Editor’s note: The following guest post is written by Joe Sipher, co-founder of Pinger, which makes the popular Textfree app.
So AT&T wants to buy T-Mobile and some are screaming it will reduce competition and hurt the consumer. Sprint is now going to court to try and stop the merger. I am in the mobile communications industry and, to be honest, I couldn’t care less. This isn’t going to affect the companies pushing the real growth and innovation and it’s not going to affect the consumer. The consumer has plenty of options that have nothing to do with carriers and that list is growing daily.
For the legal fees it will take for these two giants to merge, ten new startups could be funded. The companies creating new business models for mobile communications are iterating out of sight of the big carriers, away from calling plans, contracts and traditional views of how people communicate. The Internet and the emergence of a robust mobile application layer have changed things forever.
Over-the-top services that provide calling, texting and other communication options over the wireless data channel are getting to carrier size in less than two years. For instance, my company, Pinger, now moves over a billion text messages every month and millions of minutes of voice calls. And we are only a fraction the size of Skype. There are many more companies like ours out there too. Increasingly, users pay nothing for calls because these new over-the-top services apply internet monetization methodologies to communication services. Advertising based communication services mean no contracts, no calling plans, no overage fees.
Before you say the newly extra gigantic evil carriers will shut down these over-the-top (OTT) services using their monopoly powers, let me say that the carriers are getting bigger, not dumber. Mobile operators make money with nearly every text, call, and tweet coming to their subscribers from OTT networks. These services are good for the operators because they help them sell phones and data plans. Allow me to use a couple examples from Pinger, because that is what I know. If you have a $19.99 unlimited text plan from Pinger and send 1000 texts per month, you pay $0.02 per text. Do the math: $0.02 x 1 billion is $20 million a month for the carriers on texting from our service alone. Not bad. The carrier appreciate that revenue.
In fact, new app-based communications services are helping carriers discover new revenue because most of the traffic coming to their networks from over-the-top services isn’t even coming from phones. In fact, 80 percent of our voice traffic comes from connected devices like iPod touch, iPad, and even desktop computers.
But here’s the real truth: an entire generation isn’t getting their first mobile number from services like ours. They aren’t even making their first call from a phone! Because communication is simply an app, as kids grow, these apps will just work on their new device whether it’s on the web, an iPad, an iPod touch, an iPhone or an Android device. Kids love Facebook, Twitter, Skype and all of these new communications apps because they offer better communication alternatives and the price is right. The thought of signing a contract just to communicate is going to be about as foreign to these kids as paying for cable TV!
The real story here is that the consumer has more options than ever, and the bigger the traditional operators get, the more their scale interferes with their ability to innovate.
Will there be sufficient competition in the marketplace if these two cell carriers connect? Plenty.