The greatest opportunity for connectivity service providers over the next five years is getting right the balance of wholesale and retail operations, says Dean Bubley of Disruptive Analysis. What he means is that service providers cannot do everything, anymore, and must make choices.
Most telcos will have to pick one to five areas where they can be viable platforms and then partner for everything else, Bubley argues.
And though many have tried some way to mimic the app provider business model, that mostly has not worked. App providers hope to earn 50 cents a year from billions of customers; telcos have to hope to earn $30 to $35 a month from possibly millions of customers, says Benoit Felten, Diffraction Analysis principal. Those models are almost mutually exclusive.
“Telcos have been in a weird place for 10 years, between pipes and platforms, and they have to decide which they want to be,” says Felten. “You can’t be everything to everybody.”
One example is new revenue generated by enterprise services, ranging from new internet of things use cases to new forms of indoor access infrastructure. “But the revenue might not go to traditional telcos,” says Bubley.
The greatest opportunity is that infrastructure can be deployed in lots of ways, and not just by service providers, says Felten. In fact, it likely is no longer possible to say with complete certainty when and where network infrastructure must be owned.
“If you are AT&T today, do you need to own your own infrastructure?” Felten asks. “Maybe owning the pipe is not strategic anymore.”
There is something nonsensical about owning lots of popular content and putting it behind a walled garden, when you’d really rather sell it to everyone. In other words, strategies that make sense for a major content owner (sell more things to everyone globally, on any network) are not necessarily those of a major connectivity provider (sell more things on my network, to my customers).
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