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Point:
Enfranchise the entrepreneur and unleash creative applications

by reuven carlyle
March/April 2001

Arise, o’ entrepreneurs of the world! The time has come to save our industry–again!

In the wireless Internet industry’s “battle for the customer” the new, powerful Mega Carriers with their massive networks, billing systems, customer care centers, infrastructure back ends, name brands, huge revenue streams and endless institutional financing have seized an opportunity to exert hegemony over the industry.

Plucky entrepreneurs are still searching for ways to circumvent the operators’ institutional grip on consumers’ pocketbooks and loyalty. The obvious hope is to continue to secure financing so we can design less carrier-dependent technologies and businesses. It’s all part of our plan for world domination. Ah, the sweet arrogance of youth.

Kidding aside, the Mega Carriers’ unparalleled grip on the delivery of new technology, applications and services

has serious implications. While entrepreneurs were busy building enterprise and content-based apps that loosen the dependence upon formal relationships with operators, carriers focused on their own strategy–exponential growth at any cost, including eating each other up.

So now, our industry enters a New Era, that of the Mega Carrier. In fairness, the New Era has its upside. Lower costs, higher quality networks and ubiquitous brand names emblazoned on consumers’ consciousness.

The New Era also means there are serious challenges for entrepreneurs in garages from Seattle to Tel Aviv. Mega Carriers do not have the time, energy or inclination to work with young companies–especially those headquartered outside of the United States–that may not offer sophisticated operational and scaling support in the States.

Most entrepreneurs struggle mightily to secure funding, especially those without a successful Mega Carrier-sponsored trial, test, review or assessment of the young companies’ technologies. Mega Carriers that do occasionally test new products from young companies often do so with a quid pro quo; they access the new technology and the entrepreneurs foot the entire bill. Successfully marketing new technology to Mega Carriers has become more difficult than the actual development itself for entrepreneurs without portfolios, political contacts or high-end venture financing.

Sprint PCS can cite numerous and legitimate high-profile exceptions to this thesis, and their aggressive foray into the wireless ’Net arena was a genuine example of pushing the technological line. No one is suggesting that new tech-nologies shouldn’t contribute to the bottom line, and the Mega Carriers’ sustained losses in the data arena have caused nothing but frustration so far.

But it is not consumers’ fault that they have yet to discover their sweet spot of the wireless Internet.

While Mega Carriers have grown exponentially in a feeding frenzy of mergers and acquisitions, the difference–whether voice or data–is cosmetic for most consumers. To fund their overpayment for third-generation licenses and prepare for even more consolidation, carriers are targeting churn reduction and capital efficiency to the detriment of almost everything else. Entrepreneurs are focused on radical, leading-edge applications for general packet radio services, location, 3G, streaming audio and video and more that add genuine value for consumers’ desire for wireless customization, personalization and localization.

The grip of the Mega Carriers’ bureaucracy is stifling old-style entrepreneurialism and chutzpah that built the wireless revolution.

Passion, ideas, energy, focus, drive, creativity and excitement unleashed by entrepreneurs have been the spark of the wireless and Internet phenomenon. Even though Mega Carriers now dominate, they–and their traditional infrastructure and handset manufacturers– shouldn’t hold such commanding power to filter new technologies for everyone else. No one should be surprised that Nokia and other handset makers are finally developing direct relationships with consumers in order to sell them software for their phones, independent of the carrier. Entrepreneurs worldwide have been leading that battle cry.

All roads point to the need for a higher degree of risk tolerance, incubation of new technologies, freer and less-political access for entrepreneurs at Mega Carriers and a successful open source movement in wireless. Our industry is just 20 years old and yet it’s almost like Ma Bell is back in charge.

While any startup would love a real contract with a Mega Carrier–the exhilaration of successfully closing a serious deal with a Mega Carrier is an awesome feeling–most recognize that in order to survive they need a broader model that is not exclusively dependent upon the risk aversion of Mega Carriers.

On a deeper level, entrepreneurs have already truly won the “battle for the customer” when we look more broadly at the way that the wireless and Internet sectors has riveted the world with its infinite possibilities.

Today’s Mega Carriers are unquestionably and understandably the pipeline, but front-line entrepreneurs continue to supply the heart and soul that pumps the spirit of progress through to consumers.

Reuven Carlyle is co-founder of TriCoastal Partners, which helps wireless and Internet companies secure financing and form strategic partnerships. He formerly served as vice president of strategic development for Xypoint Corp. and as an external affairs executive with McCaw Cellular Communications Inc., now AT&T Wireless. Contact him at reuven@qwest.net.

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