Much has happened in the 17 months since we first published The WAP Trap. The Internet bubble has burst catastrophically, causing the Nasdaq Composite Index to collapse from its peak of 5130 in March 2000 to around 1700 today - a staggering 67% loss of market capitalization.
And the WAP bubble has also burst. The fortunes of WAP are perhaps best represented by Openwave Systems, Inc. (formerly Phone.com, Inc.), one of the principal inventors and architects of WAP. The stock price of this company reached a peak of $208 in March 2000; at the time of writing in September 2001 it is trading at around $15 - a loss of 93%. Other WAP-related companies have experienced similar losses.
Meanwhile, the consumer has yet to see anything close to the promised ease and convenience of cell phone Internet access; and we are not aware of even a single company that has made significant profits from sales of WAP services.
WAP has been a colossal failure in financial terms. Its usage has not and cannot recoup its investment costs. Nevertheless, WAP has created fortunes for a privileged few.
The WAP business model is based on the traditional supply chain model, in which the financial and other needs of all potential gatekeepers are addressed throughout the supply chain. The creation of this supply chain has required the construction of a major infrastructure. Though this supply chain model cannot and will not work as intended, its construction has presented enormous profit-making opportunities for those in the right position.
These profits have derived from two major sources. The smaller of these consists of the profits associated with building the WAP infrastructure itself; in particular the huge development contracts that have been awarded, together with sales of WAP gateways and other equipment.
But it is the larger source that represents the truly spectacular opportunity. This opportunity has been based, not on building the WAP infrastructure, but on the fairy-tale promises and expectations that have been created alongside it. The enormous amount of hype surrounding WAP led to huge increases in stock prices and company valuations across the entire WAP industry - nowhere better represented than in the valuation of Phone.com itself.
Various WAP promoters were also investors and stockholders in key WAP companies. These investors/promoters participated actively and collectively in the hyping of WAP, drove valuations up to levels far beyond what was realistic or supportable, then sold their WAP-related stock to the public at vastly inflated prices. One could be forgiven for wondering whether the activities of the WAP promoters were intentionally directed towards this happy outcome. As the disappointing reality of WAP inevitably became clear, virtually all these inflated stock prices collapsed to less than 10% of their WAP-bubble peak, making fortunes for the investors, while leaving the public holding the empty WAP bag.
This type of activity is commonly referred to as a ``pump-and-dump'' scheme - an ugly phrase to refer to an ugly operation: the deliberate over-hyping of a stock with the intention of artificially inflating its price, then dumping it on an unsuspecting public. From the perspective of the unfortunate losers, the collective activities of the WAP insiders must be hard to distinguish from a pump-and-dump operation on a grand, industry-wide scale.
The WAP bubble was part of the more general Internet bubble, which represented the aggregate effects of a multitude of contributary bubbles similar to WAP. The WAP bubble was thus both a consequence of, and a cause of, the Internet bubble. To the extent that WAP was a consequence, the WAP promoters may shirk their responsibility for the WAP bubble. But to the extent that WAP contributed, they must then accept responsibility for the broader Internet bubble.
We have no objection to those who make fortunes on the basis of something real. Authentic entrepreneurs make fortunes by building companies which provide something of value to the consumer, and which create enduring value for their stockholders. Such people fully deserve the wealth created by their ingenuity, commitment and hard work.
Nor do we object to profitable stock trading in which no misrepresentation takes place. The stock prices of many companies were swept up and down along with the general Internet bubble; but in most cases this took place without gratuitous hyping by insiders. Those who sold near the peak made money at the expense of those who bought; but those are the breaks in the high-tech industry, and these are the risks that investors must accept.
But neither of these considerations applies to WAP. In the case of WAP little of value has been provided to the disappointed consumer, the value of company equity has been fleeting, and a minority of people have been greatly enriched at the expense of a duped majority. The WAP fortunes have been made by selling WAP-related stock at inflated prices, not by delivering WAP services to satisfied customers.
Furthermore, the WAP hype campaign continued, and still continues today, despite the fact that actual WAP usage remains dismal, and no one has ever made significant profits on the basis of WAP services. Given these facts, we find it scarcely conceivable that the WAP insiders were unaware that WAP was being hyped far beyond its reality, that stock prices were being driven to levels far beyond their sustainable value, and that they would inevitably collapse.
