I have come up with an interesting concept for communications service providers (CSPs) - why not provide connectivity-as-a-service? Before you mark me as a madman, hear me out, there is some logic behind the question.
Fixed line network operators, from their earliest days, primarily built networks to allow people to talk to each other over any distance. Voice was the first and only service for nigh on one hundred years.
Everything connected to the network had the prime purpose of making voice communication quicker, cleaner and 'monetizable.' Voice service providers, as they should have been termed, were making money out of ‘hot air’ and it was really profitable.
Even with the advent of mobile networks, the primary purpose was to allow people to talk from anywhere by taking the handset with them. It was all about voice once again and almost by accident came the concept of sending a short text message over a barely used service channel. This heralded a new use of the networks for data traffic.
The internet would never have taken off if fixed and mobile networks were not able to carry data, although the first efforts with audio couplers and GPRS were deadly slow and cumbersome! However, since then the world has gone data mad and connectivity is key to almost any activity we are involved in. Voice is fast diminishing as the main means of communication and has even become a subset of the data traffic flooding networks.
It is no secret that CSPs, trying to replace those lost voice revenues with a myriad of services they are not familiar with, are finding the going tough. Cloud services, software as a service, apps, IoT, M2M, even platform as a service all stretching their budgets, and stakeholder’s patience in some cases.
Trying to be all things to all people is not only impossible, it is suicidal in an era of increasing competition and lower margins. Google (despite its denials) are ‘testing’ fiber rollouts in selected markets in direct competition to CSPs. Cable companies, long contented (no pun intended) with simply pushing their own content over limited infrastructure are offering all the services CSPs have done for years. So what other options do CSPs have to remain relevant nand profitable?
Specialization may be one. Being the best at one thing has served many companies in good stead over the years. Sure, we have gone through an era where differentiation has been seen as a normal, if not essential business practice, but there is an increasing trend to come back to core values and build brands linked to one great product or service.
Supermarkets like UK’s Tesco, that branched into financial services, insurance, telecommunications, utilities, etc. etc. through their loyalty card systems are finding that their core business has suffered. The world’s leading lingerie brand, Victoria’s Secret, doesn't sell anything but ladies finery, but they do that really well. All their marketing is focused on one thing and they do it better than most.
Of course, there are thousands of examples of companies that have successfully deviated from the core, but more and more are either focusing on their main business and splitting off the diversions.
If connectivity is so critical, and we can see millions of new devices about to be connected, then why shouldn’t CSPs concentrate on providing the one service they do best and forget the stuff they don’t?
There will be arguments that M2M and IoT traffic will be very low margin and that may be true, but there will be lots of it. Things like home management systems may compete for device aggregation in the home but they still have to connect to the outside world at some stage.
Smart operators are redirecting their investment into the network and opening up their business systems to partners and customers that simply want seamless connectivity. They are acquiring or partnering with other networks to ensure they can provide the full range of connections being demanded and they are adopting technology like SDN and NFV to ensure they can maximize the resources they have.
Connectivity offered as service in this way will not only give customers what they want, it will also make it more difficult for respective competitors that do not specialize in communications to enter the space.