Network operators are facing a real business dilemma when it comes to monetizing their infrastructure assets. I believe that the key is to look beyond the assets and understand how to deliver a package of capabilities that network operators are uniquely suited to provide.
In the construction business there are many general contractors that can bring together the right subcontractors to build a house, but there are far fewer real estate developers. Real estate developers start with the scarcest, finite resource - the land. They then use commodity providers to build streets, build homes, deliver electricity and deliver plumbing to customers. And they make a lot of money. For too long, network operators aligned owning the scarce resource - the bandwidth - with building and operating the products and services delivered to customers. We all know that is no longer the case so operators need to revive their role as developers and facilitate the construction of the entire subdivision while viewing the role of plumber as a necessary commodity, but one that many can deliver.
Over-the-top (OTT) providers assume the availability of bandwidth and thus far have treated it as free, but bandwidth is becoming a finite resource. Those of us that were in this industry before Google and Amazon remember that there was once a capacity glut. Bandwidth was seen as a commodity and operators competed on price. Now, as demand exceeds the ability of mobile operators to expand capacity there is a real opportunity for operators to develop that subdivision. As even regulators come to understand that the costs of building capacity is well beyond the revenue to be realized using current service models, they are beginning to recognize the need for differentiation of customers, services, and service levels. As France Telecom works out the details of a revenue sharing deal with Google, we're seeing that enlightened OTT providers recognize the need to ensure service quality and deliver unique products which is something they cannot now, nor will they ever be able to, do on their own. Even if Google and the other OTT providers purchase spectrum, it won't be enough and they, too, will be commoditized.
So where does that leave the network operator/developer? They are in a position to monetize the scarce and finite resource they own by bringing in commodity providers including Google, Facebook, Netflix, and the rest; leveraging their strong, extensive customer relationships; and delivering kick-ass products to both retail and business customers. The ability of operators to return to this lucrative developer role, however, relies on their willingness and ability to automate and streamline the critical processes associated with infrastructure, service, customer, and product management lifecycles. As OTT products become commoditized, OTT providers will have to compete on quality. Network operators have the money, the customer relationships, the business relationships, and the brands to succeed and, until we reach a ceiling for capacity demand, they have an advantage.