Robert Russell, VTCI & VTXT business development executive, admits to being “a gadfly.” He has been “long advocating the conversion to being a data first provider, then everything else becomes an application.”
In other words, broadband is the foundation of the new service provider business, irrespective of how many apps, or what types of apps, a service provider also might offer.
The reason “building on broadband access as the foundation” makes sense, at least for Russell, is pretty simple, if seemingly at odds with much thinking. “It simplifies our outside plant design, adds versatility to our ISP, and most importantly it frees our business plan to leverage what we are good at,” he says.
“I cannot praise enough how liberating it is to view yourself as a pipe provider first, add the applications that you’re good at and then enable third parties to provide what” a provider is not uniquely and compellingly good at,” he says.
Rural LECs “have to move towards a broadband product as POTS subsidies fade away,” he argues.
The anchor video product is being “end run” by over-the-top providers, he says. “We thought tru2way was the key, but now it is IPTV that has won,” he notes.
“Being the local data access provider is their strongest comparative advantage,” says Russell. “Be the best darn data pipe provider you can be.”
That does not mean “do nothing else.” Service providers, to this point, always have provided both physical network access and applications, including voice, texting and video. Even simple broadband access to the Internet involves some elements of an application, typically.
One way to think about this is that broadband access to the Internet, from either a fixed or mobile network, is a “pipe” function that provides the foundation for all else a service provider does.
That does not prevent a service provider from driving significant revenue from apps, including voide, text messaging, mobile payments, commerce, content services or video entertainment or conferencing.
Still, there is a certain logic to thinking about the business as an amalgam of two distinct lines of business: access and applications. Access is now, and always will be, a foundation of the rest of the business. Quality access always will be a business differentiator.
But there is little way to avoid being an access provider. Nor is there any way to avoid the fact that “quality and transparent access to the Internet” is what customers want when they buy a broadband access service. That’s just another way of saying that what customers buy, fundamentally, is a “dumb pipe” access.
That does not speak to any inexorable logic about margin or gross revenue, or exhaust the range of applications a service provider might provide to end users and business partners.