"Dumb Pipe" is Dangerous if You Want Your Telco Business to Survive

It is fairly easy to illustrate the shift in value generation within the internet ecosystem. The phrase “dumb pipe” nicely encapsulates the broad problem, which is that, in the internet era, network access--while essential--is not where most of the value and revenue is being created.

In technology terms, that is by design. The whole point of internet protocol, in the early days, was to protect information and content transmitted across networks from the impact of network disruptions.

The whole point of internet protocol as “the” next-generation network platform of choice is that it offers a low-cost way to deliver information, content and services of any type over a single integrated network.

But internet protocol also logically separates ownership of networks from control of applications that use the networks. That is why voice over IP, over the top messaging and video services have been disruptive. IP allows third parties to create apps and services that provide the value of carrier …

Who are Tomorrow's Telcos?

Most people who work in the telecom industry do not really need to know too much about industry trends, as much as some of us like to think they do. Most people have jobs that do not require such knowledge, as important as such knowledge might be for those in “C” suites, industry and financial analysts, and some on the staffs of banks and equity underwriters.
Sales forces who actually have direct contact with customers do need some industry knowledge, but more product focused. A salesperson might well need to know at a high level if, when and how a software-defined wide area network (SD-WAN) complements or replaces MPLS, for example.
A salesperson might need to have some high level knowledge of how enterprise conferencing systems work, and the advantages or disadvantages of cloud versus premises solutions, based on enterprise size and workforce deployment.
So at the risk of being irrelevant, here’s a look at just one of the biggest business model changes shaping the fortunes of what w…

5G Capex: In Line with 4G, Higher than 4G or Less Than 4G?

Some 5G skeptics believe 5G is risky, in terms of early deployment (perhaps all would agree 5G is a reasonable bet in a decade) because incremental new revenue is insufficient to pay for the network, or that capital investment will be too high, in relation to the revenue potential.
Those fears are reasonable enough, if more true in some markets than others, though. Consider only capital investment requirements.
If the number of cell sites to provide coverage grows by to two orders of magnitude (100 times), that has capital investment implications. Plus, many argue, all those new radio sites require backhaul or fronthaul, which means more investment on the transport network.
(Brief note, backhaul refers to the part of the network that moves traffic between the core network and the edge of the network. That includes traffic to and from the cell site or the last active network element before the subscriber location.  Fronthaul is a form of “backhaul” that refers to the part of the networ…

Big Changes in Mobile Value Proposition, Roles, Revenue Coming?

The choice of internet protocol as the foundation for modern networks has been fateful for application and service providers. As Verizon CEO Lowell McAdam has said recently, in 2000 Verizon could  monetize the entire stack (26:58),  as it was vertically integrated and created and controlled all the apps provided over its network.
Today, Verizon has to compete horizontally, monetizing apps and features “above the network layer,” since it no longer controls or creates most of the applications used by its customers.
That is the difference between a fundamentally “open internet” app platform and the older “closed” telecom platform. McAdam would say the “iPhone changed everything.”
What he means, in large part, was that, in the smartphone era, people are “customers” only for a few Verizon-supplied apps (internet access, carrier voice and messaging, the Oath ad platform or connected car and other possible internet of things apps), but “users” of a universe of third party apps and services.

Two Biggest U.S. Voice Providers are Not Telcos

Sign of the times: each of the two largest U.S. cable TV companies now have more voice subscribers than does AT&T, the largest fixed network telco.
In the fourth quarter of 2017, Charter Communications had 10,405,000 residential lines while Comcast had 10,351,000 accounts in service.  AT&T had 10,333,000 lines. So, for the first time, the largest U.S. “telephone companies” were cable TV providers, not telcos.
A key qualification is required, however. Mobile is the way most U.S. residents use voice services. Well over half of U.S. homes (53 percent, according to the U.S. Centers for Disease Control) have no fixed telephone service at all. As recently as 2004, nearly 93 percent of U.S. homes had fixed network voice service.
And, as always in the internet era, usage and revenue can be very different matters. In 2011, for example, U.S. consumer spend on fixed network voice had dropped from 65 percent to perhaps 26 percent, compared to 2001 levels, while mobile revenue grew from 25…

Full Mobile Substitution for Internet Access Coming?

Quite often in business, as well as in physics and the natural world, the equivalent of quantum changes happen. A quantum change is like the change of state of water from ice from solid to liquid, or liquid to gas, gas to liquid or liquid to solid.
The key analogy is that a series of almost-unremarkable quantitative changes accumulate before a nearly-instant change of state happens. A recent example is the change in viewer habits from linear video to on-demand (initially VCR tapes, then DVDs, then streaming) to over-the-top alternatives.
Other examples can be seen in the “long distance” business in the United States. Because of the 1984 breakup of the Bell system, a discrete “long distance” business--separate from the local telephone business-- was created.
Competition--initially from MCI--gradually lead to lower prices overall. Then AT&T launched “Digital One Rate,” which eliminated the price distinction between “local” and “long distance” services, first in the fixed network bus…

Will Artificial Intelligence Create Jobs, Displace Jobs, Recreate Jobs? Yes.

Workplace automation is expected to nearly double in the next three years according to a survey by Willis Towers Watson, with complex impact on jobs and job skills.
While survey respondents report that 12 percent of work is currently being done using AI and robotics versus just seven percent three years ago, they anticipate that this figure will rise to 22 percent in the next three years, the survey suggests.
Though 57 percent of respondents say the key goal of automation is to augment human performance and productivity, it is safe to say nobody can presently predict just how AI is going to wind up driving value.
At the moment, 68 percent of respondents say autonomous operations are not the way they use AI. Rather, 70% use AI and robotics somewhat or to a great extent to support humans in completing business processes.
Some 24 percent of respondents say the goal is to reduce costs. Some 15 percent say AI will provide value by helping firms avoid mistakes.
The report suggests it is a my…