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Will the Next Decade be Good for Service Providers and Bad for Privacy?

TMCnews Featured Article


December 28, 2009

Will the Next Decade be Good for Service Providers and Bad for Privacy?

By Jon Arnold, Principal, J Arnold & Associates


Not only is this the last Service Provider Views column for 2009, but also for the decade. What normally would be a year-in-review recap threatens to become a long rear view mirror reflection on the first decade of a new millennium. That’s a pretty ambitious target, and anyone with an opinion is riffing off this tangent right now. While it’s nice to reflect on all that’s gone on since 2000, you can’t cover much ground in one column, and I suspect you’re more interested in what it means for 2010 and beyond.


I may yet revisit the key trends and milestones of the last decade, but that would be better done on my blog, where I can meander a bit more freely. For this column, I’m going to distill the last decade down to one idea – one trend – one acronym – one trend, and I think you know what it is: VoIP. I know I’m not alone in saying this, and can there really be any doubt? For better or worse, I can’t think of anything more important that’s come out of the last decade. 

For those who follow me, you know I could go on a long time about VoIP, but I’ll keep it short. What’s so fascinating about VoIP is not just what it has done, but what it hasn’t done. The past decade brought forth many other game-changing technologies and trends – the Internet, broadband, blogs, Twitter, YouTube, mobility, the iPhone, Skype (News - Alert), etc. For the most part, these have been universally embraced and their adoption continues to grow. VoIP is the mutant offspring that you either love or loath, and the market seems split between those who want it to rule, and those who want to see it die.

Despite its failure to take over the telecom market, and its ability to survive a seeming conspiracy of powerful forces bent on its elimination, VoIP is still with us, strong as ever. I can’t think of any communications technology that comes close to this schizoid journey, and it really makes you wonder about – and admire - its staying power. Since VoIP isn’t going away any time soon, I’d like to look ahead to what it means for service providers in 2010 and beyond.

In short, I would say that service providers who integrate VoIP into their plans will be on the right of the curve for the next decade. This sound simplistic since there’s no turning back to POTS. That may be true, but I happen to believe that clever telecoms can still find ways to make the PSTN sexy again, but as a value-add to other things rather than being the core service. This would take some explaining, and I’ll save that for another time – or perhaps a consulting gig.

Let’s get back to VoIP. Service providers will have success with VoIP in the next decade once they truly understand it and position it properly. If Vonage (News - Alert) taught us one thing, it’s that VoIP cannot flourish as a standalone PSTN offering competing directly against incumbents. Telio is the exception, but I’m not going to explain why right now. Service providers need to see that VoIP has more value as an application than as a service. This is where things get interesting, especially since almost anybody can be a service provider today.

VoIP has value as an application because voice is really the best form of communication. We all know that, and to date, service providers have monetized voice in the form of telephony. The Internet and IP has changed everything and with that, telephony has become a commodity. So where is the value in voice in this new world? Followers of Web 2.0 and mashups already know the answer, and have started to show the way. Voice has adjunct value when it is added to other things, and I’ve cited examples in previous columns.

The main idea to recognize that VoIP allows voice to be provided at little cost, and once the network can scale securely and reliably, new applications emerge, as do new business models. This takes into Telco 2.0 territory, examples of which have also been discussed in earlier columns. To turn this into competitive advantage, service providers need to see VoIP as the driver that brings subscribers on to their network and keeps them there – which is why the network is so critical.

Simply put, the longer you can keep subscribers on-net, the better you get to know them. They will stay there so long as it’s worth their while, which means one of two things. Either they stay because you have really engaging services or you’re serving up some form of advertising that speaks to them at that point in time. Engaging services could be applications (social media) or content (such as interactive gaming), and advertising could be either passive or highly participatory. 

In either case, the service provider needs intelligence about subscribers (i.e. data mining), and is best acquired over time as profiles are developed about habits, preferences, etc. There is a lot to explore here of course, and I can only touch on one idea now to support my thinking. That idea is privacy, and as Orwellian as it sounds, the coming decade is going to see a continued, gradual erosion of something we took as an unassailable right in the pre-Internet era.

I may be showing my age, but privacy is a one way street, and once you give it away, you can’t get it back. Conventional notions of privacy will soon seem quaint, and the tradeoff will be justified by the boundless wonders of hyper connectivity and virtual reality. It’s not the world I want to see, but I think it’s inevitable, and for service providers who connect the dots, the next decade could be huge for them.

This may seem like reverse engineering, and my view is that Google (News - Alert) has already figured it out and is well along this path. In other words, once you discover that keeping people on-net is the real key to monetizing the service provider business, VoIP acquires a distinct form of value that has nothing to do with telephony.

Like bees to honey, people like to talk – nothing wrong with that – and if talking enables them to do other cool things, that’s what you do. The money is made around doing these cools things rather than the talking. Service providers have struggled with this in the past decade, and have not figured out how to monetize these new opportunities. 

I think that’s about to change, as will the concept of a service provider. For years I’ve saying that the distinctions between telcos, cabelcos, ISPs, etc. will eventually go away, and a new order will emerge. Nobody knows yet if the new order looks like Google or a super communications entity built from the best pieces of telcos like AT&T (News - Alert). However, I’m pretty sure the answer will become clear over the course of the coming decade, and my gut says that how privacy is handled will have a lot to do with it. More on this in upcoming columns.

Jon Arnold, Principal at J Arnold & Associates, writes the Service Provider Views column for TMCnet. To read more of Jon’s articles, please visit his columnist page.

Edited by Kelly McGuire







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