Cellular Voice is now a Commodity

apple-watchAs has always happened with every major telco product, cellular voice has probably reached the point where we can consider it to be a commodity. In economic terms, a commodity is a basic good that is reasonably interchangeable with other goods or services.

A brief history of cellular voice is probably the best way to show how the product has changed over time. I remember when cellular voice was introduced. At first it was an extremely rare product and only rich people or those whose jobs demanded mobility at any cost had cellphones. The units were huge and heavy and mostly were used in cars. Users paid a steep price to gain mobility, which was the first value proposition of the cellphone.

Cellular voice became a mass market product when the size of the cellphones shrunk and the batteries got good enough that they could hold a charge for a reasonable amount of time. Various versions of flip phones became popular and millions were sold. These early cellphones had lots of innovations other than just being mobile. For instance, I remember seeing a coworker buy an early flip phone that had features that we now take for granted. The phone stored your whole rolodex of contacts. But even more impressively, the phone kept visual track of who had called you and when. And long distance largely disappeared when the cellphone companies started selling minute plans instead of long distance plans.

But then came smartphones and cellular voice started taking a back seat. Data became the rage but all of the market emphasis was on using your phone to surf the web and to take advantage of the burgeoning wireless data business. The telephone part of the product was still important, but this is about the time when we saw cellphone companies start to blend in the pricing of voice, text and data into one bundle. People became less willing to pay high prices for voice and texting, and so the price of those products was buried into the monthly rate.

Skip forward to today and it’s easy to see that voice has lost all cachet. I have a teenage daughter and using the voice capability of her phone is at the bottom of her list along with email. She much prefers to communicate with pictures, emojis, text messages and social media sites rather than actually talk to somebody on the phone. She’ll do it, but she clearly would rather communicate in some other way. In fact, she does the majority of her communications these days using an Apple smart watch, where she talks into the watch which then sends her message as text. She doesn’t even need a smartphone for most of her communications.

And the business world has also moved away from traditional voice. For instance, it’s routine for me to have conference calls using various web conference services that allow me to talk and listen through my computer.

One of the best indications that cellular voice is now a commodity is that there are now many willing to give away voice for free. Billionaire Mukesh Ambani in India is now giving away free voice to anyone buying a cellphone data plan. In this country there are a number of cellular providers allowing unlimited free calling using WiFi.

Cell phone companies are going to be offering voice as part of their products for a long time. But one has to wonder as we move to smartwatches, smart assistants like Amazon Alexa and a future of various wearables if we won’t soon stop using the word ‘phone’. My daughter’s smartphone is rarely used for the ‘phone’ features, and the time comes soon when she can ditch the phone completely I think she’ll gladly do so.

The Promise of Hyper-Local Ads

Wi-FiApple Watch is now being promoted as a platform to deliver hyper-local ads. These are ads that are provided to you locally at a given store or other location – essentially instant specials that are provided at the point of shopping or purchase. The advertiser’s dream has always been to use hyper-local ads to get you to pause to look at things you might have otherwise walked past, or even to lure you into a nearby store you might have otherwise gone past.

This is an idea that has been around for many years; advertisers are chomping at the bit to make this work. The problem has always been finding a method of transmitting the ads to people in a way that can be widely accessed and used by enough shoppers to make it worthwhile for the advertisers.

For a long time retailers have been working on ways to make this work using a smartphone. But there are issues with that. The primary issue is that a shopper needs to download an app for each store they shop at in order to participate. This works fine in large department store or a grocery store, but it’s unimaginable to make this work in a busy mall or shopping district with hundreds of stores.

There are also privacy issues. Currently the easiest way to contact strangers would be to send them a text message, but it’s against FCC rules to send unsolicited text messages to people with whom a business doesn’t have a relationship. Plus texts are quite limited in content and looks and don’t have the pizazz that advertisers want.

A lot of stores have customer loyalty programs today that are a tiny start towards a hyper-local ad system. For instance, my wife likes Target and she uses their shopping app. When shopping she can scan any item with her smart phone and the app will tell her more about the product and also offer coupons if there are any. But this is not hyper-local advertising and my wife describes this more like a scavenger hunt where it takes a lot of effort to find the best specials in the store.

There is also the technology platform issue. Apple has assumed that an eventual winner for hyper-local shopping is going to be beacons; they have built the ability to communicate with beacons into all of their devices using the iOS7. Beacons are small devices that will communicate with shoppers using low-power Bluetooth technology. This means that the communications will be very short-range and a person needs to be pretty close to a beacon to get a notice from it.

There are retailers now testing beacon technology. Target, for example, just installed beacons into 50 of their larger metropolitan stores. Even in this first run Target is worried about overwhelming shoppers. They are making a shopper confirm three times that they want the beacon messages and they are then limiting these messages to two times per given store visit. Of course, power shoppers like my wife are probably going to demand many more pings!

With beacons the retailer can provide coupons to a shopper as they shop. And with loyalty shoppers they can provide the coupons that they guess will be most effective based upon that shopper’s past purchasing history. When fully implemented this will be one of the first truly hyper-local ad experiences.

The precautions that Target is taking highlight the risks of hyper-local ads. If they become too overwhelming or annoying then most customers will likely turn them off. And off course, reluctant shopper like me are never going to use this, and so the system is not going to work with everybody in the store. And there are still going to be technical issues. If a person has turned off their Bluetooth then this isn’t going to work.

One of the biggest concerns expressed by a survey of Target shoppers is that they don’t want the store to use the technology to track them when they are in the store. Target says they will not do this, but one has to suspect that they are going to have a hard time not mining that data when it’s lying right in front of them. The more any given store knows about the overall habits of their customers will help them increase sales. But even scarier, the more they know about you personally, the more they can coax you to spend.