Fiddling over net neutrality while business models burn

09 Dec 2014

2015 will be dominated by two major industry concerns - falling revenues (and profits) and net neutrality.

Looking at the latter first, there appears to be an overwhelming desire by governments and regulators to “fiddle” with the Internet that seems to be working quite well on its own.

Whether it comes from concerns that they have little or no control over the Internet or they really do fear that service providers will restrict access to it, those parties bleating the most about net neutrality probably pose the greatest threat to its independence.

The premise that no party should be able to differentiate access levels to the Internet is a farcical argument on two grounds. Firstly, it would be commercial suicide to offer a lower quality or more expensive service than a competitor. Secondly, quality and speed of service is directly related to the level of investment in infrastructure.

The more a service provider spends, the better the service and it should have the right to recoup that investment by offering different levels of service. This is a basic premise in any free-market scenario. The Internet is in no way threatened by the current scenario and has, in fact, flourished on its own accord with more people gaining access every day around the world. Any move to change that will certainly affect private enterprise appetite for investing in the provision of access to it.

Meanwhile, the stark reality of diminishing voice revenues and burgeoning demands for data will see an acceleration of the introduction of new business models for communication service providers in 2015.

Those heady days of high-margin voice revenues will be replaced very shortly by low-margin data-led revenues. The existing multi-siloed operations will be closely reviewed with each department having to justify its existence as a profit center.

The need to lower costs will push further investment into all-IP infrastructure and leaner operations so we can expect major reductions in head counts in 2015.

Most significantly, CSPs will start seriously looking at structural and/or functional separation of the operations. Becoming a wholesale “smart pipe” with a high-volume, low-margin business model will begin to look very attractive and will allow network operators to do what they do best.

Costly consumer and enterprise-focused departments will be split off as virtual network operators and will have to stand on their own two feet in the face of increasing competition from new players, including digital service providers, wanting to offer a complete digital service to their customers.

Seven incentives to change your game:

1. Fiddling over net neutrality while business models burn

2. Goodbye telcos, hello IDSPs

3. Cellcos remain their own worst enemy

4. Mobile Money Part 1: Apple Pay will break payments gridlock

5. Mobile Money Part 2: Wireless/digital finance earns additional interest

6. Plenty of room in 2015 unified comms market

7. Getting to grips with the IoT value chain

More coverage of 2015 predictions

This article first appeared on Telecom Asia Vision 2015 Supplement December 2014 edition

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