CTIA Wireless 2009 - After ... thoughts

Coming back from CTIA Wireless 2009 I felt beaten up in the struggle to bring forward good arguments for an intelligent services layer that could transform network operators from Carriers to Service Providers, give them the agility to apply the right business model for the right consumer, right on time. There was so much ebullience around 4G - on its way to making “mobile broadband similar to what fix broadband offering brings to the customer today” because Internet AppStores such as Apple’s, RIM’s and many others are there to generate more and more data traffic! Mobile data traffic will be doubling each year by Cisco's estimates, but network operators see it tripling, others even increasing 10 times! Nevertheless, a panel of 6 VP and above, executives from Sprint, Virgin Mobile, Boost Mobile, AT&T, T-Mobile and Orange labs, went completely blank when somebody asked the pertinent question: “then, as a smart device owner, whose customer am I anyway: Apple’s, Google’s or AT&T’s?” Neverminding the unanswered question, carriers have a new reason to be “busy bee building 4G, WiMaX or LTE” - btw, I learned from Clearwire’s CEO that it does not matter, “there is almost 80% compatibility”. Moreover, with so much data traffic that will be generated, there is yet another opportunity to develop new areas of network management: “policy control and Deep Packet Inspection (DPI)”! No doubts there are good reasons for this attitude. The complexity of the network, starting from the access point for broadband, increases tremendously! Think only about the fine granularity of phase synchronization that is needed to support high bandwidth wireless traffic or about the heterogeneity with which core network management has to deal due to so many vertical additions of services. And so many suppliers for all these pieces that need to come together somehow to deliver service to customer! Being able to manage this complexity called “network” is after all the pride of being a “Network Operator”! The trouble with this model and the above “broadband strategy” is that data traffic increases exponentially while revenue follows rather a logarithmic increase. Following this data "plot", time is limited until the model will become unsustainable because it will cost too much to operate the network for the amount and variety of data flows, even if the Network Carrier becomes a smart IP traffic cop and starts banishing the illegal (BitTorrent) and hurting the foe (Skype)! Only so much done for understanding what the customer wants and how much he is willing to pay or to give up, like time to watch an ad, to get that service! But if the new business models are not for network operators, what will happen then? Internet players do get them, these new business models, they need them, this is how they make money today! Will one of the big Internet players, say an AppStore owner, buy the mobile operator who runs out of money operating 4G networks because this hurts an application distribution channel? I don’t think so, no mobile operator has the global reach Internet players need and have! Nevertheless, there must be some sort of calculation that shows how to “subsidize” network operations, whoever carries their burden, to allow viral applications penetration anywhere, on any device so that everybody on the value chain/network survives. Maybe this is a version of the 2/multi-sided business models where the platform is the Device or the AppStore, not the network operator’s SDP as we all thought at the beginning of the NGN era. The network operator may be just a side that will be paid by the platform owner. And when the side is not worth it, it will be dropped for just another one. Do you see network operators competing to become the ‘preferred’ side for an AppStore so that AppStore reaches more subscribers? For me, sounds more like what is happening today. The optimistic twist now: to win in this competition network operators still need to build some form of a Service Delivery Framework so external partners can tap in without any knowledge of the network behind. The value provided in this model, be it just bit transport, must be exposed as a manageable service otherwise it will be hard to on-board it and make it a side of the real money making platform. And this could be the beginning of understanding of what we are all trying to preach here…