"Techco" Dream is Mostly That: a Dream

Even before the internet era, telcos and connectivity providers have been torn between “being who they are” and “becoming something else.” Some with long memories may recall efforts to diversify into computing (before edge, before cloud, in fact, before client-server) or systems integration or information technology consulting. 

In the internet era, many more will recall efforts to create leading app stores, become cloud computing or data center leaders. Though controversial, efforts to become content owners have been more successful. 

Now many connectivity providers explore private networks, internet of things or edge computing as new fields to lead. The phrase techco is the latest version of connectivity provider efforts to become something other than what they are. 

In some iterations, a “techco” is a connectivity provider that curates other digital services to add value and drive higher revenue. In a word, telcos need to become platforms. That is much harder than it often appears. In fact, few companies in any industry actually are able to become platforms, which earn their revenues in a specific way.

A platform earns its money by enabling transactions. It is a marketplace that matches supply with demand; products and services with the organizations that wish to buy such products. 

source: Simon Torrence 

 

It is a compelling vision, since it promises the flow of money and revenue from lots of different places to the telco. 

The problem is that other participants in the value chain either do not see the value or positively reject such arrangements. Who “needs” the telco business relationship when the “layers” architecture allows app providers to reach their users and customers directly, without any such business relationships?

source: STL Partners 

It is far harder than it sounds. Not everyone agrees that even successful curation or bundling of features means a connectivity provider has become a platform. A true platform implies that the actual revenue model for a firm is functioning as a marketplace where other buyers and sellers conduct transactions. 

Adding features, content or value does not, by definition, mean a firm is a “platform.” It just means the supplier provides different and expanded value. 

The Connectivity-Plus model might bundle cloud, edge and IoT providers’ services. 

The Innovation Platform model most closely approaches a “true” platform model as it has the connectivity provider exposing its services using application program interfaces. 

The End-to-end Solution model has connectivity providers assembling end-to-end solutions for business-to-customer products that might have complex value chains. 

The Adjacent Acquisitions model has connectivity providers acquiring specialist companies such as IoT or security firms, and operating them as independent or partnered efforts.

Perhaps most seasoned observers would expect most connectivity providers to try either the “Connectivity-Plus” or “expose our services using API” approaches, as neither of these forces firms to radically change their business models.

Those approaches also limit execution risk. 

Though most such efforts will focus on business customers and use cases, the fundamental approach has been tried often in the consumer space. The irony is that such efforts--whatever the outcomes--eventually are criticized as a distraction from “doing what you do best.” 

And what telcos “do best” is provide connectivity. 

source: Kearney

It is hard to argue with the vision of a connectivity provider network that is self-configuring, self-healing, and self-optimizing, enabling zero-touch operations and zero-wait for new services, as TMForum says is among the goals of applied artificial intelligence in the network. 

Likewise, it makes sense to many to explore more-complicated business models that add features and services “beyond connectivity.” 

But bundling new value does not change a telco into a techco. Using AI, creating a more-open network and automating are good things, to be sure. They help a telco run its business more efficiently, with less friction. 

But none of that--exposing APIs, automating, using AI, open interfaces and processes, enabling zero-touch provisioning--makes a telco a techco. They make a telco a better telco.

In principle, a true telco operating as a platform would not “sell connectivity.” It would be a marketplace that allows others to buy and sell connectivity. 

Few--if any--legacy telcos will ever become true platforms. To do so, they would have to become Amazon or eBay--marketplaces and exchanges--making their money from transactions. Such a “telco” would not own the actual networks and services that are bought and sold. It would simply make the transactions possible. 

Few even entertain the notion, let alone are actively moving to realize such ambitions.

How Much Mobile Substitution for Fixed Network Home Broadband, and How Fast?

Observers continue to debate the importance of 5G fixed wireless as a driver of increased home broadband market share for Verizon and T-Mobile, as well as a cause of slower cable TV home broadband net additions.

Cable operators predictably deny that fixed wireless will prove a threat, arguing that hybrid fiber coax speeds are fast enough to stay ahead. But financial results posted by Verizon and T-Mobile suggest that fixed wireless already has proven to be a key driver of home broadband market share gains.

The issue now is the fixed wireless rate of growth, compared to new fiber-to-home additions. Despite cable executive denials, more observers believe FTTH and fixed wireless are going to eat into cable's market share over time. How fast that happens is an issue.

But there have been signs of mobile ability to substitute for fixed network service over the past five years or so.

Some studies show that users in 2018 often found 4G mobile internet access was faster than their home broadband using Wi-Fi. 

