It's good to be a commodity

I just received in my mailbox the executive summary of yet another report offering advice to next generation network operators on how to capitalize on the growth of content value and avoid being relegated to a commodity access service. 

I just want to say how happy I am to be commoditized! 

As the former manager of a retail operator with a strong consumer focus I know how hard it is to monetize the content that is carried to the end user. Some very smart broadband operators are able to capitalize on voice, television or video on demand. But in general, content and services are very expensive to produce, extremely competitive and almost always - except in the case of premium content - face a free alternative. 

Web content providers are like gold prospectors competing for a vein that they know will only make a few of them rich. But the smart entrepreneur who sells spades to the gold diggers is more likely to have a profitable business - even if a spade is by any means a commodity. And the good news is that the rush in the digital world is predictably going to last for a very long time. A look at the poor quality of a streaming video over a cable, DSL, or 3G connection will show the incredible demand in capacity that lies ahead of us. 

Of course being a capacity - or commodity - provider doesn't mean that you should not try to provide value added services.  The right services are the ones which help retail providers to carry out their mission, not the ones that compete with them. Anything that lowers the cost and improves the quality of the services that they provide to end users will be a relevant service. Most frequently these services rely on mutualisation of infrastructure: network planning, co-location, multi-casting, legacy protocols encapsulation, etc. Next generation network operators who satisfy the growing demands of content providers should eventually generate the right revenues to pay for network upgrades and shareholders' return. 

And please continue to disparage commodity providers. It's always good to be in the business with less competition!

Comments

[Rédigé par: Marc Duchesne]

Actually, you (Covage & its peers) are definitely not to be considered as a "commodity": you must be considered as the new builders of the 21st Century' s territories. Next Generation Networks are aimed to sports Next Generation Applications, which are aimed to feed the country's economy.
Plus, your role in rural areas is absolutely predominant: no private telco is going to offer its services there, hence your mission.

[Rédigé par: Jean-Michel Soulier]

Thank you for this encouraging comment.