Until a few years ago, it was critically important to get your cell phone from a reputable company otherwise you'd have many dropped calls, bad reception and many missed calls. Nowadays, it is not as important to get your cell phone from one of the big guys. The difference in the quality of your connection, cell phone or home phone, is pretty much the same regardless of your provider. They are all good (or well, all bad in some cases). Therefore, the most important factors for phone users to select their company/plan is price (as opposed to price/quality in 2006)

Phone lines (cell phone or landline) are becoming commodities. It is getting harder and harder for the phone companies to say 'our service is better than our competitor, so you should pay more'. They are all providing similar quality of services and therefore price is playing a crucial role. This is of course only true about your basic service. In other words, if a company is offering value added services such as family plans, voicemail, call block, etc they can still set a higher price and justify it by saying : Well, we offer such and such services that are competitors don't. The basic service, i.e. the connectivity, is becoming a commodity whereas value added services are playing important roles in distinguishing a phone company. It means that the profit margin on phone connectivity services will be gradually disappearing and phone companies will have to depend on new services to attract new customers.
The problem is developing new services is expensive. The current infrastructure used by phone companies are not that flexible to enable them to build game changing services. All they can do is to tweak some parameters in a traditional service, give it a new name and a new brand and offer it as a new service OR pray that their device manufacturer provides a new module that implements a new service!

This is one of the essential differences between the IT and the telecom world. If you have an interesting idea in IT, you can create your own service rather inexpensively, create your own website and start offering your service. That's why new services are coming out everyday in the Internet world but not in the Telecom world. Creating a new telephony service is expensive and a guy/gal in a basement cannot just wake up with a new idea and start implementing it. It takes way more time, energy, expertise and investment to develop a reliable telecom service and it is even more difficult to offer it to potential users. Even if you manage to implement your telephony idea, it is next to impossible to offer it to your potential buyers without being partner with one of the phone providers.

The solution is to have a system that:
1- separates connectivity from value added services so that offering new services does not require partnership with the phone providers.
2- provides enough flexibility that enables people to actualize their ideas as easy as creating a website
3- provide a market/store for the developers to offer their new services to potential buyers. Customers should be able to select the service they want from the developer that they want.
4- Developers should not worry about how to host their service, how to make it reliable and how to handle accounting, etc. Having a good idea and knowing basic programing skills should be enough to make a change.
This is just the beginning.

Service vs connectivity in the telephony world