In their relentless pursuit to move “up the food chain” wireless providers are sacrificing the massive potential (and profit) of open standards and interoperability to the booby prize of cool commercial content.

I’ve been having the same argument with pretty much every “digital content” executive I speak with at wireless companies these days. I tell them that they should develop open standards and invite their users to create content for one another. They tell me there’s no way to make money off that.

The wireless strategy, as currently espoused by this admittedly biased wing of the cellular industry, is to “move up the food chain” away from wireless access and into what they believe is the rarefied and more profitable realm of content creation. Or at least content deals. So they spend their time, energy, and money trying to woo branded content providers - from sports leagues to television networks - into exclusive contracts to distribute some scaled-down version of their entertainment enterprises.

And while they’re imagining that their users will pay to receive, say, SMS messages from Buffy the Vampire Slayer or instant replays of great football moments, they likewise turn themselves into enemies of anything resembling open standards or user-generated content in the wireless space. Why does one lead to the other? First, they need to protect the copyrights of the content providers with whom they are making deals. Disney, for instance, isn’t going to allow Mickey Mouse to appear on a device if he can be easily changed and passed on. Second, and more pernicious, if people have the ability to create their own programs, they won’t have to buy the packaged ones.

That’s why Verizon, among other carriers, prevents users from downloading their own programs to the phone. To do check email, customers must pay to subscribe to a program written by a Verizon partner. The phones are locked to shareware.

The real problem here is that, deep down, many wireless providers hate their own industry and want to be doing something else. The big fear among the CEO’s I’ve spoken with is that wireless access will become a “commodity.” If that comes to pass, reason these executives, then competition will keep prices low and profits from rising.

The wireless industry should only be so lucky to be selling a commodity. Should Cingular worry about becoming a company as big as, say, BP, Delmonte, or Alcoa? I don’t think so. When an industry becomes commodified, there are certainly casualties. Look at the consolidation of the Internet access business, for some examples. But there are also a few big winners.

Wireless providers seem amnesiac when it comes to the lessons of the Internet era. They think working with content is infinitely more cool than working with boring old technology. They are falling for the same misguided content arguments of the mid-nineties, and threatening their very liquidity with foolish investments into content. Why do they need to pay to play with content instead of simply creating profit-sharing agreements with media companies? Because the companies with whom they are making these deals aren’t as stupid as they were in the 1990’s. They know that wireless content won’t work any better than Internet content did. They just want the cash.

Meanwhile, wireless phone companies are neglecting their real profit center: minutes. Sorry, but wireless companies are selling wireless access. This is their core business. If, like the smartest Internet companies, a wireless provider left their users to worry about creating content and programming new tools, they would end up with heaps of free content, countless hours of development, and communities of dedicated users.

This might just be enough to differentiate them from the idiot carriers who waste their capital on content and end up with customers who grow bored of gee-whiz content streams and want to take advantage of those great programs people wrote for the other wireless platform.

That’s why the way to survive the coming crunch is not to lock down your wireless universe and focus on proprietary wares and content, but to open it up and let your millions of users lead the way.

Wireless companies will, one day, be able to charge their customers for the minutes they use. The object of the game is not to turn into another kind of company, but to do the job of fostering good communication, the sharing of data and programs, and the development of self-organizing communities of users. The industry must sit tight and let this happen - however little excuse it gives them to raise or spend more money. Or to feel cool.

I suppose, in the end, the wireless carriers who refuse to be wireless carriers will get their way. They simply won’t exist.