Telcos must invest in their infrastructure, even as demand for their services rises. Yet they cannot ask revenue to continue rising at the pace of consumption, and in some cases, such as text messaging and voice calls their revenue is falling. So far their response has been to decry bandwidth hogs, implement new pricing plans that try to hold the line on the dollars coming in even if users choose to use over-the top-alternatives.

But some are realizing that that’s not enough. They are investing in technologies such as OpenFlow, or at least software defined networking, as they try to get a handle on their costs. And they are demanding their suppliers provide them with specialized software running on commodity hardware, as opposed to the pricey, proprietary boxes of previous generations’ of technology.

Metaswitch’s big switch for telco gear.

For example, Metaswitch, a three-decade-old company based in San Francisco has created Project Clearwater, a software-based IMS core for telephone networks. An IMS (it stands for IP Multimedia Subsystem for those who care about these things) system is the glue that connects the old analog wireline systems to the newer digital systems. The thought behind IMS was that mobile operators would use them as a bridge into the IP world, but in reality they proved complex and expensive and telcos put off making those investments.

As Metaswitch looked at the market two years ago it saw an opportunity. The company, which provides other hardware to wireless carriers, saw the world was changing. So CTO Martin Taylor said the company decided to build an IMS core that ran on commodity hardware. And if that wasn’t revolutionary enough (remember, we’re talking about telcos here) on May 8 Metaswitch will open source the software.

Taylor points out that telcos used to have the largest scale systems, but that is changing. The globe-spanning networks delivering five nines that once inspired such awe, are now common as Google, Microsoft and others build out their own globe-spanning infrastructures. And telco’s know that to keep up they must adopt the same tricks the web scale companies have, like open source software and commodity hardware. Thus Metaswitch will open source its Clearwater software, and follow a Red Hat model of supporting the software and releasing regular updates. Taylor has the right idea, but telcos need to go even further.

But the real solution isn’t open-source software

As forward-thinking as Metaswitch is with its open source business model and trying to deliver a software-based IMS core built for commodity hardware, its customers are making a mistake if they rely on Metaswitch to hold their hand. As the telco network looks more like cloud and webscale infrastructure — in that telco networks they are taking on more load without adding costs — telcos need to think like real cloud vendors and webscale companies, not like enterprise IT customers.

Telcos are providing essential infrastructure in their mobile networks. Many of them also provide cloud computing services. In yesteryear it was enough to just provide the pipes, but if you’re going to provide compute and networking infrastructure today you need to adjust to the new reality for infrastructure providers.

The new infrastructure reality

And that reality is you need to own your systems. Infrastructure is going to be a commodity, even in mobile access (look at Free Mobile’s plans in France or even Republic Wireless here in the U.S. if you want to see the future). And people are going to want more and more of it, so the build out had better be cheap. So if telcos really want to be cloud providers, and the really want to compete in an all IP world, they need to stop demanding hand-holding from their vendors, hire smart people to own their infrastructure development, and get off their butts and start innovating.

For example, Amazon doesn’t hire a company to provide help on its operating systems or databases. When it chooses an open source technology it also chooses and hires smart people to make sure that technology is up and running and maintained. Google, Facebook, Netflix, they all operate the same way in the core areas of their business. Because when you cut out the middle man you cut costs. When you have smart people on staff, you can keep innovating at your pace and in the direction you want to go.

So if you’re going to be an infrastructure provider, that mindset and skill set is par for the course. And telcos do not seem to get this.

They can’t say they want to be like Amazon and play in that world if they want their vendors to do the work. They’ve got to find a way to embrace not just the technologies but the economic realities of competing in the commodity and cutthroat business that is the cloud and IP networks. Otherwise they will begin a long decline.

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Coalitions seldom succeed unless the members are motivated by a supreme crisis. Throughout history, a major threat or act of war was often needed to compel independent and competing parties to join forces for common gain: the United States, NATO, the international ban on whaling. Business can be war too, but the stakes aren’t usually high enough to keep a collective of companies aligned under a common agenda. Except for OPEC or Hollywood agencies, coalitions tend to generate more fodder for the press than progress.

