Why WISPs Do Not Worry About "Dumb Pipe"

Wireless ISPs do not seem to worry much about becoming “dumb pipe” providers. Having no large “service” businesses in voice or video to lose, WISPs seem professionally comfortable with “primarily” providing Internet access, even though many also sell voice and video entertainment.

That might be why it seems so natural for a WISP executive to say “I think we are entertainment transport providers, more than anything,” as Doug Watkins of Blast Communications, has noted.

Referring to online and over the top apps such as Netflix, Hulu, Amazon Prime and YouTube, the phrase indicates the key challenges WISPs face these days, namely coping with growing demand by their customers for bandwidth sufficient to “watch video.”

Though other service provider executives reflexively rail against the notion that their business is, substantially, getting to be a “dumb pipe” business, there possibly are new signs that reality is sinking in. And that reality is that. like it or not, the future of the business is substantially built on “dumb pipe” access to the Internet, most of which is related to entertainment video.

“Built on” Internet access does not mean “exclusively” built on such “dumb pipe.” Video entertainment services, voice, machine to machine services or computing, storage or software as a service will be delivered as services riding on top of the access.

People sometimes use phrases such as “smart pipe” or “happy pipe” to try and make the point that “there are other things we do.” That sort of misses the point.

In large part, future communications suppliers will be “Internet service providers,” which largely  is a dumb pipe service. Some ISPs might try introducing access with quality of service features, which might legitimately allow those ISPs to claim they are in the “smart pipe” business.

No matter. There is no inherent reason why any form of Internet access has to be a “low gross margin” business, or a “low gross revenue” business.

Nor is an ISP restricted from selling other services that are not, in fact, “Internet” services (such as carrier voice and video entertainment, machine to machine and cloud services).

That said, broadband Internet access is the foundation for the rest of the services suite, including those services using IP, but which are not “Internet” services, such as  branded carrier voice and video entertainment.

The point is that telco or cable company fundamentally is an ISP, whatever else those firms do. WISPS seem to have little trouble “getting” that element of their businesses.