Why carriers need to treat developers more like partners

“Operators treat partners like vendors.” That quote comes form Google(s goog) director of global Android partnerships John Lagerling, who said it during a panel discussion this week at Management World in Dublin, where it was captured by Light Reading. It’s a telling statement, especially coming from one of the most important players in the mobile industry.
Several years ago, operators could have gotten away with treating everyone else in the mobile ecosystem as a mere supplier. After all, they ran the whole show. If your service, device or technology was ever going to make it onto an operator’s network, you had to kiss the ring. A lot has changed in a few years.
These days, Google and Apple(s aapl) have far more clout in the global wireless industry than any individual carrier. Apple’s decisions on which radio technologies to support can cause seismic shifts in the industry. And any new iteration of the Android OS can spur new waves of new service innovation and app development. That’s power that no single operator has ever held.
The mobile industry has evolved, but if Lagerling is speaking the truth, then the carriers haven’t evolved with it. That Bellhead, old-school telco mindset was in evidence at the U.S. mobile industry’s biggest show, CTIA Wireless. The show has been suffering for several years and I believe the main cause for its slow demise is its stubborn focus on carriers. The show simply hasn’t embraced the new reality.
To be fair, the disdain runs both ways. Most over-the-top (OTT) app developers view the operators as mere dumb pipes, which isn’t going to ingratiate with them Verizon(s vz)(s vod) and AT&T(s t) anytime soon. I’ve heard developers lament the loss of unlimited data plans like old hippies pining for the Summer of Love. Mobile carriers may be treating developers and platform providers like mere vendors supplying the nuts and bolts of their services, but the developers are treating operators like mere utilities into which they plug their apps.
The thing is carriers need developers a lot more than developers need the carriers. And the carriers know it. Wireless analyst Chetan Sharma sums up their conundrum quite eloquently in his latest U.S. market update:

We are at a critical juncture of the industry evolution. The OTT phenomenon is shifting the tectonic plates at a rapid pace. What seemed like a minor irritant only a few quarters back is become a nuisance virus that is eating away the core. Some operators have gone into panic mode while others have stepped back, assessed the situation, embraced it, and will try to exploit the opportunity. The truth of the matter is that the two biggest apps – voice and messaging didn’t really evolve a period of two decades. When the last big invention was interoperability and that too a decade ago, you know things are ripe for disruption. Thanks to the availability of always-on IP networks, new and nimble players are pushing the boundaries of what’s possible.

Operators are now floating the idea of OTT providers fronting the costs of delivering their traffic over mobile broadband networks. (We may even see the first instance of it in the coming weeks from Verizon.) The operators are talking about revenue sharing, and “sharing” implies a partnership of equals.