Time to Redefine Telecom
by: Burak Fenercioglu
Telecommunication, according to Wikipedia, is
the extension of communication over a distance. In practice,
it also recognizes that something may be lost in the process;
hence the term 'telecommunication' covers all forms of distance
and/or conversion of the original communications, including
radio, telegraphy, television, telephony, data communication
and computer networking.
While defining telecom gets more and more difficult,
the profit and ethics behind the business keep on diminishing.
SBC spent $16B to a company whose revenue stream is declining
more than 10% year over year. Verizon bought MCI, and in order
to make deal lucrative, they say they will layoff over 7,000
people.
The reason for scaling-down in telecom is that
the technological advancement has terribly been focused on
communications. We all owe a thank to nineties for that...
Lots of technical people has seen the future in Telecom and
made huge amounts of mind investment to the business. Today,
we are forced to live in an overly competitive industry where
telecom is forced to be cheaper everyday. To make matters worse,
a company called Skype appeared. This global P2P Telephony
Company decided to make old fashioned definition of telecom
a commodity through its software, which allows you to make
free calls over the Internet. Other emerging companies like
Net2Phone and 8x8 also flocked customers to make cheaper (sometimes
free) calls.
Some traditional telecom companies have kept an
awry eye on those start-ups while adopting technologies like VoIP.
They mostly thought those new technologies are something to monitor
and investigate. In other words, they are disruptive. Some assumed
the danger and started firing QoS bullet, as those startups do
not provide top-notch service like incumbents do.
The fact of the matter is, none of those business
plans will hold true should they are based on making money
on calls. Like Michael Powell said, “I knew it was over
when I downloaded Skype...”
So, can we say that telecom is a commodity?
My answer would be no, if network providers accept
to change their musty mindset. Three things are important if
the full background of this new notion is to be understood.
First is, telecoms exist to provide infrastructure. The rest
needs to be handled by networking and computing companies.
The need for voice, video and data are going hand
in hand. There is no value in them when there is no Internet.
That’s why, the second is, the new business plan should
be based on the Internet access. If telecoms want to survive,
charging customers packet-based with the guarantee of excellent
QoS is the only way to go. MPLS is their material to make this
happen.
Dish
vonage
comcast
This way, optimization, the biggest concern of
telecom industry, can be solved as the packet usage can be
approximated. Demoting VoIP into an application to where it
originally is can be doable in packet-based model. This new
model will also disallow fighting against free-of-charge models
and bring a fresh breath to network providers to generate more
revenue.
Third is, not only the ability of optimization
but also the prioritization and security of the traffic, if
needed, will let network providers to put extra cash to their
pockets. The money behind the content will not be their ball
game.
Some may argue that there is no incremental cost
of extra usage of packets to a network so the value behind tracking
the traffic is nonsense. However, what is unseen is that it forces
network providers to upgrade their systems quicker. They can also
build their cost /profit structure easier.
moto
Perils to the model would be the evolution span
of MPLS and anti-spam systems. MPLS, as an immature technology,
is welcomed with high expectations. Addressing all needs in
such a short period of time needs a lot of investment. The
story is almost the same for anti-spam solutions too. No customer
would like to pay extra for spam as this is adding to the traffic
that a user is using. That would force network providers to
unify on an MPLS/ anti-spam model where they and their customers
can rely on.
Once this new role of incumbents is well assumed
with solid technology, then converting the so-called threat
of telecom commoditization into an opportunity is feasible.
About The Author
Burak Fenercioglu is a freelance writer and working for a computer network
security company for over 4 years. His articles are about new ideas,
innovation and strategy and can be found at http://burakfenerci.blogspot.com
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