant in the value chain—and carrier relevance, Buckingham believes, is no longer a given. Traditional operator business models of voice and text are, he says, “end of life now.” Yet still Buckingham sees a lack of imagination in carrier models.

“I’m seeing commoditisation. I’m seeing a proliferation of $50 all-you-can-eat price plans. They’re doing really well, those plans, and it seems that the principal innovation for carriers is on price. I suppose that is inevitable in a mature industry like this one. But I’d rather postpone the inevitable and prolong the monetisation, and we need to do that through service innovation. The underlying enabler that can help all of these services that have a lot of promise but not a lot of actual reality is location. That’s all I’m saying, because eventually mobile will be so ubiquitous that it will become free.”

The big story of 2009 in this industry, of course, has been the rise of the app store business model, and carriers, handset vendors and platform developers are going head to head for the heart of the consumer. This is a positive development in Buckingham’s view and app stores have, he says, been justifiably hyped. “We’ve talked as an industry about tapping into the entrepreneurial, innovative nature of the internet for a long time now. But because of the friction in the commerce and the number of people out there there’s never been an easy way to get the application developers into the ecosystem. So these models are good because they provide the small developers with the opportunity to distribute their innovation.”

But app stores are not yet optimised, he argues. Today they are used primarily by early adopters; enthusiasts with the time and the inclination to cycle through hundreds of applications to find one or two that might be genuinely useful to them, he says. This is not a strategy that is going to take applications to the mass market. If these stores are location enabled, he argues, they are made more relevant. Applications on offer can be filtered to suit a user’s given circumstances. He cites a trial that Mobile Streams ran in Singapore, targeting commuting routes with mobile game offers. Consumption was higher during the commute than at all other times in the day combined, he says, proving that relevance is essential if applications are to be sold to more than just the tiny percentage of users who will actively search them out.

“I believe we’re at the tipping point now, where location based services are becoming mainstream,” he says. “You don’t have to explain location to people now, and every mobile service that’s ever done well has started to do well as soon as you have no longer needed to explain to people what it is and what the benefits are. That’s my experience in the content business.”

But the addition of location is not a panacea, and the proliferation of app stores, while a positive trend, he says, is creating problems of its own. “I’m concerned about where all these stores will go in the next two years. We’ve got different stores from different companies and they all have different build characteristics,” he says. “If you look at the PC industry, one of things it did very well was to standardise. We as an industry, on the other hand, continue to fragment. And with these app stores we’re creating another level of fragmentation because, if you’re a developer and you want to be on the mobile device, you’ve got to do five or six different platforms to get there. So for me another inhibitor of the maturity of the whole mobile services ecosystem is a lack of standards.”

He argues that any VC on the lookout for the next big investment opportunity—and perhaps here he gives a glimpse into ongoing discussions at Liberty Media, where he heads the mobile investment unit—will be hunting for an organisation that enables the seamless porting of applications from one store to another. “That’s where the friction is at the moment, but the problem is that it’s almost an impossible vision, because while the iPhone is just one build globally, if you want to work with RIM or Windows Mobile or Symbian or whatever, you’ve got thousands of builds.”

And he returns to his theme of location by speculating that another third-party opportunity awaits any firm that can aggregate location information from a range of mobile operators and sell that information, in varying degrees of depth, to any developers interested in integrating it into their applications. Carriers have the ability to do this themselves, but for many it is simply not a priority, he says.

But location, like application environments, requires collaboration in order to achieve real success, he says. “We need standardisation, we need the likes of the GSMA and the MMA to be involved because this is going to take a concerted effort across the industry. The only way you can do location is if you have everybody’s location; it can’t just be the customers of one operator.

“Whether or not we well get all the operators together on this is not clear, because there is inertia among the carriers. If they don’t do it, though, somebody else will and it doesn’t really matter who maintains this central database of permissions that we need. But the operators have an opportunity here, and they should seize the initiative.”

If Vodafone’s recent manoeuvres are anything to go by, perhaps the carrier community is coming round to Buckingham’s way of thinking.