There used to be a map – from Harvard, I think – that displayed the value of information transmitted on the horizontal access and the speed or throughput of transmissions. At this map’s bottom left were personal letters and at the top right were major financial transactions. Now, in this age of social networking, the bottom left of that map could be the home of many a Facebook and Twitter post, while Wall Street keeps increasing the $Trillions/MB transmitted.
The impact of divestiture in the mid 1980s was that carriers tried to get into the top right-hand corner with integration services and leasing companies. Eventually, though, it became clear that the carrier-financials relationship was not adding value, as the carriers could get often better prices elsewhere and the markups desired on integration were constantly under pressure.
My father’s advice was to stick to the dial tone at divestiture, so I avoided the integration services company and stayed with the last mile. The Internet, though, changed the dial tone into a whistle, and with broadband and VoIP dial tone was no longer a network function. Then the Commercial Internet arose, and recognizing the importance of getting ahead of the curve the carriers opted to return to their roots. Since then, the carriers have made some efforts in venture funds, some of which have been quite interesting, but as with most VCs it is necessary to pull the lever many times for each success.
Of course, I understand that an information map is dated. Today, the reality is that everybody is in some way involved in electronic commerce, and for the carriers the financial transmissions go whistling by as over-the-top services. Based on the past, though, I think that the public had very little interest in bringing the carrier into the financial market. The use of a phone number, however, serves many purposes, for instance as a way for people to discover each other without surrendering a great deal of personal information.
Considering the current hot-button issue of credit card information exposure (thank you, Target and Neiman Marcus) and the fact that the drums are beating against the U.S.’s mag stripe standard, I see an opportunity for the carriers to reassert trust. Of course, you can already use your mobile device to establish currency transactions today, even though I am sure the hacker community is actively attacking and that inevitably there will be more fiascos.
The existing financial markets are not particularly interesting, but by employing ENUM to deliver a new crypto-currency wallet service, the carriers can take advantage of a true window of opportunity, one borne of the following factors:
- Existing services are vulnerable;
- Crypto-currency is coming of age; and,
- AntiSpoofing rules will add a layer of authentication (while these rules are not clear, the government is pressuring the carriers to move quickly, and thus there is a possibility of some financial relief).
I believe the carriers can execute this in a timeframe shorter than that needed to redistribute smart cards, and with authentication guaranteed the overlay of crypto-currency security should be a complementary technology.
As the old adage goes, “money talks.”
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