A key caveat here is that Wi-Fi device speed inside the home is not the same thing as the speed delivered to the home by the internet service provider.

source: Deloitte 

Another possible caveat is that it is not clear how many of the speed comparisons used home Wi-Fi compared to public hotspot Wi-Fi. It is almost certainly the case that home Wi-Fi runs faster than public Wi-Fi. 

Wi-Fi is slower than line speed for a number of reasons, so to note that 4G data access is faster than home Wi-Fi is not to say that 4G mobile networks perform better than ISP fixed networks. 

It is to say that a smartphone or other device able to use a 4G network might often experience faster speeds than delivered to that same device by the in-home Wi-Fi. 

This might be even more relevant for comparisons of home Wi-Fi experience compared to 5G mobile network experience, as 5G is going to be faster than 4G, once the networks are substantially or fully populated. Even as early as 2020, early 5G was faster than Wi-Fi, according to Opensignal.  

That also goes for 5G fixed wireless, as it is rolled out on a variety of frequencies globally. Generally speaking, if 4G was faster than Wi-Fi, there is a very good chance that 5G will be even faster, in comparison to Wi-Fi. 

source: Opensignal 

In countries that launched 5G early, 5G has proven to be faster than 4G and Wi-Fi, according to Opensignal. The sole exception was the U.S. market, where early 5G used low-band spectrum that does not support mid-band or millimeter wave speeds. 

source: Opensignal 

All of this is important for the development of 5G fixed wireless as an alternative to fixed line networks. In some markets, 5G fixed wireless is expected to be a key challenger to fixed network service. 

Fixed wireless has become a major driver of Verizon home broadband net new account additions. That also is true of T-Mobile home broadband net account additions in the U.S. market. 

In its first quarter of 2022, for example, fixed wireless supplied 85 percent of Verizon net home broadband account additions. 

For its part, T-Mobile got fully a third of total net home broadband additions in the U.S. market in 2021, and all of those accounts gained used fixed wireless. 

So 5G mobile and fixed wireless speeds will be a huge material factor in driving Verizon and T-Mobile home broadband market share gains, as well as a limitation on cable TV operator net additions as well.

How Fast is "Fast Enough?"

Determining what an acceptable internet access speed “ought to be” requires knowing how many users are sharing a connection, what they do when connected, how often they are connected simultaneously, the days of week and times of day when that happens. 

And it is hard to avoid the conclusion that most of the discussion we hear about “how fast is fast enough, ” when it comes to internet access and home broadband,  is a political or lifestyle or values statement, not a technology statement. 

The minimum amount of bandwidth to support one user is not the same as that to support four users, each connected simultaneously to a few devices. Even assuming every user requires streaming video support, most of the time, minimum bandwidth requirements are not that stringent. 

source: Minim

In fact, the single best rule might be the number of concurrent users and concurrent video streams that must be supported. Not many households will find they really require speeds above 500 Mbps, assuming latency performance and upstream bandwidth requirements are tolerable. 

All that said, would I willingly downgrade from my gigabit connection, which I know I really do not need, even back to 500 Mbps or 600 Mbps? No. But that is not based on any real performance advantage I can perceive. All of my requirements are, in principle, met by a connection operating at 25 Mbps. 

I haven’t had a connection running that slow in a few decades. My consumption keeps growing, but as a technology matter I cannot really argue that I generally “need” speeds as high as I pay for. 

 

source: Minim

In a sense, the behavior is many decades old, sort of done for the same reasons as I always have purchased mobile data usage buckets that exceeded my expected usage.

The logic is similar to the reasons people often buy “unlimited usage” consumption plans that typically exceed their anticipated usage. 

The value is predictability of payment amounts, not a fine-tuned analysis of price versus usage relationships. In fact, people tend to pay more than they need to, to assure predictability of the recurring payments. 

In a similar manner, having a speed “up to Xbps” means that when the network gets congested, I still can expect to have .6Xbps as a realistic experience. Obviously, what matters is the speed one actually experiences at the most-congested part of the day, when running the most demanding applications, with the most concurrent devices or users.

EU Looks at Allowing ISPs to Treat"Some" App Providers Unequally

Network neutrality has always been a slippery, impossible to define concept, notable more for its help or hindrance to business models of various participants in the internet ecosystem. Under the rubric of “treating all bits the same,” policymakers and advocates have prevented quality of service mechanisms for consumer internet access; blocked the access equivalent of “toll free” calls and generally imposed effective price regulation on internet access providers. 

All that despite the fact that application providers routinely pay money to ensure that their own bits are “not treated the same,” using content delivery networks to circumvent public internet routing delays and uncertainty. 

Now, in an ironic twist, European Union regulators are looking at imposing just such “unequal treatment of bits” on a handful of large application providers. 

