How Far Can "Asset Light" Model Go?

In addition to network virtualization, private equity and institutional investor interest in communications infrastructure might be part of a reconceptualization of where value lies in the connectivity business, from the standpoint of service providers. 

For investors, fiber assets, for example, represent an alternative asset similar to airports, seaports or other physical infrastructure. For service providers, there are new ways to conceive of where sustainable business advantage can be gained. 

As the competitive era of telecommunications dawned, service providers gradually moved away from developing and creating their own platforms, from switches and access media to applications. They almost universally now rely on third parties for infrastructure. 

So the issue is how far the trend can extend. 

As mobile operators have concluded that owning tower assets does not provide as much value as other uses for cash, if such assets are sold, so there could be new thinking about the value of copper access assets and access networks generally.

Specifically, service providers might decide that, though still valuable, access assets need not be 100-percent owned. Partial ownership might still provide the required business value, but at less overall capital investment. Freed up capital from asset sales might then be applied to other more-strategic growth initiatives. 

That is not to say there is a general rethinking of operating solely on the basis of wholesale access. “Owner’s economics” and the ability to differentiate still flow from network ownership and control. 

Also, mobile operators increasingly are comfortable outsourcing their core network information platforms to public cloud providers, showing yet another way that service providers are rethinking the ownership versus leasing of platforms and capabilities. 

All of this should lead to a rethinking of where sustainable advantage lies, for service providers. How much of the core infrastructure they once developed and owned becomes less strategic over time. How far can the “asset light” approach be carried?