May 28, 2010

Good Pipe v. Bad Pipe

By Lai Kok Fung, BuzzCity CEO

Telecom carriers and some advertising companies are at it again. Instead of focusing on whether a carrier provides fast reliable high-quality connectivity, they've resurrected a false debate, posing the question “is a mobile carrier a 'dumb' or 'smart' pipe?” In the hope of securing an additional revenue stream, they make Orwellian promises of better user experiences, when in fact all they want to do is hijack a user's mobile browser and insert ads where they shouldn't appear.

The real focus shouldn't be on “dumb v. smart” but rather whether a carrier is a good pipe or bad pipe.

Let me share with you an analogy.

Suppose the government wishes to privatise the postal delivery service and invites companies to place a bid for a three-year contract. How would it determine if the vendor would be a good provider?

Well, I suppose a good postal service is one that

  • charges reasonable postage rates and
  • delivers the post to the intended recipients on time, all the time.

Moving up the value chain, an extremely good service provider can provide differentiated services:

  • guaranteeing delivery within a certain time frame at affordable rates for standard parcels and
  • charging a premium to deliver faster, provide tracking services and notification of receipt for urgent items.

A bad postal service, on the other hand, misplaces your letters or delivers them late.

Now, suppose that the postal service

  • opens your letters and parcels en route
  • inserts leaflets and advertisements based on the content of these materials
  • and, on top of that, boasts that it's a “smart” postal service because it is providing users with relevant content in addition to the letters that they were tasked with delivering.
As a consumer, how would you feel about this? How about as a government regulator? In many countries, this “value added service” would be illegal, not to mention unethical.

Now, let's bring the analogy back to the delivery of mobile internet services.

A good pipe

  • provides a reasonable quality of service at a fair price, ie good connection speeds at rates consumers can afford
  • provides premium services (dedicated lines, faster connection speeds) for an additional fee.
Yet, some carriers in the name of being a 'smart' pipe act instead like the postal company that tampers with your mail. They intercept communications and interupt a mobile surfer's online experience by breaking mobile web pages into two or three parts and inserting advertisements.

We call this “browser hijacking” and a number of communication platforms offer this functionality as part of a "holistic" solution to mobile carriers. For example:

  • Bytemobile – a company that provides mobile platforms to more than 100 telecom carriers – promotes a service “to drive advertising revenues from off-portal browsing traffic.” Translation: the service enables carriers to insert ads onto web pages that they do not own. Bytemobile goes on to say that the ads have high click-through rates because “they are tied to browsing context (site category, URL) and past browsing behavior.”
  • In a brochure called “A Win-Win-Win Solution for All Players”, Comverse says “off-portal interstitial” and “off-portal header/footer” should be part of a telecom operator's advertising inventory.
  • Mobixell announced late last year that it had won a contract with a leading tier-one Asian operator. Mobixell's ad solution enables operators to insert adverts into a variety of platforms, including off-deck mobile internet sites (again – pages published by someone other than the telecom company). It adds that ads can be location-based to create “immediate commercial opportunities.”
Consumer profiles and location information, used intelligently, enable advertisers to target relevant offers to consumers. Targeted advertising is an acceptable industry practice, as long as it is done in a manner consistent with consumer privacy protections.

However, interrupting a user's browsing experience, manipulating browser settings and the displays seen by end-users, should not be tolerated. This practice is even more deplorable in the mobile world, where display screens are small.

Take a look. Here's an image, captured by a user, of a normal mobile website:

And here's what it looks like after it's been hijacked by a carrier:

Two years ago, we reported that M1 in Singapore was practicing browser hijacking. Consumers were outraged and M1 quietly stopped doing it after a few months.

Some of the companies that offer this service have spoken to BuzzCity and offered to “white list” our sites, ie we would be placed on a short list of mobile internet sites that would not be affected by an operator's ad insertions.

That's not good enough.

Browser hijacking infringes on copyrights, violates user privacy and adds unnecessary data costs to a consumer's bill.

Some telecom carriers argue that they “own” the pipe and should be able to do as they wish. But the truth is they have purchased a license to run a service. In any country, there are a limited number of licenses issued. The carriers build infrastructure and have a right to a return on their investment. But this return is supposed to come from data costs and voice calls. Telecom carriers must refrain from any practices that infringe on the rights of others and concentrate instead on providing quality transmission services at affordable rates.

Industry players meanwhile must now firmly state that browser hijacking is completely unacceptable.