Watching the big fight over Wi-FI -- Keep your eye on the ball

Verizon and T-Mobile announced recently that they planned to use the Wi-Fi provision of the LTE-U standard to deliver connectivity more cost effectively to their customers.  Content providers like Google and Cablevision Systems Corp immediately called the FCC and cried “Foul.”  The media smelled a fight and latched on.

I was immediately struck by the irony of the situation. The very same content providers whom users access through the Verizon and T-Mobile networks are complaining about how those carriers are delivering their content.  I thought “Really?  Why do you (Google and Cablevision) care how users get to your content and provide eye balls to justify your ad revenue?  I thought eyeballs-on-the-screen was all that mattered to a content provider.” Then I thought “Really?  You (Verizon and T-Mobile) want to highlight to your customers that your cellular connectivity is really no different than free Wi-Fi?  That sounds like a good way to undermine your pricing structure.”

So here’s the deal.  We tell our customers that when considering the IoT value chain, the flow of data from sensor to action, the value is at the edges.  The edges are where content originates; the data captured from the real world, and then is presented in actionable form to the user at the other edge.  On the way from one edge to the other there are connectivity providers, cloud storage providers, analytics, and then finally application providers.  Users pay for the entire value stream of course, but they will pay the most for the edges – the content. 

Verizon and T-Mobile live in the middle – the connectivity between the edges.  Their value is delivering the content, but being in the middle they don’t have as much value.  They need to keep reducing their costs if they are going to maintain their margins.  Unlicensed bandwidth can help with that.  But their bigger problem is that they are at risk of losing the users’ dependence on them to access the content.  If they lose that they lose the eyeballs and aren’t even in the value stream.  

Google and Cablevision own the content and they don’t want anything to create fiction against the flow of that content to the eyeballs that matter.  That’s the fight.  Wi-Fi is just the excuse to fight.  The real fight is over the eyeballs.  Whoever controls those owns the value at the edge. 

I am interested in seeing how this fight plays out, but keep your eye on the ball. The eyeballs that is.