In the fixed networks access business, most of the price competition arguably has come through wholesale access to the network, using various forms of network unbundling or simple resale, and not facilities-based competition.
Just as arguably, most of the innovation has come from facilities-based competition. Mobility provides the most widespread example, but there is a growing amount of fixed network innovation from firms using hybrid fiber coax instead of traditional telecom industry platforms.
Vodafone, for example, predicts a massive expansion of its gigabit speed fixed network broadband services in Germany by 2022, using the HFC platform, not the more-traditional fiber to home platforms.
Vodafone also notes that HFC gigabit platforms are expanding across Europe as well. One tends to see more innovation from suppliers using different platforms (mobile and HFC) in large part because those platforms offer the ability to differentiate service.
Wholesale basically restricts competition to price, with network capabilities essentially the same for all suppliers, who, by definition, are using the same network. Sometimes, using a different platform also allows a supplier to disrupt industry pricing because the cost basis is qualitatively different.
At scale, a facilities-based approach also allows better “owner’s economics,” compared to a leased facilities approach. The same trade-off occurs for hosted voice versus owned switch business voice or cloud computing as a service versus owned computing facilities. At low volume, leasing often makes more sense.
At scale, owned facilities often offer lower total costs.
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