Handsets are becoming the most personal & pervasive platform for communication, computing, and entertainment more so than Personal Computers (PC). However the major difference between PC and mobile handsets is that PC are based on open and largely interoperable architecture of hardware, software, and services. Handsets on the other hand are highly integrated. Majority of handsets are sold locked to a single network by the carriers. Content services, functionality, and software applications are largely preset. This keeps their customers within what is often called a “Walled Garden.” Carriers hope to protect their revenue streams with these Walled Gardens. Most of the carriers in US (ATT (formerly Cingular), Verizon, Sprint, T-Mobile etc) and many European and Asian carriers (Vodafone, Telefonica, NTTDoCoMo etc) follow this model. I believe this is approach is a direct consequence of slow pace of industry innovation and high cost service plans. Only a few carriers are starting to move to a different model, “Open Web Access” for example Orange, according to Sanjiv Ahuja, CEO during his key note at 3GSM 

Now innovators are applying Web 2.0 principals to mobile communication to jump the “Walled Garden.” Skype, a simple peer-to-peer protocol based calling service allows a loosely joined community to come together and unlike the legacy telephony system where a central server is required to connect end-point together to talk, Skye allows users to connect directly to each other. Today Skype has a 300 million user community that can make free (or almost free) global phone calls over the internet. The pre-existing community makes it easier for Skype to jump the garden wall.  With Google investing in free wireless networks and startups like ipass and Boingo, creating a Global paying Wi-Fi networks. These organizations are creating a parallel network that is bypassing the carrier networks. Now if Skype is tied to this Wi-Fi network, users can by-pass the cell carriers entirely and get mobile voice from a Wi-Fi enabled smart handset or laptop.  Today many carriers are not selling Wi-Fi enabled handsets (only 1 handset sold by each Sprint, ATT, and Verizon amongst all smart devices). One of the exception is “3” in UK.

Similarly, Nokia uses Python, an open programming language, on some of its phones e.g. S60. This enables handsets to be easily scriptable by users or third parties. Thus creating a global community of developers to build a open scriptable platform, which goes against the grain of walled gardens approach. This is building Mega communities of developers, users, and networks. We are seeing Mobile 2.0 in development.

Emergence of the new open technologies, entrance of new players like Skype and ipass, open programmable devices will force carriers to re-evaluate their strategies and try to figure out how to leverage this new paradigm to their advantage. This is not the first time for these carriers, Short Messaging Services (SMS) is a success story, which went against the early intuition of the mobile carrier of protecting their revenue stream by not allowing inter-carrier messaging. However, when finally they were forced to allow it, the end result; higher usage of SMS and thus higher revenue.

The strength in this new model (Mobile 2.0) of integration and collaboration are new methods of production, consumption, and involvement of masses, which can quickly impact the current competitive advantage.