Is broadband success a partner-or-perish proposition?

Broadband service providers need to get past their current mindset of doing everything themselves and consider the advantages of partnering with innovative service developers and offering broadband services on a wholesale basis, according to Yankee Group senior analyst Benoit Felten.

Partnering to develop new services would speed up the relatively slow pace of new revenue-generating options today, while offering wholesale services increases the service penetration rate of high-cost fiber-to-the-home (FTTH) networks much faster than retailing alone will ever be able to do, said Felten, the Paris-based analyst who is lead author of “Fiber to the World: A State of the Union Report on FTTH,” issued Dec. 31. The report details FTTH deployment to date, noting that many service providers in the US have made what Felten calls “dangerous technology bets that will haunt them for years,” and of major service providers, only Verizon is pushing FTTH.

One key problem is that the new services that justify FTTH construction and enable service providers to earn a return on their investment have been slower to develop than expected, Felten said. One reason for that is that service providers are intent on developing their own services and are struggling as innovation engines.

“The service providers, for a large part, think they can do it on their own and may even see [potential partners] as competitors, which is ridiculous,” Felten said. For example, a service provider could partner with a security company to offer home and business security services over their FTTH pipe. “Or they can crash and burn trying to offer their own security service, after which they would turn to the professionals, who then say, ‘But you were competing with me before,’” Felten said.

For high-value services such as telemedicine, home security, remote energy management and more, telecom service providers don’t have the expertise or the market credibility they need, Felten said. “There is a whole host of services where a telco has no legitimacy whatsoever – medicine, security, energy. Who is going to trust their health or their home security to Verizon? It doesn’t make sense – as positive as the brand may be, it doesn’t extend to these services.”

What telcos should be doing is looking at how their networks can contribute to existing services and ecosystems not in the telco realm to make them work better, Felten said. “It’s not an over-the-top [OTT] thing – it’s a matter of adding value to your service, and both parties getting something out of it.”

However, failure to partner will leave service providers vulnerable to OTT offerings, he warned. “If they don’t partner, these services are going to emerge one way or another, but they are not going to be a part of it.”