Transpera's CEO calls for an end to the antagonism between wireless content providers and carriers; he argues that both will see economic gain in partnering.

The two parties are heating up. The battle lines are drawn. The sides are polarized. The debates are ongoing and January will prove to be a pivotal month. No, I'm not talking about the presidential race, I'm talking about the "open" vs. "closed" network camps in the wireless industry and the new attention this debate has gotten because of the FCC's 700 MHz spectrum auction due to take place this month. The debate may be just as passionate as the political ones and even more so sometimes -- with circular arguments feeding long-held frustrations. One blogger at the CTIA show last October, while watching a mobile operator representative sing the praises of a walled garden, opined, "I felt like I was transported back to 1997." The "open" crowd wants carriers to "just get out of the way." Operators, on the other hand, claim that the new bubble-generated online world would bring their network to its knees with no viable way to pay for the data throughput. "How many profitable Web 2.0 companies do you know?" -- the argument goes.

As with any polarizing debate I've often found that the truth lies somewhere in the middle, and in this debate in particular, sophisticated marketers and savvy entrepreneurs should recognize that there is a third way in which the innovation of the web generation can exist peacefully and profitably alongside the carriers. 

Consider the argument that carriers should just "get out of the way." This camp, consisting mostly of venture capitalists and the innovative web companies they fund, rejects real advantages that a carrier partner can bring to any business: ease of billing, merchandising and marketing. I would say ignore those advantages at your peril.

M:Metrics has shown in the past that a primary ringtone purchase motivator for mobile buyers has been "boredom." Consumers are turning to their mobile phones to fill time, and they're finding stuff that the carriers promote and merchandise. If the item is commerce based, when users find what they want, carriers make it super easy for them to buy it by putting the item or service on the mobile phone bill. In the online world every input of a 16 digit credit card number is another chance to reconsider the purchase decision. If the mobile service is ad supported, carriers can provide the kind of promotion and support that eases discovery and thus drives impressions.

The provider/carrier relationship has the potential to be like the relationship between a consumer brand -- say Philips-- and a retail store, like Best Buy. Viewed this way the relationship is symbiotic rather than adversarial. What consumer electronics manufacturer or digital entertainment company treats Best Buy as an obstacle, not an opportunity? In fact, Best Buy's merchandising and consumer clout is such a big opportunity that brands fork over 35-45 percent of the product retail price. They pay another 2 percent to Visa for ease of transactions.

So what is the fuss about? It might be that the carriers are typically bad at being Best Buy. As the entertainment industry of yore held a white knuckled death grip on content in legacy distribution mechanisms (remember when DVDs were called the "death of Hollywood," by Hollywood?), some carriers hold the same death grip on voice revenue and ARPU, and have been agonizingly slow to staff and adopt the practices of a good consumer channel: to move their business from telco infrastructure providers to a marketing channel partner. When one has service and content conversations with carriers one is more often talking to a technical program manager, not a seasoned entertainment marketer or merchandiser.

Why is this? The mobile data industry to date has been heavily influenced by technical limitations of networks and handsets. So it does make a sort of sense that many of the decisions around mobile data services and content were made by technicians with a deep understanding of handset and network capacity limitations. But those days are fast disappearing. Handset and network innovations and evolutions are obviating the need for management of what were scarce resources. The natural reaction to positive growth in capabilities such as advertising and media consumption should be a shift in focus from "What can we do?" (a technical paradigm) to "What do consumers want?" (a marketing paradigm). Marketers and merchandisers are expert at answering the latter question, and they should now be the ones in the driver's seat at the carriers. But change has been slow. Big companies move slowly, but the trend is clear.

Consider the below graph:

*Graph by Chetan Sharma Consulting

Data ARPU (average revenue per subscriber) growth is outpacing voice ARPU growth. So for carriers, if it was my business, and it's not so I get to say this with impunity, I would be looking at data content and service providers as salvation, not damnation. The business itself is fundamentally changing as your consumers pay less for your old business and more for the data pipe to access new stuff they want, like social networking, media and entertainment and free, ad-supported services.

Why not put seasoned merchandisers and marketers, who are expert at wringing sales and page views out of consumers, in control of the growth part your businesses? If you make it easier for services providers to work with you and your systems, the impact to the growth part of your business will be more growth. Let's kick it up a notch.

For service providers: Is your business so good that it wouldn't benefit from partnership with a carrier that can drive usage, ease of use, ease of billing, further innovation through new handset and network capabilities, etc.?  Let's stop the calls of "get out of the way" and start the calls of true partnership.

So an open letter to all debaters, presidential and mobile industry alike: What people really want is compromise. And while extremists garner headlines, the folks aimed at the middle are invariably garnering more audience share.

Frank Barbieri is CEO of Transpera. Read full bio.