Operator Options: Service Provider or Service Facilitator?

Going into 2009, operators need to figure out if it makes more sense to share or be selfish.

From most industry perspectives, operators are sitting on a gold mine of valuable assets associated with their ownership of costly infrastructure and length relationship with the subscribers attached to that infrastructure. When the subject turns to how those assets should be leveraged, however, opinions begin to diverge.

While it would be foolish to assume that Internet-based service providers, such as Google and Yahoo!, lack the inventiveness to eventually build up their own mountains of subscriber data or make up for a lack of control of last-mile infrastructure, most industry observers believe that a carrier’s chief defense against becoming a mere pipe is the successful exploitation of its natural attributes. The inventory of those assets has been well documented over the past year or so:

• Subscriber information: In addition to having insight into a subscriber’s habits and preferences, operators have the ability to hone in on the whereabouts of and activities of a subscriber at any given time.
• Payment infrastructure: Unlike Over the Top (OTT) service providers, which collect the vast majority of their revenue from advertisers, operators know a thing or two about billing subscribers for the consumption of content or services.
• QoS assurance: The only way to make sure you can guarantee that a subscriber will get the type and quality of service he or she is paying for is by controlling the infrastructure those services are running over.
• Anytime, anywhere services: Another benefit of controlling all of the pipes (fixed and wireless) that a subscriber uses to consume services is possessing the ability to make those services available over any connection or any device – at the same time or in a follow-me fashion.

Little doubt exists that carriers could leverage all of these capabilities, and a few additional ones, to add significant value to almost any service traversing an operator’s network. Operators just have to figure out if it makes more sense from financial and branding points of view to be the originator of those services or more of a facilitator, a position in the value chain primarily defined by enabling third-party service providers to tap into these assets to improve the user experience.

Both scenarios have their advantages and drawbacks. For operators that choose to hoard their riches, opportunities exist to significantly expand the parameter of their metaphoric walled gardens. By leveraging local pipes and subscriber data, carriers will be able to offer significant differentiation in terms of subscriber experience when compared to OTT players. But at what price? The jury is still out in deciding if operators, which have largely concentrated on transport and delivered only a handful of services for most of their existence, are equipped to evolve into hardcore service providers, offering subscribers a catalog of thousands of products and services.