Perhaps we should stop worrying so much about the revenue potential of each next-generation network upgrade. Maybe the enduring value of capacity upgrades has less to do with specific application and use case possibilities and nearly everything to do with staying in business.
We normally think about “sustainability” as an energy issue; a carbon zero issue. But business viability also is “sustainability.”
The upside of investing in fiber to premises might be less the exotic new apps it can support but rather the ability to “stay in business.” In other words, the value of an FTTH investment is that “you get to keep your business.”
How long do you think any fixed network service provider can stay in business if it refuses to upgrade copper access to optical fiber, under conditions where every other competitor does so, or alternative access providers manage to surpass fixed network performance?
How long can any mobile operator stay in business if all its competitors invest in the next generation mobile network (5G, 6G xG) and a particular mobile operator decides never to invest in upgraded facilities?
It is understandable why suppliers of network infrastructure and service providers tout the new features and capabilities of their new networks. Vendors must convince their customers to buy. Service providers must convince regulators to allocate additional spectrum.
Still, the fundamental value driver for a service provider is only inconsistently “new value, features and revenue.” The essential value is survival. Sustainability, in other words.
The other common issue is an effort by access providers to boost the value of their services within the internet value chain. Hence we see less focus on the revenue upside of 5G in the consumer segment of the market, often because those returns are slight, or non-existent.
At the same time, we hear more about the upside from enterprise or business-to-business use cases. That might ultimately prove to be correct, more of less.
But none of that arguably is the main driver of capacity investment. Access providers must continue to invest because their survival depends on it. Greater revenue would be nice. New value propositions would be welcome. Higher customer spending is hoped for.
But the bottom line is the bottom line: access providers have to keep investing to stay in business. It is not such a compelling argument for investors, regulators or customers. But it is essentially the truth: investments are needed simply to avoid bankruptcy.
No comments:
Post a Comment