Apple And Google Smash Open The Telecom Oligopoly--Verizon Caves And Co-Creators Win.

Posted by: Bruce Nussbaum on November 28, 2007

For those of us who believe people should be able to design their own tools, co-create their own products and services and control their own lives, the decision by Verizon to open up its closed system is huge. Thanks to the huge popularity of the iPhone and the upcoming Google phone, Verizon is going to “”permit” people to configure their own array of services for their phones. To say this is a long time coming from the oligopoly known as the telecom industry, is an enormous understatement.

It was great to read these words from the head of Verizon Wireless, Lowell McAdam—“The trend we see here is an explosion of innovation.” You bet. The other trend is a shift of control away from the producer or market dominator to the individual consumer.

There are many lessons to be learned from this episode. One is that

it takes longer than you think to change paradigms. The closed, controlled phone/telecom paradigm resisted regulatory, political and market pressures to change for decades. One simple reason is that monopolies/oligopolies generate so much money that they can buy political influence and the best legal advice. That's why America used to have a tradition of breaking up monopolies--a tradition that ended some years ago. Remember anti-trust?

If the political and regulatory institutions don't do their job, then it is up to innovation and competition to do it. Surprisingly, that too can take time. Often, the innovation and competition has to come from outside the industry and market because it is outside the control of the oligopolies. Apple and Google are way outside the control of big telecoms. And they are hugely popular, giving them political clout as well.

This is all good news for the Brand America. The US has fallen further and further behind in telecom innovation. Anyone who has traveled to Asia and Europe knows this to be true. Now there is a chance for the country to catch up.

Reader Comments

Don MacFarlane

November 28, 2007 9:33 PM

"Remember anti-trust?" Of course we do. Who can forget how Microsoft, Brand America, par excellance got mauled in court by anti trust in 2000 ringing a death knell to any company that is guilty of the audacious crime of being too succesful. According to amorphous laws of anti-trust, Google and Apple are monopolistic, by definition.

Dan Hester

November 28, 2007 11:51 PM

Nice revisionist history. Microsoft was on the way to being broken up after many years of forcing their products upon computer makers and ripping off other companies software.

Unfortunately, the Bush Administration saved them. They weren't mauled, they were found guilty and then let off the hook.

But it did reign them in some and look at increased pace of innovation in the tech industry since that point. Microsoft stifles innovation. Apple and Google drive it.

vanax

November 29, 2007 2:42 AM

Yes, but they are not predatory monopolies like Microsoft has proven to be by the court. Apple and Google are legal monopolies. Your point?

James Robinson

November 29, 2007 6:44 AM

I can only suggest that Mr. MacFarlane read up on the MS antitrust trial.

MS were not hauled into court because they were successful. They were not hauled into court because they were a monopoly, because it is not illegal for a company to be a monopoly under the clear, clear-cut and long-established rules set by antitrust law.

What is illegal is for a monopoly to abuse its controlling position in the marketplace to give its other products an unfair advantage (e.g., commingling IE with Windows) or to unfairly drive off would-be competitors (e.g., telling content creation companies to drop QuickTime support in favor of Windows Media if they wanted to sell Windows software). Furthermore, multiple Microsoft executives, including Bill Gates, either lied outright or dodged and dissembled under oath. They rigged demonstrations to the court. Meanwhile, they were caught stealing both QuickTime code and open source code just as they were accusing the open source movement of theft.

It was pathetic, but to those of us who are familiar with Microsoft's depredations, it was not surprising. Microsoft fights dirty. They always have. In a way it's understandable because wherever they have tried to compete on the merits they have failed miserably.

Kameran Ahari

November 29, 2007 3:03 PM

Great post Bruce. I share your perspective. This is a big win for open network movement. My post takes a position that the announcement, and sudden about-face, is no more than a tactical defensive response.

Kameran Ahari
http://gotastrategy.typepad.com

John Willborn

December 4, 2007 8:41 AM

Next is the banking industry. Some innovative startups are coming up from outside the industry that will force change.

Bruce - How about an article on this topic?

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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