Comparing Mobile Openness: Case Studies of United States, United Kingdom, France, China, India & Brazil

Abstract

The economic organization of the mobile wireless sector is undergoing substantial change as mobile markets move from phone calls and text messages to internet and other data services. Mobile Network Operators (MNOs) that have traditionally been firmly in control of the customer relationship are increasingly challenged as handset makers and application platform providers develop direct commercial links with users. Equipment manufacturers are building next generation wireless networks that will be almost entirely IP-based. These stakeholders hold varying views about how “open” wireless systems should be to their direct competitors, other firms in the value chain, and customers.

In the United States, current policy discussions of mobile wireless openness have largely focused on the FCC’s Open Internet proceeding and, most recently, the proposed merger of AT&T and T-Mobile. Other countries have different market arrangements and different institutional frameworks for developing openness principles and sustaining them. This paper compares the evolution of the mobile sectors in the US, Europe (UK and France) and Asia (China and India), examining how industry stakeholders and government regulators have dealt with mobile openness. We assess openness along several dimensions, including the organization of carrier, service, device and application markets; alternative forms of entry and innovation; characteristics of contracts offered to subscribers; restrictions imposed on mobile devices and applications; and openness principles for the mobile Internet.

Our preliminary work has identified various national and transnational developments relating to openness, which we will explore further in this paper; e.g.: The app explosion that began in the US has changed the nature of the mobile business; Apple’s AppStore, Google’s Android marketplace and other app platforms now vie for domination, each with different degrees of openness; The move to tiered pricing by US and other MNOs limits user choice in some respects but relaxes previous restrictions, such as the prohibition of independent VoIP services; The smallest UK MNO (3UK) has been an innovation leader with more open (i.e., less restrictive) choices for customers, which has influenced the overall market; France has recently licensed a new MNO anticipated to increase openness along the lines of the 3UK model; Postpaid SIM-only service contracts, excluding handset subsidy, promote device portability in the UK but are not yet widely available elsewhere; Although regulations and incompatible standards restrict device portability in China, an active gray market for modified devices provides some elements of openness; Network outsourcing and facility sharing lowers entry barriers for service providers in India.

Various countries and companies are making significantly different choices in structuring mobile platforms, with differing consequences for openness. Openness played an essential role in fostering broad-based innovation throughout the wired internet, and was a key factor in its success. As much internet use moves to mobile platforms, we can expect the characteristics of these platforms, in particular their degree of openness, to play a similarly important role in shaping the future evolution of communications. The goal of this paper is to explicate these choices so we can begin to analyze their likely consequences.