How does disruption happen in the communications business? Venture capitalists typically hope it will happen when new technology firms can create killer new solutions in software or hardware. The hope is that young upstart firms can somehow create value so important that communications service providers have to support the innovations.
Apple and Google provide excellent examples. Despite that, some will complain that there is little disruption or innovation in the mobile part of the communications business, for example.
Some would dispute that notion. In the communications business, whole categories and industry segments have disappeared. There once was a hugely revenue-producing “long distance” industry in the United States, lead by firms such as AT&T and MCI, for example. That segment essentially has disappeared.
Mobile services once were a niche used primarily by business users. Now mobile services are ubiquitous and beginning to challenge and displace other established segments such as fixed network voice and broadband.
There once was a time when the mobile industry was not lead by AT&T, Verizon, Sprint or T-Mobile USA. There was a time when handset suppliers had terms dictated to them by the major carriers. Now carriers bend to accommodate Apple.
Nor would many observers have predicted the extent to which application providers would emerge as key players in mobile ecosystems.
If you ask just about any executive in the telecom or cable industries what “disruption” means in the business, and what it looks like, you will undoubtedly find that people talk about competition from new contestants. “Disruption” normally is seen as something that “happens to” telecom or cable providers.
But that’s only half the story, and probably not the more-interesting part of the story. In recent days, we have seen some significant potential changes in the wireless part of the business that illustrate a whole new aspect of “disruption.” And that difference is that some initiatives in the communications business now are aimed at disruption of another existing business.
True, one might argue that telcos getting into the IPTV or video entertainment, or cable companies getting into voice and data services, also were disruptions.
But there’s something more than that going on now, in some other parts of the business. The best examples so far are mobile banking and mobile payments. In both cases, mobile operators are not simply seeking incremental, “line extension” sorts of growth, but seeking to establish leading positions in new businesses that means mobile service providers are the “disruptors,” not the “disrupted.”
The point, one might say, is that there is plenty of disruption in the business, but precious little of that disruption comes from “small and innovative firms.” Instead, in a scale business, it seems to take other firms with scale to make a dent, whether that is cable companies in voice and data, or telcos in video, or Apple in devices or Google in operating systems.