Best Buy and eBay CEOs tell mobile operators they need to change
CEOs of the mega-retailer and the online auction giant say that wireless carriers need to open their networks and offer simpler data plans.
BARCELONA, Spain--Wireless operators need to stop locking devices and offering overly complicated data plans. That's the message from Best Buy CEO Brian Dunn and eBay CEO John Donahoe here at Mobile World Congress.
Dunn and Donahoe took the stage today as part of a panel discussion about mobile payments. While the CEOs talked a lot about how shopping and payments are changing thanks to mobile devices, they also took a few jabs at wireless operators, challenging them to become more open to help spur greater adoption of their services across a broad range of devices.
While the mobile phone has been the primary way that people have connected to wireless networks, Dunn and Donahoe acknowledge what other players in the mobile space have seen already, which is that a new era of connected devices is dawning. Soon everything from cameras to home appliances to cars will be connected via a wireless network. Carriers have been talking about this for a while, but to date they have neither adjusted their service plans nor opened up their networks to make it easier for devices to be ported from one network to another.
Best Buy's Dunn said that this is a problem that needs fixing.
"Carriers need to offer plans that are more reflective of how people live with these devices." he said. "There's a limit to the number of $15 monthly fees someone can pay. And customers don't think in megabytes. Carriers need to get to a place sooner rather than later where the plans offered are more reflective of how devices are actually used. And once they do that, consumption will go up."
Dunn said that carriers and device makers also need to stop locking devices to particular networks because it drives up the cost of these products. He cited tablets as an example. Today consumers pay a $130 premium for a device with 3G wireless technology. Dunn said this is creating another kind of digital divide, where people who can't afford these more expensive devices are limited in how they can use these products. And because devices are locked to specific carrier networks, it drives up the cost for the manufacturers who need to build devices with different components. It also inflates costs by forcing retailers to carry different models of the same exact device. Dunn said that unlocked devices that are free to roam on any wireless network would greatly reduce the price of products.
"This inefficient supply chain is driving costs up instead of down," he said.
eBay's Donahoe agreed with Dunn. He urged mobile carriers to be flexible in their plans and to open up their networks to unlocked devices. He acknowledged that wireless carriers are in a very powerful position since they control the devices and the wireless networks, but he said that unless they are more open, they risk failure in the future.
"A closed ecosystem won't last forever," he said. "People find ways around it. Wireless operators need to make their networks as open as possible. And those that do will ultimately be the winners."
Donahoe said that this is exactly what eBay has to do in its own business. The company offers a shopping app that allows consumers to compare prices. But eBay doesn't limit the app to only offering prices from its eBay store but from competitors as well.
The executives also talked about how mobile phones are changing the shopping experience. While some experts have speculated that online comparative shopping apps are killing the retail experience, Dunn and Donahoe disagree. In fact, Dunn said his retail business and online and mobile businesses have been growing over the past year. He said that comparative shopping via mobile apps is a phase. Eventually, manufacturers will make it difficult for any retailer to slash prices too far. Instead, he said that the mobile apps have actually breathed new life into retail, offering customers a richer experience. He said he wouldn't be surprised if Amazon, the king of virtual shopping, opens its own physical stores some time.
Donahoe agreed that mobile has made the shopping experience richer. And he said that payments and shopping will change more in the next three years than it has over the past 10 years. But when it comes to near-field communications, or NFC, technology in phones to enable payments, Donahoe said he doesn't see it happening any time soon.
"It will take years and not months for NFC to be embraced by retailers," he said. He said the biggest problem is that there has been no standardization on applications that will use the NFC technology. As a result, retailers won't be keep to support several different platforms, such as Google Wallet or the carriers' own Isis networks of NFC payments. That said, he thinks that mobile phones are important to the shopping experience, but may not be needed for the last few inches of the transaction. Instead, he said consumers are already leveraging existing payment systems such a PayPal. This implementation allows people to simple enter a PIN at checkout, without swiping their phone to a terminal outfitted with the same NFC technology.