Douglas Zone Douglas Zone Special Projects - Cable & Wireless

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... Development Economics and Rain

  • It's raining and I am off to an architecture meeting in Birmingham.  System architecture... not neo-Bauhaus evaluation of the Bull Ring as a work of.... Anyways, its raining and if it rains I would rather be in rain's native city: Dublin.  And that brings up the thoughts on the TMF show there....

    I think they should rename the TMForum – the Service Management Forum. Maybe rename is not enough… a little thought will have to go into it.  But looking at the agenda at the TMF – and the participants – it is clear that its agenda has now clearly expanded to include the Cloud. 

    The Cloud is the service industry that will probably be the first to converge on a business model that is an amalgamation of everything from Telco to Utilities to Airlines to Logistics. 

    • Telco … Cloud is really just ICT as a Service.
    • Utilities… Cloud sells CPU much like Energy producers / transmitters and distributors sell kilowatts.
    • Airlines…. Cloud is all about maximizing utilization while maximizing price paid… using all the tricks of the trade of yield management.
    • And Logistics…. Cloud providers will never have exclusivity with their customers… enterprises will contract with multiple “carriers” and select on a daily basis whom to use.

    In other words – if the TMF cracks defining business processes and models for the Cloud they will have made inroads into service markets in general.

     

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    Dublin Convention Center

     

    On the theme of the Cloud – and the role of Telco’s in being cloud providers:...  I think we can’t avoid a competitive dimension that has dominated the past 60 years.  Will the industry be dominated by large multi-nationals importing into economies across the world (like Electronic Hardware) or will it be remain largely national (like Telcos)?  Data protection and the need to use national communications infrastructure to make the Cloud work would support the latter. History where MNsC have overcome bit by bit domestic protectionism (not always in ways we would have liked) and limitations in domestic supply chains (by using last mile assembly …) really supports the former.

     

    I cannot see any other result than the Cloud pushing for further consolidation in the Telco industry.  Microsoft’s purchase of Skype is a case in point.  For many national governments, this is clearly not the end result they would have sought. It will lead to yet another de-industrialization - as skills and talent move to the MNCs and leave them only the commodity end of the value chain.  Maybe I am jaded having seen the end of the UK car industry

    I am pulling out an old text book on Import Substitution versus Export Promotion.  In the 1960’s many economies tried to grow out of poverty by placing high tariffs on imports to give local industries a chance. This largely failed. Others like Korea opened up and went whole hog for Export Promotion. As we can see this did quite well.  Yet others switched from Import Substitution to Export Promotion – but before prospering suffered a scary de-industrialization as its domestic firms couldn’t compete with the efficiencies of the global MNCs.

    So what will happen with Telco?  I would say the pain has yet to come.  Mobile and Broadband really saved Telcos from the decline of national wireline industries. The real question is – what is the export promotion strategy that will allow countries to take advantage of the Cloud’s impact on the concentration of industrial power.  I am not sure, but of course I am looking at Singapore and wondering if the IDA has it right.  But I am really wondering about the BRIC bunch (especially Brazil and China) - what will they do?

    Douglas Zone
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