Abstraction

I just completed a guest blog post at Telco 2.0 pointing out that the SLAs involved in new business models, coupled with the fundamental driver behind those business models (bandwidth as a scarce and valuable resource), will put wireless operators in a position of allocating resources selectively.

That is, in times of high demand, a choice must be made as to who gets connectivity and who does not.

I argue that this will require operators to rethink their existing subscriber model, because a subscriber by definition has a right to access t he network. Put another way, the existing subscriber model precludes new business models because it eliminates operator flexibility in terms of allocation of bandwidth.

The solution is to eliminate the subscriber model, and instead bundle connectivity directly to services. People will purchase a voice service, or an email service, with associated connectivity (and SLA) bundled with it. Ad hoc access for general browsing will be provided only if bandwidth is available after servicing access connected to an SLA.

To be fair to subscribers, and to spur innovation and competition, ad hoc access must then be open — people will connect to whatever network is available at the time. This has a number of implications:

1. Any given subscriber can connect to multiple networks simultaneously, e.g. network A for email and network B for general browsing
2. Operators can find niche service areas — for example, some operators might specialize in providing ad hoc access during busy hours
3. Account management for ad hoc access will require federation. All subscribers essentially become roamers, with the HLR information maintained in a clearinghouse.

I’m curious to see reaction to this piece…

Great story in NYT today on the effect the iPhone is having on the ATT network. Directly related to my argument that wireless bandwidth is as a scarce, valuable resource will be the foundation of next generation business models.

Killer quotes:

[Because of network capacity being sucked up by iPhones] The result is dropped calls, spotty service, delayed text and voice messages and glacial download speeds as AT&T’s cellular network strains to meet the demand. Another result is outraged customers.

Just wait till all operators offer iPhones. And a full netbook line. And more dongles. And enterprise services in the cloud.

AT&T says that the majority of the nearly $18 billion it will spend this year on its networks will be diverted into upgrades and expansions to meet the surging demands on the 3G network. The company intends to erect an additional 2,100 cell towers to fill out patchy coverage, upgrade existing cell sites by adding fiber optic connectivity to deliver data faster and add other technology to provide stronger cell signals.

Wonder what the ROI will be on that 18 billion…

http://www.nytimes.com/2009/09/03/technology/companies/03att.html