Over on GigaOM, Chetan Sharma has a guest column called The Operators vs. the Media Brands that’s well worth a read. He talks about how the two industries are converging, but how difficult it is for operators to become media companies, despite their comments to the contrary. The biggest point I took away from it came from this passage:
To be successful over the long term, operators need to focus on the unique elements that only they can provide — such as location, presence, user profiles and platforms for applications; as well as device and network APIs — and build business models around abstracting this information so that the ecosystem can utilize them to enhance user experience and usage. Such an approach will enhance their competitiveness in the media ecosystem, keep the usage and ARPU levels up, and get more entrepreneurs and users involved in moving the industry to its next milestone.
While I disagree that only operators can provide things like “location, presence, user profiles and platforms for applications” (I’d argue that Google offers three of those four already), the bigger point is valid: that operators will only become dumb pipes if they choose to. This doesn’t mean they should try to be media companies, but rather, as Chetan says, they should focus on building smarter pipes.
Mobile connectivity has become a commodity and will be priced as such; but if operators can offer additional value to content providers, beyond data delivery, through their networks, they can expect to be compensated for it.
Hi Carlo,
Thanks for your comments. I made the mistake of not qualifying my “only they can provide” statement - what i meant to say was that they are best positioned to provide such functionality to mass-market. While each of these features can be enabled by others, it is the operators who can cover a much broader base (today) and they should try to leverage that competitive advantage.
Best,
Chetan
See my quote from the recent Ericsson Business Review:
But what hampers the dialog with operators is their great fear of becoming “dumb pipes.”
“That might be the outcome if they get it wrong. But I would like them to think they could become ‘smart pipes,’ smart like a probe or robotic lander that continues to send back data about its environment, what is being consumed and so on.”
There is so much to do to ensure seamless access to different media and formats: tying together all the access technologies in both wireline and wireless; integrating set-top boxes with mobile TV menus, e-mail and text messages, and home voicemail; storing and updating content around the clock; billing, collecting and intelligently evaluating usage and demographic data to optimize the content and greatly increase its value to advertisers.
Because media companies are used to tracking ticket sales, overnight TV ratings and print circulation reports from traditional one-way media, Sanders asks why they should expect any less from content-displaying devices that are inherently networked and two-way. Making it all work is not trivial. Content providers cannot do this, but operators must. Sanders concludes that operators should worry less about content and dedicate their resources to what they do best.
Carlo,
We’ve given the Operator almost 9 years to innovate and drive mobile services and we’ve seen little success. Operators are good at providing a network so that other verticals can use that network for their services. Operators are blowing the opportunity and their window is closing.
Let the Studios and entertainment providers do what they do best, create and publish content. