Network operators, including telcos, cable MSOs and others that own and run major networks, are at a crossroads, according to IT industry experts. In the 15 years since the Internet became a huge part of everyday life, there has been an explosive growth in the number of services that customers are able to access via their telecommunications connection, and most of them were created and supplied by third parties.
This is not to say there has been no growth in telco-created applications, but growth has been largely restricted to a tiny handful of new services such as IPTV, according Graham Finnie, author of a recent white paper commissioned by Alcatel-Lucent (News
), and who has 20 years of experience in the telecommunications sector. These unavoidable facts have led to a sea-change in the attitude of network providers to third party application and content providers. They are beginning to recognize that there are two possible ways they can work with them.
For the most part, network operators are trying to deepen their relationships with third-party Internet and Web-based service providers and developers, mostly by giving those third parties better access to telco resources and databases that could be of value.
“Relationships between network and third parties will likely need to move beyond market and branding agreements to deeper technology and commercial relationships implemented further up the value chain. Many Web and Internet companies still think of network providers as suppliers of basic connectivity and bandwidth, and in some cases they are actively hostile to the idea of a more complex relationship, fearing that network providers are simply seeking to retain or regain control over end users. Independent software vendors, on the other hand, are often put off by the
complex and time-consuming (often as much as 12 -24 months) on-boarding processes for getting on the operator’s ‘deck’ as well as the sometimes-challenging middleware systems that, in many cases, require developers to learn new software procedures,” Finnie writes.
Can that situation be changed? According to Alcatel-Lucent executives, it can, but to improve and enrich their relationship with third parties, network operators need to demonstrate that they are ready to create equal partnerships that are geared to the way Web developers work, and offer them resources with real value.
However, there are barriers to opening networks to third parties, such as concerns about security, uncertainty about revenue and pricing, difficulties identifying revenue-generating applications, and fears of cannibalizing existing revenues.
The barriers highlight an unclear business case: This is not simply about the cost of implementing a technology program versus the revenue; it’s also about whether proposals can be created that really appeal to third parties.
To achieve the optimal position, Alcatel-Lucent offers these 10 “core principles” for network operators as they move forward in this area:
1. Establish a set of KPIs that set benchmarks for improving performance in this area.
2. Take a pragmatic initial approach to working with third parties.
3. At the same time, be ready to have a variety of business and commercial solutions available over time.
4. Understand which third parties are most likely to respond positively to an invitation to work with you.
5. Use software platforms that are suitable or adaptable for use by particular kinds of developers.
6. Sell the ability to connect third parties with end users wherever they are.
7. Break down internal walls and barriers between the key stakeholders.
8. Deploy policy and QoS tools that are designed from the start to help enrich relationships with third parties.
9. Focus on dismantling subscriber data silos and getting consensus on rules for using that data.
10. Emphasize the ability to identify and authenticate individuals in a secure environment.
Alcatel-Lucent firmly believes there is a path that will prove profitable for all three stakeholders in this relationship – network operators, third parties, and end users – that provides a level of safety and control to ensure service reliability.
However, because it also must include basic value propositions in opportunities for third parties, it also includes a range of options over which network operators will not have complete control.
For this reason, a trust must be built between the operators and their third-party partners that incentivizes each to contribute equally to the relationship – which is when the end user will also see real value from these relationship and ensuing applications and services.
For more on the latest service provider strategies and technologies, make plans now to be in Los Angeles on September 1-3, 2009 for ITEXPO West at the Los Angeles Convention Center. Conference tracks have been specifically designed to discuss how service provides can leverage these technologies to increase their competitive edge, and the exhibit hall floor will be full of vendors ready to share their experiences.
Mobile operators, in particular, won’t want to miss 4GWE, a colocated event focused entirely on the evolution of mobile networks and applications to a 4G environment
Be sure to follow IEXPO on Twitter: twitter.com/ITEXPO (News - Alert).
Erin Harrison is a Senior Editor with TMC. To read more of her articles, please visit her columnist page.
Edited by Erik Linask