Access service providers do not much like the notion that they primarily are “pipe providers,” much less “dumb pipe” providers. That has lead to much consideration of how access providers can compete with the application providers (Google, Facebook, Apple, Amazon, for example).
Others have suggested something a little less ambitious, namely the “smart pipe” streategy where service providers work to leverage core network features such as billing, customer location or messaging and voice features, typically exposing such features to third parties.
For the most part, argue analysts at Delta Partners, competing with the likes of Google and Apple will be completely out of reach, though not impossible in some markets. A larger number of service providers might achieve success in the “smart pipe” arena. But all have to stay focused on the one unique role played by access providers in the application and Internet ecosystem.
“We believe most operators have little chances to become a successful ‘Operator 2.0,’ Delta Partners believes. “Being an ‘efficient pipe’ is a valid option while some might achieve some success as “smart pipe” providers.
In markets with strong competitive intensity between operators, the “efficient pipe” strategy is essential. That means offering the highest bandwidth (speed) at competitive market prices, and to deploy the lowest network cost, Delta Partners argues.
But some service providers with global scale and a dominant market position should consider the “Operator 2.0” positioning, Delta Partners says. In many cases, that will mean a focus on enterprise and small, medium business services and customers, as well as government clients, rather than consumers, though.
The “smart pipe” strategy will be more logical for a wider range of service providers, though.
As an example, mobile-only operators’ ability to offer information and communication services will be limited to services such as machine-to-machine services, apps for internal business processes, mobile payments, mobile health, mobile insurance and ticketing apps, for example.
Operators’ attempts to deploy a smart pipe positioning in emerging markets are still in early stages but may be successful as the major global IT players (e.g. IBM, Accenture) have a weaker presence in those markets.
