Thursday 21 February 2008

Say no to "Dumb Pipes"

Mobile operators must focus on providing services, not just pipes, to ensure they continue to keep pulling a profit, leaders in the industry said.

At a keynote speech at the Mobile World Congress in Barcelona, Vodafone's chief executive Arun Sarin said big pipes - the term used to describe high-capacity networks - were not the right area to focus on to achieve growth in the market.

"We must not allow ourselves to become big pipes and let someone else do the services," said Sarin. "Communications is our core business - we have to provide these services," he said.

Speaking of services, he added: "If we get this right, the upside will be enormous. If we don't, it will still be enormous - just for someone else," he said.

His view was echoed by the head of Cisco, John Chambers: "If all we do is provide transport, it won't be very lucrative... If we allow markets to become dumb pipes, there'll be no profit."

Services - and how they are delivered - have been a hot topic at MWC this year. While new devices have drawn attention, the news is often more to do with the operating system, be it Android or Windows Mobile, or the web services than the new technology in the handset.

Softbank CEO Masayoshi Son warned operators they risked becoming “dumb pipes,” if they did not move swiftly to control mobile content, reports TotalTelecom. Speaking on Wednesday at the MWC, Son said his primary plan when Softbank bought Vodafone Japan in 2006 was to drive the development of the mobile web, saying voice will “eventually become a utility.”

Son said that 2008 will see network speed and device capability hitting a point that will enable the mobile web to take off. In Japan, 90 percent of all handsets shipped are mobile-TV capable, while mobile phones now have faster CPUs that speed up browsing and bigger and better quality displays that allow the web to be viewed “properly.” Son noted that 3G was actually not good enough in terms of speed, and that with it, “you just end up with people getting upset.” HSDPA, however, was fast enough.

Just as the carriers' fear of becoming a dumb pipe is one elephant the industry can't seem to push out of the room, it's worth noting that mentions of the Apple iPhone declined significantly at this year's show. Panelists talked about the rise in popularity of touch screens, the importance of user interfaces and the big push to bring the desktop Internet experience to the mobile platform. However, they rarely mentioned the handset that has done so much to evangelize these three trends. After an entire year barraged by iPhone news, the attendees didn't need to hear it.

One high profile carrier speaker never gave a "dumb pipe" warning. Instead, AT&T Mobility CEO Ralph de la Vega detailed the myriad options that AT&T subscribers have for mobile content services after quickly rushing through a few slides with iPhone usage statistics.

De la Vega didn't give a dumb pipe warning during his keynote address because iPhone users have already turned AT&T's EDGE network into one. The iPhone's applications are managed by Apple and other Internet service providers. AT&T just needs to keep the network up and running.

So maybe Coleridge's quote doesn't apply here. Maybe the fearsome "dumb pipe" metaphor really is as tired as it sounds. Maybe the carriers' folly is already evident here at Mobile World Congress: No one addressed the power that Apple has wrestled from carriers the world over. The carriers' folly was in trying to resurrect the specter of one elephant in the room, while ignoring the presence of another.

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