We are making no suggestion here that actual, prosecutable criminal fraud took place. But there can still be breach of trust, even though no law may have been broken. When we consider that the WAP model includes a gateway whose primary purpose is to generate revenue for its operator; when we consider that WAP is patented; that WAP is a shoddy engineering construction; that WAP is the pseudo-open creation of a pseudo-open forum, then we have to wonder if everything is entirely above board.
In our judgement, the activities of the WAP investors/promoters amount to fraud in all but the letter of the law. Our readers may come to their own conclusions.
Underhanded practices are a fact of life in the business world. But when such practices involve the creation of a large-scale engineering construct, and when they are based on the exploitation of vital industry protocols, this degrades the integrity of the engineering profession.
The engineering profession traditionally carries a responsibility to protect the safety and welfare of the public. An industry protocol is an engineering construct, held in public trust by the engineering community. It is the responsibility of the engineering community to defend this trust against exploitation by narrow business self-interests.
There are three fundamental principles for maintaining the integrity of public protocols [4]. These are:
Each of these provides a vital assurance of protocol integrity. Patent-freedom ensures that a patent-holder cannot subvert free-market competition among products and services based on the protocol. RFC publication ensures that the protocol is freely available to anyone who wishes to use it. And maintenance by open organizations ensures that development of the protocol takes place by technical engineering consensus, rather than business self-interest.
This trilogy of principles represents the most basic guarantees of the integrity of a protocol. If any one of these things is missing, then this means that some attempt is being made to control or limit access to the protocol. In the case of a public protocol, there is no valid reason for doing this.
The creation of the WAP specifications has violated every one of these principles. The use of patents and other access-control mechanisms has been a traditional way of life in the highly business-oriented, oligarchic telecommunications industry. But the Internet industry is not like that. Openness and freedom from authority lie at the heart of the Internet, and in no small measure account for its extraordinary vitality and success. Patents and other business-oriented control devices have no place in this industry. Though WAP may try to pass itself off as an ``open Internet protocol,'' its roots in the telecommunications industry are plainly evident.
In The WAP Trap we challenged the WAP Forum either to provide valid reasons for their violation of the above principles, or to bring the WAP specifications into line with them. Seventeen months later, neither of these things has happened, and our challenge remains unanswered.
We now repeat our challenge. We challenge the WAP Forum to abandon their closed, members-only model of operation, make patent-free declarations regarding the WAP protocols, publish them as Internet RFCs, and subject them to genuine public review and maintenance procedures. By taking these steps, the WAP Forum will allow the possibility of what remains of WAP being incorporated into the mainstream Internet development model.
When first published in April 2000, The WAP Trap was well ahead of its time. At that time it represented a distinctly minority viewpoint, and seemed radical and extreme to many. Today it seems much less so.
The same may be true of this article. To the casual observer, the WAP Forum may appear to be a healthy organism, engaged in creating something important and worthwhile. WAP has not yet been fully discredited, and it may not for some time. Meanwhile, the naive or the inexperienced may find themselves impressed by the sheer scale of financial investment and engineering effort that has gone into WAP. Such observers may find themselves puzzled by, and skeptical of, our rhetoric. It may be hard to accept that something so big can be so fallacious; nevertheless, that is the fact.
In this paper we are lobbying for a Mobile Web Browsing based on a truly open industry model. By definition, WAP in its present form can play no role in such a model. Not all the things we are lobbying for will take place, and the things that do may not take place as soon as we would like. The LEAP protocols we are proposing may become part of this model, or they may not. The WAP salvage operation we are suggesting may contribute to this model, or it may not.
But the eventual outcome is clear. WAP is non-viable, and sooner or later the rest of the wireless industry will come to this realization. And at some point it will be replaced by a truly open solution.
In the meantime, we urge those engineers who have an interest in the ethics of their profession to distance themselves from WAP, because it is specious. Given a choice between WAP and something else, we encourage the engineering men and women of the wireless industry to invest their precious talents in something that has both business and engineering integrity.