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In this column I’m going to continue the platform play theme, as it has come up at various points during the industry events I’ve attended over the past few weeks. Briefly, this is the notion that in today’s market, service providers need to think of themselves as platforms for services and applications as opposed to relying on their incumbent status and trying to control the customer relationship.

The platform play idea may seem very intuitive for a next-gen service provider, especially one that does not own the last mile. In this regard, the more dependent you are on others for last mile access, the more sense it makes to focus on being a platform play. This is where you have the most leverage for creating value, and in fact, the less you have to worry about maintaining the last mile and keeping your network state of the art, the more free you are to focus solely on developing services that will truly resonate with subscribers.

Conversely, large incumbents have less reason to think this way since they hold most of the cards. As mentioned in previous columns, they have the subscribers, and don’t have to share the revenues with anyone. They also have the end-to-end network connection, from the core to the edge, and then the last mile and in many cases, the premises as well. As such, they own and control the factors of production, and for the most part have the regulators on their side.

This would appear to be sufficient for maintaining market dominance, but we know this is not the case for incumbents. There is a fine line from where their network-centric thinking crosses from being a winning strategy to being a losing strategy. When VoIP began to break into the mainstream, the PSTN was being touted as a liability, not an asset, and would render RBOCs obsolete. This hasn’t quite happened, but the parallels are similar now, where the story is much more than VoIP.

The stakes are higher today, where landline replacement service is just the starting point. As IP networks mature to support all forms of communication, every incumbent stands to gain or lose revenues across the full spectrum of multimedia – wireline, wireless, Internet service, video, IPTV, etc. All incumbents face this reality, especially since IP is a dual-edge sword. On the positive side, IP enables everything, allowing operators to offer a full range of services, many of which represent new revenue streams. In the residential market this translates into the bundle, where the possibilities are endless, and I believe we’re just seeing the first generation of offerings. I’ll explore the bundle further in another column, as it warrants more attention as a strategy for service providers.

Returning to the two-sided aspect of IP, the negative side is that it lowers the barriers to entry. Just as it enables you to provide all kinds of new services, the same holds for anyone else who chooses to embrace IP. There are actually two important aspects to consider here. First is the fact that IP is a less expensive technology to deploy than TDM or cellular or cable. So, in pure economic terms, the entry costs are low enough to allow competitors who could not have possibly done this in a world based on legacy networks. Second is the fact that IP allows new competitors from outside your domain to enter. This is why the likes of Google and Microsoft (News - Alert) are a growing threat to incumbent telcos. They may not have conventional telecom expertise, but their IP-based voice services are poised to compete directly and in ways that telcos have never had to consider until now.

All of this adds up to the fact that no service provider can afford to rely solely on their tried-and-true business model. With IP, everyone competes with everyone, and in due time, I believe the distinctions between telcos, cables and ISPs will pretty much disappear. The ultimate challenge is somehow being able to differentiate from the competition where everyone has access to the same technologies. As IP continues to displace legacy networks, the hallmarks of open systems and standards-based solutions will become the lingua franca of all service providers.

In this environment, I really see two paths for creating meaningful differentiation. One lies in the network and the other lies with the services. For the former, the strategy would be to invest in the network and create an infrastructure that is truly superior to the competition. There is a multitude of ways to do this, and would involve variations on things like faster upload and download speeds, advanced network intelligence, security and privacy, storage, data recovery, QoS, QoE, billing, etc. Regardless of the services offered, there is a compelling value proposition here by providing a superior end user experience. In the North American market, there is a very real opportunity as all service providers are in a race for speed, and they have limited ability to keep pace with the evolving demands of subscribers.

The second strategy is more about the services and less dependent on having the absolute best network out there. It won’t be long before all types of service providers will be able to provide a basic bundle of all the core services that most subscribers want. This is the magic of IP, but it also creates a level playing field rather quickly. To get beyond that, service providers must focus on innovation and build on the flexible nature of IP to develop more personalized and customizable offerings. Whether the innovation comes from within or from third party partners, there will be an ongoing need to keep up with – or better yet, ahead of – both your subscribers and the competition.

In my view, service providers need both strategies, and the mix will depend on factors such as their competitive environment, what their core competencies are and their agility for responding to customer demands and commitment to innovation. There is a lot to explore here, and this article sets the groundwork for some specific examples I have come across at recent industry events. In my next columns, I’ll be touching on AT&T (News - Alert), BT, rural operators, and how service providers are adding value for the business market with offerings such as hosted services, video and unified communications. That should take us a long way, but by all means, let me know what else you’d like to hear about.