The dumb pipe discussion has been going on for years. I wrote about dumb pipes and smart pipes several years ago in the context of location from wireless networks - keep in mind this was before GPS was ubiquitous in devices so the best option (sometimes the only option) was to use network-based location for Web and Mobile apps. If unfamiliar with these systems or how they work, head over to Ericsson. They do a nice job explaining network location systems and how to use them as a developer (they also happen to be the leaders in this area with over 40% global market share so they're certainly credible). Anyway, these systems have been around a while (over 10 years actually) and at one time they were closely guarded, coveted pieces of technology that only a few privileged developers had access to through carrier walled gardens. While I was working to build an enterprise LBS community several years ago, I ranted often and publicly about these issues, wireless freedom, and developer rights while encouraging carriers to stop thinking about the emerging dumb pipe threat which forced them to protect these assets, and start thinking about how they could and should be smart pipes. Smart pipes are intelligent. They recognize innovation lies at the edge of the network with the developer community, and they embrace the edge by exposing network capabilities that allow developers to add rich telecom smarts into Web and mobile applications from the outside-in, while charging for access to these capabilities. The other inside-out garden approach hoards the goods, develops the apps and controls the user experience end-to-end. Both can work. Verizon's VZ Navigator app now does well north of $1B/year in top line revenue, and yet while it's widely considered the epitome of a walled garden approach, it is nonetheless extremely profitable. However, so are other opposites. I recently read that Telenor (a Norwegian carrier if unfamiliar) was piping through $120M/year off of telecom web services exposed to developers at cost. Combine this with Telenor's monthly recurring revenue from data consumed via the developed apps, and it's an excellent example of how two-sided business models can and do work, and that they are anything but dumb. All that said, I think the walled garden and dumb pipe/smart pipe debate is now tired. With new innovations ushered-in by the smartphone era, smart pipe approaches are now a matter of survival. Being dumb today if you're a carrier is just plain stupid (sorry) and suicidal (sorry again). Apple and Google have done a wonderful job awakening carriers to face that harsh reality and here's some proof.
I recently had a visit with a friend who works at a carrier. We've known each other for 7 years, and when we get together, we have informal fun conversations about everything mobile. We talked about an upcoming Android launch, social phonebooks, the tectonic shift from voice to data economics, big fat dumb pipes, smart pipes & APIs, and business intelligence & analytics. The later topic was a new one we hadn't discussed before. "We have much better data about subscribers than Google ever will. That's what their Android thing is all about. They want to get our data" she said. Wow I thought (she gets it) as I nodded my head in agreement. Our discussion helped me crystallize that the new coveted asset today is subscriber data and derived intelligence from carrier intelligence hubs - the what, when, where, why, and how a subscriber behaves while mobile, not to mention some other things like purchasing behavior, credit ratings, and so on. This databank of knowledge is a goldmine for new wealth creation from multiple-sided business models, but thus far the veins aren't mined. That's now changing though as some develop smart hubs of data that can be harvested with business intelligence automation tools, and as a result it makes the carrier side of the business very interesting again - for me anyway.