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Smarter Commerce | August 20, 2014

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For CSPs, The Network Itself Is The New ‘Gold’

Wrapping up my meetings with analysts and telecommunications providers here at Mobile World Congress in Barcelona, Spain this week I had time to reflect on a couple key constants: Everyone seems to agree that the two most valuable assets that communications service providers (CSP) possess are their massive amounts of customer data and their physical networks. These are also their largest advantages over over-the-top (OTT) service providers who are relentlessly shifting the value of the customer experience to themselves instead of the CSP.

There is an abundance of material available from organizations like IBM on the value of this data when it is converted to information and used to personalize interactions with customers.  Instead, I want to focus on is the second asset that providers hold – one that many of them have come to think of as somewhat of an burden, especially when they see the OTT providers saturating their networks with little remuneration. They have always seen the network as their ‘gold mine,’ of course, but they have run out of the rich veins that used to be voice and messaging in recent years. The only vein they think they have left to mine is data and it is a volatile commodity. But the fact is they are sitting on a gold mine and many of them do not know how to mine the new vein of gold – the network itself.

So what does it take to mine this rich new vein of gold? It takes a fundamental change in the approach to a CSP network. Traditionally the network has been viewed as a proprietary system of technologies to provide a finite set of services that the CSP believed their customers desired. But most CSPs have a limited set of human and capital resources and so can only provide a limited set of services.

It was during a few of the meetings this week that one of my brilliant colleagues, Anthony Behan (@telcomatrix), brought up Amazon and Facebook. He said that they didn’t become multi-billion dollar behemoths in their industry until they turned their network – into a platform. And he is exactly right. When I went to my first Salesforce.com conference there were about 3,000 people in attendance, all users of the Salesforce.com CRM application. Shortly after, they announced the Force.com platform that allowed anyone to develop an application on the cloud platform for nominal cost. About 4 years later I went back to the conference to find over 25,000 people in attendance, and nearly 100 companies there that had built their businesses on the Force.com platform.  They had turned their network into a platform that became an ecosystem.

There are a few CSPs who are finally getting this (AT&T is one of note) and have begun to shift their networks in this direction.  This week at MWC, I spent a lot of time with Deustche Telekom (DT), a CSP who definitely gets it.  IBM partnered with DT to provide machine-to-machine (M2M) solutions for the Mobile World Congress Connected City concept.

To undertake this effort, DT has made two major changes.  First, its entrepreneurial B2B2X group has been working like a startup within the larger organization.  Second, DT has transformed its network into a platform that is now becoming an ecosystem. They have released the Developer Garden, an open set of APIs and services that let developers and creators collaborate and access services provided over the network like geo-location and billing services – and it is working. The ecosystem is growing at a rapid pace and, based on the reception they received after their new product announcement, becoming a model for other CSPs around the world who are still trying to figure how to mine this new gold.

Service providers need to understand they do not have the bandwidth or the capital to respond as fast as the market is changing – and they need to enable the participants in the market to help them do that – the miners who will harvest their gold for them.

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