OTT and Telco: Threat? Opportunity? Head in the Sand?

It's ok, you can come out now!

There’s a strange dilemma in telco.  Worldwide demand for its core product is skyrocketing, and all that the industry can do is complain about it.  When you step back from it, it’s quite bizarre.  It’s like a spoiled child, given everything they could ever want, with no restrictions, and over-protective parents decrying any attempt at discipline.  Then, when the child has to fend for itself in the big bad world, she is totally unequipped to even consider the threats and opportunities that presents.

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Telco Busting Business Model #487

Imagine for a minute all iPads were 3G enabled.  Now, imagine that no data plans were sold with them.  Next, all users get free access to the iTunes app store.  Now, everything is an app.  Connectivity is an app (for random browsing).  Bundles of call minutes could be sold as an app.  Text and instant messaging too, if anyone still pays for that stuff.  All other apps would have access bundled with them in a 3G context, in the same way as books for the Kindle have access bundled with them.  Telcos become infrastructure providers for consumer electronics and applications (media) providers.  The end.

The Latest MVNO Model: Dell

That Dell is selling laptops is hardly news.  Even that they are selling laptops with HSPA on board is not new.  But now dell-logo1they are delivering service too – wireless broadband – in Japan.  This is like Apple generating services revenue from the iPhone, and in a general sense like the blurring of business models that Nokia’s Comes With Music offering introduced to the music industry.  One wonders whether Dell might offer lifetime free internet access bundled with the device?  For example – if a netbook retails at $300, and wireless internet access retailed for $15 per month, the total retail value over three years (the blended likely period of ownership / viability of the netbook) would be approzimately $840.  Presumably given that there is three years of access prepaid, and a paid-for support line would be essentailly a self-supporting business, it is not inconceivable that a NetBook with unlimited bundled access to the internet could find its way onto Christmas shelves for somewhere near the $700 range.  With a VoIP client there is unlimited, no-subscription, no-topup, straightforward retail-only, (no need for billing or customer care) consumer electronics that deliver all required communications (you could even bundle text messaging at that price, given the general absence of SMS termination charges).  And, in one fell swoop, the basic telecommunications industry business model is destroyed.  And, while I’m at it, all of the business support and operations support systems that underpin the telecommunications industry collapse.