Last week, another coalition tombstone was etched. As Kevin Fitchard explained (and eerily predicted) in his recent article: the Wholesale Application Community (WAC) will go down in mobile history as one of the most ambitious, but failed, collaboration attempts of our dear telco friends.

WAC, if you don’t know, was an industry alliance of 47 of the largest worldwide mobile operators. It was formed in 2010 to help wireless carriers compete in an open, unwalled mobile world. Rather than force developers to work with each individual operator to get APIs, the carriers would design a “single API” for location, billing, messaging and more. This would be the “iTunes for carrier stuff.”

Why couldn’t these powerful carriers — all facing common threats from open, data rich, ubiquitous platforms such as Apple, Google, Facebook and Amazon — get their WAC together?

The bullets shot in WAC’s back

Membership impatience. Collectively, the carriers endeavored for more than two years to launch a “single API,” and failed to develop much of anything. Now the carriers are individually frustrated with the GSMA and WAC. Rightly so. You won’t find the AT&T and Verizon chief technology officers publicly bashing the GSMA. But within their carrier walls, you can hear their screams at LTE and 4G speed. Don’t be surprised if splinter groups of carriers leave the WAC’s original 47 members behind to form their own common API solutions. And they should. Developers want tools and APIs that are easy and ubiquitous. A group of 47 single-minded designers won’t ever create a slick, friendly interface.

APIs aren’t backhaul. Deploying servers and towers is easy after developing decades of monopolistic experience. But building APIs is hard. Those of us that do it well (such as Apigee, or my company, Locaid) have spent years and tens of millions of patient investor money connecting behemoth, byzantine carrier networks to create easy-to-use APIs for developers. You cannot create an API by committee. And while the carriers have done a yeoman’s job of offering up more APIs – either directly or through partners – for high-demand services such a billing, messaging, location, it’s not an effort conducive to a group. The task is made more difficult for carriers because top developer talent wants Apple, Google or the latest VC-backed wunderkind on their resume — not AT&T or Vodafone. Carriers are trying to attract top developers, but that takes time. “Coding at carrier” isn’t hip in the college dorms just yet.

Policy versus products. Ultimately, WAC was a policy-setting machine, not an execution machine. And it certainly wasn’t a market-making initiative, which is what the carriers all desperately want. Some of us in the API enabler market have more sales people selling carrier API data than all 47 WAC carriers combined. It takes focus, design and execution to win share. And if you can’t launch product, you won’t survive. Hence, RIP WAC.

WAC will be resurrected. The concept of carriers working together comes around every few years. WAC will rise again (under a new brand no doubt). But even if carriers can get their network technology people to agree on standards, code, enablers, SLAs, etc. (good luck with that), and even if the carriers’ legal teams can agree on liability, privacy, etc. (more good luck to them there), they still have a major issue: carriers will have a hard time selling APIs. These are telcos. The sales teams, commission incentives, even the product offers, need to be dramatically restructured to become “developer friendly” services. Carriers can get there, but the journey will take time.

It’s a shame, really. The carriers want what WAC promised, and two-by-two they will eventually get there. WAC and carriers are populated with smart, innovative folks, and they should be admired for their ambition and fight. But carrier machinery — processing billions of bits per second at five nines of reliability — isn’t built to move at developer speed. Not out of the gate.

This is a great opportunity for developers. The message from the market is now loud and clear: “WAC is dead! Long live WAC!” The holy grail of “one API” remains. Venture capitalists and strategic investors have been funding the market-driven API agenda to date, and they will continue to do so because it’s the right thing to do. And it will be up to nimble, focused innovators to fill the need, one API at a time.

Rip Gerber is the founder and CEO of Locaid. The company offers Location-as-a-Service that connects developers to Tier 1 carriers via a single API.

Image courtesy of Flickr user buddawiggi.

