One of the bigger problems with the shift of all forms of content and communications to internet protocol is that legacy services are disrupted by free and cheap product substitutes.
“Voice,” for example, has been steadily losing value as a revenue driver for communications service providers.
Still, voice will matter more in the future, but not “people talking to people.” Voice will be a key interface for interacting with computing resources. In many ways, that is an analogy for what will be happening in other areas of communications as well.
In other words, the voice function is changing. It is less a service costing money and more a feature of an app; an interface with computers.
Other changes are happening as well. Where the function of a fixed network was to sell narrowband services to customers, it now becomes a platform for broadband internet access sold to customers, but perhaps at relatively low volumes.
The actual “take rate” for fixed network services, in other words, is low and static in most markets. So the amount of retail revenue that can be generated from a fixed network is limited.
But the fixed network’s value as a mechanism for backhaul supporting small cells is growing. That shifts the revenue composition in the direction of wholesale, backhaul and signal trunking, and away from retail end user services.
If, as expected, internet of things becomes a big revenue driver, it will be because IoT supports huge networks of sensors. That also means that revenue growth comes from enterprises, not consumers; computing devices not phones; machines not people.
That is a bigger shift than the move from analog to digital networks; the shift from slower to faster data networks; use of smartphones in place of voice-only devices.
For the first time, industry revenue growth and application support will be driven by services for computers, not services for people.
