Jul 15, 2009 11:14 AM,

Is ‘open’ the new black for telecom?

By Carol Wilson

On the business, consumer and mobile fronts, the open approach holds greater promise

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“I think we are closer than a lot of folks think,” Malnati said. “Content providers actually want people to look at their stuff and get paid for it. The Hulu experiment is not an experiment anymore. It’s early still, but I clearly think the precedent has been set, and people are actually negotiating. They are anticipating these things being allowed.”

There is even a stronger push to make broadband access networks more open. In a Webinar in late June, Yankee Group analysts Benoit Felten and Wally Swain laid out the business case for fiber-to-the-premises (FTTP) deployments. Their research showed that opening up the network in a wholesale model led to greater uptake and was more likely to assure a five-year payback of construction costs than even higher revenue per user through sale of advanced services.

Felten, who has long advocated an open network approach, makes a strong case for the economics of openness by showing that the best way to achieve a five-year payback on an average FTTP deployment is to drive down costs per home and drive up user penetration. Hitting a 30% take-up rate and reducing costs per home had a much higher impact on the payback rate than increasing ARPU by selling more advanced services or even increasing cash margin, Felten said.

Then there’s the Apple App Store, which has become the new model for making money selling applications. While currently delivered via the iPhone – ironically a closed relationship in the US between Apple (NASDAQ: APPL) and AT&T (NYSE: T) – the app store has become the new model for enabling app developers to quickly reach an audience and make money for the providers as well.

There are also signs that the more open, free-air approach to mobile TV is succeeding ahead of premium services being pitched to consumers. Even service providers hoping to make money selling premium video services, such as Sprint (NYSE: S) have agreed that combining a free-to-air service with a premium offer may have the best chance for success in the marketplace.