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If you’re concerned about privacy, this should be kind of scary. There’s some solace in the fact that most providers claim they deny requests they feel are overbroad or unauthorized, but they comply with most and the numbers are rising. A couple of carriers, including Verizon and T-Mobile, noted user-data request increases in the 15 percent per-year range. Further, as some companies explain in their responses to Rep. Markey, many requests ask for information on numerous parties or location data that might identify everyone who pinged off a particular tower.

Here’s a little chart I made comparing the estimated number of requests for user data from wireless providers in 2011 to that of Google. I also threw in Twitter’s recently released number from the first half of 2012, which, at a mere 679, doesn’t even show up on the chart.

Here’s a breakdown of requests in 2011 just by the carriers that provided information for last year, although all numbers are estimates because (1) some providers just provided estimates and (2) they weren’t entirely clear in differentiating between types of requests. Sprint, for example, claimed more than 300,000 court orders for wiretaps, pen register/trap and trace devices, and location information over the past five years, but also noted “approximately 500,000 subpoenas from law enforcement” last year alone.

Several providers were a little more vague than others. MetroPCS claimed “an average of fewer than 12,000 requests per month from January 2006 through May 2012.” Cricket said requests grew steadily “from a low of approximately 24,000 in 2007 to a high of approximately 42,500 in 2011.” C Spire claimed approximately 12,500 requests over the past five years, while T-Mobile declined to release any numbers. Here is AT&T’s rather detailed breakdown.

Aside from the numbers, the Times article also notes varying degrees of consistency with which law-enforcement agencies go about requesting user data in accordance with federal surveillance laws. Of course, this isn’t made any easier with ever-changing technologies and data sources, such as GPS, that begin to blur the lines between mere requests for user data and suspect surveillance that the Supreme Court recently declared unconstitutional without a warrant.

It’s yet another reason that Congress needs to get its Fourth Amendment act in order, redrafting outdated legislation to account for new technologies not even considered when many laws about data privacy were written decades ago. In the case of data such as that stored with cloud service providers or wireless carriers, that might mean focusing laws on the type of data authorities hope to access rather than where it’s located — a variable that changes with each new wave of technology.

Given the right case, maybe the Supreme Court will spur Congress to act and offer enhanced protection to everything we’re all but forced to share digitally. In United States v. Jones, the case mentioned above, Justices Alito and Sotomayor both wrote concurring opinions expressing their discomfort with how easily authorities can access digital data stored with service providers. As of 2010, many wireless providers were storing user data for years.

Sotomayor called the third-party doctrine “ill suited to the digital age, in which people reveal a great deal of information about themselves to third parties in the course of carrying out mundane tasks,” adding that she “would not assume that all information voluntarily disclosed to some member of the public for a limited purpose is, for that reason alone, disentitled to Fourth Amendment protection.”

Feature image courtesy of Shutterstock user Johan Swanepoel.

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Both Verizon and Hughes occupy different segments of the vehicle telematics value chain. Verizon provides raw connectivity via its wireline, CDMA and LTE networks, while Hughes supplies the hardware and software that go into numerous in-car technologies: Remote door locking and unlocking, connected vehicle nav systems, voice command and control technologies, remote diagnostics and vehicle GPS tracking.

Hughes spans the whole automotive industry. It sells embedded security and infotainment services to Mercedes Benz and Volkswagen. It designs the technology behind State Farm Insurance’s Drive Safe & Save program, which allows it to monitor its customers driving behavior in order to adjust their premiums. It sells fleet tracking and fleet management services to enterprises and industry. Hughes has even expanded beyond the automotive business and into healthcare, providing an emergency response bracelet for seniors through its Lifecomm division.

Hughes today works with multiple wireless carriers so it will be interesting to see what happens to those other partnerships now that it’s under Verizon’s wing. Verizon said it plans to operate the company as a subsidiary, keeping its current management team in place in Hughes’ Atlanta HQ. Verizon also said it plans to operate the company under its Enterprise Solutions Group, not Verizon Wireless, which may help Hughes assert a little independence.

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