Allowing ISPs to extract fees from some app providers for the privilege of allowing bits to be delivered over ISP access networks. 

One if almost forced to conclude that the network neutrality debate was never about equal treatment; equal access or anything else related to the delivery of bits over ISP access networks. 

It seemingly always was about the perceived revenue and cost advantages and disadvantages faced by various ecosystem participants. It is hard to reach any other conclusion given the extreme range of regulator opinions.

First, “equal treatment” to benefit app providers. Now, “unequal treatment” to benefit ISPs. In addition to all that, there are other political concerns, principally the impact of policies on domestic suppliers of apps, content or access. 

If we are honest we will stop pretending “network neutrality” had much to do with “protecting bits from discrimination,” and recognize it was a political move designed to help or hinder some parts of the internet ecosystem, just as it now--in reverse--is similarly designed to help or hinder ecosystem participants. 

In the latest incarnation, it is ISPs who need “revenue help.” The business simply is not growing in Europe, and ISPs seemingly have won the argument that it is they who need help, not app providers. 

source: ETNO

As often is noted, app providers have enjoyed revenue growth, while ISPs have seen their revenue shrink since the early 2000s. 

 

source: ETNO

The point is that network neutrality is shown to be a sham. The new proposals will impose unequal treatment of bits. It is the exact opposite of “net neutrality,” whatever that was supposed to be, and to some of us the concept never had integrity. 

The same people who argued for “equal treatment of all bits” also agreed that sometimes ISPs would have to treat bits unequally to preserve network performance. 

Maybe the better advice would be to stop picking winners and losers under the charade of some sort of “fairness” or “equal treatment.” It appears to be nothing of the kind. Instead, we have governments picking winners and losers for political reasons.

If You Hate Meeings, Do Not be a CEO

Frustrating though it might be, CEOs of larger organizations spend very little time with customers: about three percent, according to a survey conducted by Harvard Business School professors Michael Porter and Nitin Nohria in 2006. 

About 72 percent of CEO time was spent in meetings.

Broadly speaking, no more than 21 percent of CEO time was spent on anything connected with business strategy. About a quarter of time was spent on function or business unit reviews and another 25 percent on “people and relationships.”

About 16 percent of time dealt with “organization and culture issues.”

source: Harvard Business Review

Does Crypto Intrinsic Value Matter?

Some believe intrinsic value does matter, and crypto currencies do not possess such value. Others make the argument there is intrinsic value. 

It matters as crypto's role and value in coming Web 3.0 and metaverse use cases might hinge, to some extent, on user belief in such intrinsic value. 

The Digital Divide Will Not Always be a Problem

Scarcity--both real and imagined--drives the prices and perceived value of nearly all products and services. “Lack of” also drives the political agendas of virtually all organizations and entities who promote an agenda. 

Those organizations require resources to operate, and resources mean jobs, prestige and power. So what happens when a “problem” is essentially solved? Do organizations disband, or do they find some other “new problem” to work on, thus inviting continued support of the entity?

Almost always, the latter is chosen over the former. So we can virtually predict that, eventually, policy proponents are going to stop talking about the “digital divide” and move on to some other problem related somehow to “inability to buy broadband internet access.”

Already, many point to “digital literacy,” which is a demand issue, not a supply issue, as a substantial remaining problem. In other words, it is not the quality of the available broadband access that limits use, it is the skills of potential users. Faster broadband does not fix that impediment. 

But to the extent that generational differences exist, that problem eventually fixes itself. Younger generations are more comfortable with all new technologies than older generations, and as each generation passes, the “lag” evaporates. 

There will likely always be “differences” in available speed, latency, reliability or price between remote areas and urban areas, to be sure. Summer fruits and vegetables cost more, and are less fresh, in the winter. 

Still, at some point, internet access is going to be good enough that bottlenecks to experience and value will shift elsewhere in the ecosystem and value chain. 

Where servers are located; what customer premises gear is needed; how pricing and packaging models are crafted; which indoor transmission platforms are operating and processing speed and power could well determine whether internet apps, services and devices work at all or work properly. 

Most are now too young to have encountered it, but back in the 1980s global communications policymakers actually were concerned about how to create “voice access” platforms for most people, as “half the people have never made a phone call.” That might have been true in the 1980s or even 1990s. It no longer is true. 

We have “solved” the problem of humans having access to voice communications. We likewise will solve the “digital divide” in a meaningful sense: not defined as absolute parity of speeds, latency or cost per bit, but in the sense of “access” no longer being a barrier to usage. 

And that will lead a whole bunch of people and organizations to find some other new problem to solve.