Carriers Warm Up to Service Innovation
6/17/2014Carriers typically concern themselves with just their network and technology, but they are starting to experiment with new service models and form partnerships with OTT players.
Carriers typically concern themselves with just their network and technology, but they are starting to experiment with new service models and form partnerships with OTT players.
That may sound harsh, but it is reality. The sooner they wake up to this and choose their areas of relative and absolute strength in the new informational stack the better. It's what IBM did in the early 1990s as it became apparent that distributed processing would be as big or bigger than centralized processing. (Ironically we're going back to where we started, but IBM has done quite well).
I'm not a fan of the contrived notion of net neutrality, as I believe it was created by competitive apologists who avoid historical reality of data evolving out of competitive voice networks. I am a fan of open access in the lower layers at the edge. As has been the case over the past 30 years, it's actually the salvation for the incumbents.
But concurrently, there is definitely a need for balanced settlements (not reciprocal compensation or 2-sided revenue takings) arrived at via market mechanisms and not regulatory edict or price-setting. Elsewhere on BTE discussion threads I speak to the opportunity of competitive APIs and focusing more on the wholesale side of the business to facilitate interworkings.
The IP stack, because of its private networking roots, lacks price signals and incentives. The clearinghouse revenue models are advertising (in exchange for which we give up our privacy), enteprise intra and extranets, and carrier peering and transiting of traditional voice and subscription services.
What's missing is a centralized procurement model which will coordinate and drive edge demand more uniformly and therefore investment more rapidly. But the carriers need to transcend their silo mentality and we need to reject another equally farcical notion as net neutrality of bill and keep.
At the end of the day, a managed service, centralized procurement model will be larger than the other revenue models. We were heading that way until TA96 inadvertently mucked things up.
The edge access providers should understand that they are simply transitors and facilitators, not the gate-keepers and stiflers they are.
I wouldn't say that the model is obsolete, but the focus and reliance on a single element acts as a blinder and hinderance to the exploration of new models and opportunities hidden in plain view within their existing business.
This is made even more incomprehensible by the fact that companies have been in the public domain and riding their networks, that have been using and proving these new models. Instead of learning and taking lessons, they simply complain and scream the new dirty word: OTT...
Interesting that this issue was not addressed directly at the conference.
SPs are at the "edge" of the global "core". The scale and cost difference between the core and edge are huge.
The competitive WAN core is at 100,000 voice minutes per cent, while the non-competitive MAN edge is at 10 minutes per cent. Viewed that way, the recent Netflix peering deals with edge access providers (aka ISPs) is simply an attempt by the latter to keep the WAN/MAN demarc closer to the core. This is what they've done for 100 years, but after 30 years of scaling at the core, it's too little, too late.
Service providers need fundamental rethinks as 4K VoD, 2-way HD video collaboration, seamless mobile BB and IoT develop rapidly. Critical performance issues around capacity (particularly upstream), latency, QoS, security and redundancy need to be addressed in conjunction with the core app and content providers.