By 2025--barely eight years from now--connectivity will be only one of four key competitive dimensions in the telecom industry. “Control, content and cloud” will be the other three key dimensions, according to researchers at Bell Labs.
You can call that an example of why “moving up the stack” now is an imperative, not a “nice to have” example of generating “ancillary” revenue. In other words, value and revenue are likely to hinge on analytics and insights, as well as marketplaces, services and apps that build on insight.
Moving up the stack typically requires both resources and scale beyond the capabilities of most smaller telcos. That is one reason why a huge wave of industry consolidation, in part to achieve customer mass and scale that leads to higher gross revenue and profit, is going to happen over the next decade or so.
Moving up the stack is going to require capital, human resources and geographic scale that only the very-largest firms will be able to attain. And most of the largest firms will get there by acquisitions, both horizontal and vertical.
Horizontal acquisitions will be for scale in the basic connectivity business. Vertical acquisition will be to acquire applications and insight assets that represent industry growth and value propositions.