Should mobile broadband providers strive to become cost efficient bitpipes?
Through the years there have been many discussions about what the mobile operators’ core business should be and what a “real” mobile operator should look like.
Somewhat simplified one could say that mobile operators purchased technology, services etc, packaged them, marketed them and sold them to their customers. If you were to compare a traditional mobile operator to a supermarket, it would correspond to a supermarket owning their own dairies, butcheries and wine castles!
As we have described in a new report “Successful Strategies in the Mobile Broadband Market”, that analyses in depth the changes currently happening on the mobile broadband market, we can now see a change in the traditional perception and an increasing number of operators starting to reduce their core business, partly by having an open garden strategy in the mobile services area and partly through various initiatives that often result in outsourcing all or part of the operators business.
The number of operators that are handing larger or smaller parts of their business to various subcontractors is increasing and we are seeing an increasing number of operators choosing to discontinue handling the daily operation and servicing of their own networks and leaving these tasks to players like Ericsson, Alcatel Lucent, Nokia Siemens Networks etc.
One question that springs to mind is whether we in the future will see some operators that consider themselves to be intelligent bitpipes and where their core business is limited to a mobile licence and a billing system and all other functions are handled by various subcontractors or partners that only have one goal – to create as much traffic as possible on the operators billing system.
An intelligent bitpipe operator will need to focus on three critical areas:
Quality control of the services being outsourced – network and partner production, including the end user customer service given by the partners.
The development of new business models, making it attractive to create traffic in the operator’s network and on their billing system – this should be good business for all parties. Having many strong partners will strengthen the operator.
Having a strong “business intelligence” unit that monitors the market, sees how the operator’s partners services and products fit into the market, while simultaneously searching for new partners that can create traffic in the operator’s network.
In other words the dream of the intelligent big pipe is the dream of creating a “dream team” of people that via a number of partnership agreements can cover a whole market. The partnership agreements will in practice mean that the operator has a minimal CAPEX and that their costs will mostly relate to the cash flow being generated on the mobile network.
We have no doubt that we will see operators using this strategy – on the other hand the question is how far each individual operator will go and whether they will be consequent in all areas and shave their business down to a minimum, or whether they will continue to have business areas where they purchase, manufacturer, market and sell various services themselves.
As we have described in a new report “Successful Strategies in the Mobile Broadband Market“, that analyses in depth the changes currently happening on the mobile broadband market, we can now see a change in the traditional perception and an increasing number of operators starting to reduce their core business, partly by having an open garden strategy in the mobile services area and partly through various initiatives that often result in outsourcing all or part of the operators business.