Dumb pipe vs. smart pipe: A futile discussion?

Monica Zlotogorski
14 Apr 2010
00:00

Communications as retail business

In the current scenario, communications pipes – an operator’s network – can and should enable more than utility-type services. But that doesn’t mean they are exactly like smart pipes either. They are not just pipes, whether they are dumb or smart.

It is a far more multifaceted scenario that is more like retail. In other words, communications services could be compared to malls or department stores. Just like department stores, CSPs have both a big “physical” and “virtual” infrastructure that offer an outlet, a platform or a display place for others to expose their products and services. In other words, department stores offer the experience, but don’t develop any of the “content” that is offered at the stores – what they do define, develop, deliver and charge for is the experience.

Different CSPs can offer the same or different products; it doesn’t matter; since it is the experience that matters. I typically buy my shoes at a specific department store, but I could also get the same pair of shoes at several other outlets. What I choose is to have the same retail experience time and time again when I buy my shoes. In communications terms, it shouldn’t matter who sells the iPhones as long as the retail experience is a differentiated one, and there will always be a new thing out in the market, so the strategy based just on technology may be just short term.

Of course, the difference between traditional retail and communications retail services is in scope - and there lies the opportunity. The communications retail business is far more ubiquitous and wide-ranging than traditional retail (it can even include and/or enable traditional retail channels). Why more ubiquitous? Over the next few years, phones will be able to interoperate with consumer devices - allowing for content to be accessible across multiple devices, creating a real anytime, anywhere scenario. Hence, the business opportunity to manage customer access across multiple interconnected devices, services and locations is enormous and can enable major new revenue streams from an ever-increasing array of new services.

Yes, CSPs should keep their pipes up-to-date by means of technology in order to deliver a cutting-edge communications retail experience. But thinking in terms of retail services means that we are entering into a world that requires a different approach to the communications business – it is a more omnipresent model. Why?

Because it is far beyond the products or services that are being offered or displayed by the CSPs on their technologically advanced “window shopping” (the phone’s screen), and it is even far beyond the network and technology they utilize. Of course, technology is important, but in the past, we were technology and network-centric and because the CSP business was about the pipes, we had to care about whether the network worked and whether we had the latest technology or device to offer.

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