Mobile operators everywhere are at a crossroad. With their advantages of mobility slipping away, it’s time for mobile operators to identify the next generation of business opportunities that they are uniquely qualified to pursue. It’s time for operators to look to the cloud.
But first, let’s take a closer look at how operators are losing the mobility advantage. Operators traditionally set themselves apart with their quality of service and security of service across high-speed bandwidth networks. Simply put, mobility was an operator’s differentiator. Today, however, the proliferation of high-speed 4G networks and Wi-Fi hotspots is making mobility a ubiquitous commodity that subscribers take for granted for new services and applications.
The spread of Wi-Fi hotspots is further eroding operators’ mobile advantage. Just look at CableWiFi, the nationwide Wi-Fi roaming network backed by Bright House Networks, Cablevision, Comcast, Cox and Time Warner Cable. CableWiFi will give any of the companies’ subscribers free access to any of the companies’ hotspots, enabling a Comcast customer to access a Cox hotspot while roaming in Cox territory to access her Comcast services, for instance.
Soon, subscribers won’t really know or care what network they’re using — cellular or Wi-Fi — when they’re accessing voice, messaging, search and other apps on their mobile devices. And the commoditization of broadband-enabled mobility is going to eat away at mobile operators’ revenues and force operators into price wars on bandwidth as the only differentiating value to consumers and enterprises.
As their mobile advantage diminishes, operators are also finding increased competition from MVNOs and Internet services companies. These companies can buy large chunks of 4G and Wi-Fi data from operators and then bundle those data services with their Internet services and sell them to their own users. The value is shifting to the bundled service and the user experience of the services, and the underlying bandwidth is just part of the overall service offering.
Meanwhile, Sprint, T-Mobile and some of the other 4G operators are clearly positioning to make wholesale data plans part of their future. For example, Sprint could theoretically strike a deal with Facebook for a set amount of 4G network data plans that Facebook would then sell to its users as part of a Facebook service. The end users wouldn’t even know they’re on Sprint. They’d just know they’re using Facebook and the “Facebook data network.”
Cloud as the New Operator Advantage
In the world of competitive, commoditized data services, mobile operators can find a new service advantage by embracing cloud computing and the virtual environment of applications and clients. In particular, operators are ideally positioned to bundle cloud apps with their network assets to deliver over–the-top (OTT) bundled services. Such a move lets operators take services that are in the market today — content storage, gaming, video networking, social networking, and IP chat — and bundle them in an intuitive user interface that also enables voice calls, data calls and messaging from any network, using any device — all while logged into their operator app. In short, the cloud helps operators define a new value proposition based on application services and user experience instead of network technology.
We’re starting to see operators moving in this direction. For instance, Telefonica is branching out with over-the-top services through Telefonica Digital. Time Warner Cable is reportedly pursing a partnership with Hulu to establish Time Warner-branded OTT video on-demand services. Swisscom has launched its own OTT multimedia communications application for Android or Apple iOS smartphone users. And Deutsche Telekom is now in the OTT content game with LiveStream Perform, its cloud-based video delivery system.
Why all the activity? For one, the enabling technology is already in place, including the cloud application infrastructure comprising open-source middleware and software and commercially available hardware. The developers are also in place, with large off-shore and on-shore communities available to build out the web services development.
Of course, most operators are still focused on 4G deployments and value-pricing their data networks. And they are focusing on enterprise cloud architecture services to maintain their high-value enterprise and SMB customers, who are being courted by cloud Internet providers like Amazon, Citrix and Rackspace.
Going forward, operators will need to expand their cloud focus by virtualizing their consumer and enterprise applications into the cloud application and client environment. A new focus on user experience across bundled services will keep users inside the operator’s portal or application while enabling users to access the application, from any device and from any network.
It could actually be a huge opportunity. The market is there for the operators to own this new paradigm by offering a bundled experience across voice, IP messaging, video, cloud storage and content sharing, all from a single intuitive user interface. And while the emergence of some new technologies like Wi-Fi and 4G are threatening operators’ relevance, new technology available from the cloud might just be their savior.
Jim Hudmon is cloud and data services delivery manager at Nexius Solutions.