99 Problems but a BSS Ain’t One

After a visit to Alcatel-Lucent this week to discuss IP business transformation for carriers, I came away with the distinct feeling that the idea of technology for technology’s sake seems increasingly pernicious.

The industry is conditioned to embrace things that make it easier for people to get connected. Duh. Remember Metcalfe’s Law? That the value of a telecommunications network is proportional to the square of the number of connected users of the system? So, more users, the greater the value.

Only...who derives that value now? It used to be that carriers were firmly ensconced at the top of the food chain. But that’s clearly no longer the case, as third-party developers, device-makers and other partners are increasingly the ones with the customer relationship. The ones who, if things progress in the direction we all think it will, will soon actually be making the lion’s share of the profit. And so it was that, after the test lab tour and midway through a presentation on LTE and the types of applications that all that mobile broadband can enable (seven-screen split video streaming; picture-enabled short code service where users can take a picture of a movie poster and start streaming a trailer, etc.—all things that, from what I can tell, the operators won’t be selling themselves) that it struck me. Operators—well, most of them, it seems—are stubbornly, almost forlornly clinging to the Way Things Were. Adding capacity, making things bigger, faster and stronger, competing on the network. I think in my business it’s easy to get caught up in industry conventional wisdom that the old model must change, without looking at what’s actually happening out there. And what’s happening is that operators have yet to wrap their heads around the fact that the network simply won’t be enough anymore.

For operators, the good news is that back-office systems can support any number of models. Interesting, innovative models. To (mis)quote Jay Z, they got 99 problems, but a BSS ain’t one. So why don’t they leverage advances in BSS systems that allow, say, opening up network and billing information to developers via standardized APIs? Or combining packages of premium apps with top-tier carrier-led customer service into bundles that will give them a revenue split with the other members of the revenue chain? And those are just two very simple ideas for hanging onto the value prop.

“You have to talk to the CEO.” That was one ALU exec’s answer when asked who it is that you have to talk to in order to get the message across that the old way is not enough. “And it’s a long conversation.”

What’s interesting is that the tortoise-like aspect of carriers towards the new reality out there is not mirrored by their vendors. ALU is a venerable technology company with Bell Labs roots that of course stretch back to the 1800s. Indeed, for the visit they ensconced me in a hotel that looked like it came into being at the same time Alexander Graham Bell was calling for Watson. “Old School” doesn’t begin to describe it. As an example, I was dining in the downstairs restaurant the night before the media meeting, at a place called the “Hunt Club.” Surrounded by wallpaper with fox hunting scenes, a menu full of steaks and chops, dusty bookshelves and an assorted collection of bored businessmen, I felt like I climbed into the way-back machine. Darling, pass the tawny port. But upon arriving at the shining ALU complex-on-the-hill in Murray Hill, N.J., the very first discussion out of the gate was on business modeling and leveraging the back-office to remain competitive. They seem to understand that technology for technology’s sake doesn’t work anymore.

So carriers seem to have a hear no evil, see no evil type of attitude despite what everyone else is telling them. A friend of mine used to say that if three people tell you that you have a tail, it's a good idea to turn around and look. But carriers don't seem to want to look. And without wrapping what’s possible into what’s necessary, from a business model standpoint, operators are walking a very dangerous, and myopic, line as we hurtle into the world of ultrabroadband.