Networks & Infrastructure

SOFNET 08: Beyond the ’dumb pipe’

New opportunities mean more options for operators

by Kendrick Struthers-Watson

The notion that has haunted operators for many years — that of becoming a "dumb pipe" — might just be fading away with the burgeoning uptake of more advanced services by consumers.

With particular reference to mobile operators, as the growth in 2G services have reached saturation point in developed regions, mobile service providers have been forced to look for new revenue streams. Jonathan Kendall, head of mobile business development with Juniper Networks, claims that existing business models are in the process of undergoing a radical upheaval.

“The current thinking within the mobile industry is that three dominant business models will emerge. These include the ‘zone of the incumbent’ — providing traditional voice and text services, the ‘zone of opportunity’ — where operators will promote innovative services such as mobile advertising and 1000s of niche applications, and the ‘broadband zone’ — which is closer to the dumb pipe model.”

While Kendall accepts that these three sectors do overlap, he maintains that mobile operators will need to review this landscape and understand whereabouts they want to position themselves.

“The typical operator is way beyond thinking about the smart or dumb pipe concept and is seeing how it can best fit whatever services and assets it has into this new model. This might mean selling off certain parts of its existing business.”

Reinforcing this viewpoint was Alrik Hohmann, VP of mobile services for KPN Mobile.

“There are many new opportunities for innovative mobile operators with numerous aspects of the network not being used for applications or services. Top of this list is location and payment-based applications. Also, the provision of sophisticated community-based services will become increasingly important to our customers.”

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