In Business Model, Internet Access, Mobile, Spectrum

I often have argued that Internet Protocol is not simply a technology framework, but also a business framework. Because IP deliberately separates apps from access, third party apps can be developed, and used, without asking permission of any access provider.

Commonly understood as the “over the top” business issue, revenue models can be developed without “ownership” of access assets. Up to this point, that has been of greatest value to app providers, great value to device suppliers, and largely negative for access providers.

The reason is simple: the access function becomes a “dumb pipe,” a way to get access to the world of apps built on IP. In coming iterations of access platforms, it is likely that such principles will begin to be applied even more directly to the access platforms themselves, with a mix of upside and downside.

Advantage will flow to those service providers able to best use “any access,” while each discrete access provider business might win or lose, depending on its scale. Generally, the largest providers with the most customers and the widest geographic scale will be able to leverage “use any access” to greatest advantage.

There are other important potential ramifications, including competitive advantage based on cost structure.

In a competitive market, one might well argue, the lowest cost provider among the contestants with significant market share, will win (some smaller contestants could well have even lower cost profiles, but no ability to scale).

And, as it has become undeniable that mobility continues to lead revenue growth and strategy in the broader market, what “cost leadership” looks like in the mobile space now is significant.

Without any question, Wi-Fi has become a core and foundational part of the access fabric for mobile devices and customers. “Ownership,” as such, is less important than “access.”

That roughly mirrors the structure of the Internet Protocol-based communications and application markets, where an app provider does not have to “own access assets,” but simply can use “any available access.”

So mobile service providers can “use” Wi-Fi assets without owning them. That directly affects thinking about investments in access assets. As it turns out, it is less expensive to rely on Wi-Fi for much, if not the majority, of “mobile” access operations.

In other words, encouraging users to go “untethered” on Wi-Fi benefits both users and carriers, as demand is shifted off the core mobile networks. That much is obvious.

Also obvious is that fixed network providers with dense backhaul networks stand to reap benefits as suppliers of small cell (mobile or Wi-Fi hotspots) networks, either for internal use or as a revenue-generating wholesale opportunity.

Just as obviously, any “mobile” service provider able to leverage such assets can change the cost structure of “mobility” services.
And that is precisely the opportunity cable TV operators believe they can seize.

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