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Dumb carriers moving pell mell to dumb pipes.

Writing in today’s New York Times, Jenna Wortham reports that:

The ultimate risk for the carriers is becoming “dumb pipes,” providing only the data connection and not selling any more sophisticated communications services themselves.

It’s not just a risk.  It’s reality.  Carriers are moving toward becoming dumb pipes, and there’s little that can be done about it, as consumers are demanding a volume of applications that carriers themselves can’t deliver.  Moreover, the carriers have ceded the tollbooth role to entities like Apple, who have a better understanding of both developers needs and consumer behaviour. 

It didn’t need to be this way. Long before Apple introduced its game changing App Store, voices in the next generation telecom community were asking for better developer support, developer programs, and common standards for building and selling mobile applications.  As Andy Abramson writes:

…just about every mobile operator gets offered the opportunity to have the new services first. Nary a business development professional doesn’t have access to their counterparts at all their major mobile telcos via their LinkedIn directory or from first person relationships so the fear of the rising tide of upstarts isn’t paranoia. It’s reality. Apple, Google, Microsoft, the Yahoo and AOL of old all had it figured out, and only IP communications is the future and they built their businesses that way.

Andy suggests that carriers get back into the services and applications game – sell the pipe at a loss, and charge for the applications.  But is it still true that mobile operators get offered the opportunity to have new services first?  Or is that a relic of yesterday, also?  I think it’s the latter.

Carrier product groups need to focus on the core data services that people buy today – internet, voice, television, security – and figure out how to be the best at delivering those bread and butter products to the customer.  In business it’s managed PBX, conferencing and collaboration, and call center.  Carriers need to deliver these core services better than the Valley, and at a better price than the Valley, in order to remain relevant.

{ 3 comments… add one }

  • Aswath Rao May 16, 2011, 3:58 pm

    I contend carriers have always been a dumb pipe. Did they charge more for your call to your broker that gained a few thousand dollars than to your social friend when you had a chit chat? What is happening is that there is a huge price differential between "voice" and "data" for the same amount of radio resource being used. I am not sure the reason for this drastic fall, but it is not because they have become a dumb pipe, for they always have been one.

  • @AndrewHansen May 16, 2011, 6:13 pm

    I have always contended that delivering the 'dumb pipe' better than the next guy can be a very profitable business. Case in point a friend of mine in Denmark went to the local ISP and picked up his 'do it yourself FTTH' kit consisting of a piece of underground conduit and length of Fiber Optic cable, instructions on where to drill into his house, where to dig the trench, how to run the piece of Fiber through the conduit and a number to call for hook up when it was done. He gladly pays a small premium for burstable 100MB asynchronous internet and chooses his phone, TV and other services from a list of vendors. Everyone makes money and everyone gets paid.

  • James Barnes May 17, 2011, 6:48 am

    Wonder whether OTT companies are interested in subsidising our smartphones? First person to do that kills the incumbent telco monsters – dead. Don't think it will happen though..

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