Elliot Noss, Tucows CEO, discusses the mobile access sea change
(WEB HOST INDUSTRY REVIEW) — In one of the final sessions of Monday afternoon, Elliot Noss, CEO of Tucows presented “This Mobile Moment,” a session on the opportunity in the mobile Internet space, and particularly where that’s an opportunity for hosting providers.
We all know that the mobile space is blowing up, but Noss took care to emphasize that Mobile internet is the fastest adoption of a technology in the history of the world.
And it’s a massive shift. If you went back to just before the launch of the first iPhone (which was in 2007), mobile phones meant people talking to each other, with a little bit of text messaging. In the three-or-so years since, things have changed incredibly, to include iPhones, Android, etc.
Noss says that, while you’re sitting inside a major change like this (he uses the original Internet boom as an example), it’s impossible to see just how big it is. It’s bigger than we think. He says the shift to mobile, specifically smartphones, is a change analogous to the shift from copper phone lines to Internet access.
In order to illustrate why the mobile shift is relevant to hosting companies, he goes back to the early days of the Internet, and therefore the ISP business, and compares that to hosting – a market dominated, at a seat basis, by smaller providers, with a relatively small part of the market held by the biggest providers.
Broadband changed the ISP market, adding a regulatory and legal element, which enabled the large cable and telephone companies to push many of the small regional ISPs out of the market. However, many of those ISPs pushed out of that space make up the big players in the web hosting space today.
The point of all this is to provide a framework in which to answer the question of whether there’s an opportunity for disruption in the mobile access space.
He says there are high cost structures. The existing mobile access providers spend a ton on legal and regulatory influence. They spend a ton on marketing. And yet, the business is incredibly profitable. The margins are huge – in the 30 to 40 percent range. The reason that the gross spending and huge profitability can coexist, he says, is that there is a ton of breakage in the mobile market. Customers have to pay for way more than they need: there are huge costs for things like roaming, tethering, even just a data plan. An example – Verizon’s entry-level data plan is 2GB, where the average US citizen uses about 150 megs.
As mobile phones shift from basic devices into handheld computers, the need for customer service is growing, creating a way in which hosting providers are much better built to serve customers than these phone companies.
Hosting, he says, works at nano-scale. It’s possible to operate a hosting business at a very small scale, with a few thousand subscribers. But it’s not possible to operate a hosting business without providing, at minimum, very good customer service. Hosts are used to operating in a hyper-competitive market. You have to fight to gain customers, and fight to keep them. They’re used to operating on hyper-thin margins.
He concludes that mobile is the biggest trend in tech for the next 10 years. And everyone in the room has their roots in this kind of competition. And there are fat, inefficient incumbents. He thinks there’s a bigger opportunity in mobile access than anything else we’re going to look at in the next few years.
A lot of this leads up to Tucows’ upcoming Ting product, which is a mobile service, reselling the Sprint network, designed to offer fair, transparent pricing, and to be distributed through the company’s network of several thousand hosting provider partners.
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
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