Local connectivity: under-explored opportunity?

We’re working on a series of posts that tie together a number of themes on the blog:

* That operators need to understand the “value in existing products”:

* Local non-cellular connectivity is going to be a critical part of building new value for both personal communications services as well as the Digital Home.

* This local connectivity sets the scene for big changes to the wide-area communications services we use: by providing learning on a faster cycle on what people actually want from new communications services; and as a source of critical presence data.

* “Distribution” is generally the winning strategy in telecom, although it manifests itself in different ways (network coverage, sales channel, service compatibility). Telcos can be instrumental in distributing the next generation of locally connected devices.

* Success in this space means putting the user, not the network, at the centre of your world.

* Local connected services exhibit strong network effects. Network effects play an important part in building a highly profitable business, but operators don’t exploit their distribution strength to build these up.

* This change will affect the relationship between mobile operators and handset vendors, with a consequent ripple through the whole supply chain.

So what part of the future can the handset vendors drag into the present without upsetting the operators? Well, the ideal win-win might be something that handset vendors can do alone, doesn’t touch the sacred cellular network, but offers opportunities for operators to participate in (as distributors of network-effect goods). In which case, cue “Motorola’s John Waclawsky”: with his thesis at the last Telco 2.0 event that much of the connected value creation is going to shrink to local area and personal networks.

This makes sense to us. Consider the Apple iPhone and it’s orientation and proximity sensors. Those are first baby steps in “self awareness” of devices. That awareness of local context will grow outwards to include nearby devices and surroundings, whilst the macro cellular network will have to incorporate these local signals as presence signals in converged communications services. We will also acquire a large number of networked devices in the home, as every entertainment and utility device goes on-line.

Wouldn’t it be great if my mobile could do this?

For example, last night I was landing late at the airport and wanted to call my family to say I’m not going to get home until the early hours — but I only want to call if someone is still up and awake, since sleeping people don’t worry about absent people.
That would take a device that can tell if the lights and TV are on, whether there’s motion around, or if people are talking.

(Always bear in mind Intel founder Andy Grove’s “quote”:A fundamental rule in technology says that whatever can be done will be done.)

For these things to pass, there might need to be some degree of network compatibility effect, e.g. smart light switches that broadcast their state via Bluetooth, with a compatible profile in my handset to receive that data.

This isn’t by any means the only possible example, and more immediate opportunities exist. For instance, an IPTV set-top box (quite a balancing act with flat-panel TVs…) could offer a co-viewing or social EPG(Electronic Programme Guide) facility to see what friends and family are watching or recommending — provided each has compatible equipment.

People live in close proximity to each other, but telephony doesn’t reflect that

So if we were a handset vendor, we might be considering trialling all kinds of enhanced communications tools and entertainment functions as a digital replacement for Family Radio Service (an unlicensed but regulated US walkie-walking service), maybe using an evolution of existing unlicensed Bluetooth or Wi-Fi as underlying transport. The operator angle is that some “premium” features in locked-down handsets might only be enabled once a fee is paid — the cellular network being only used for provisioning.

This would also provide a place to trial new features and capabilities without needing a multi-billion dollar network upgrade every time. Indeed many “local communications” features may differ significantly from traditional telephony and messaging.

For example, photo sharing around a table, or “physical rendezvous” in some unfamiliar environment. (Wouldn’t it be great if the address book had a compass arrow with which direction that person was in… and then if you tilted your phone vertically, it would show on that plane too! Great for finding the kids again in the shopping mall. Hey, even mobiles were sci-fi stuff not long ago!)

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