Why the "mobile Internet" is a poor investment

Joi Ito, a shrewd Japanese/American venture capitalist, has written a great little blog-post about why he's not so hot to invest in the "mobile Internet." Basically, when a heavily regulated, big stupid phone company controls your "internet," then your ability to innovate and do cool stuff and make money is entirely predicated on the regulator's or the stupid phone company's willingness to allow that to happen. So if you're making money by disrupting something that matters to the phone company or one of its entrenched partners, forget about it.

The reason that we have vibrant startup driven innovation is because the Internet is open by nature. Anyone can participate without asking permission and anyone can compete with anyone else at every layer of the stack. This DNA of open and free competition (except for the occasional semi-monopoly) is what allows startups like Google to come in and displace incumbents. If it weren't for the Internet, I'm positive that the telcos would have determined that it was the most efficient that THEY design and operate the "online directories"…

In 2006 in Japan, mobile advertising was only $330M vs Content (Ringtones, Song-tones, Games) at $2.2B and Commerce at $4.7B. (http://www.johotsusintokei.soumu.go.jp/whitepaper/eng/WP2007/2007-index.html) Although all of us are experimenting with advertising and advertising is increasing on mobile, the overwhelming percentage of money spent on mobile devices goes to paying for and the collection of payments for a small number of not so innovative products from a small number of providers.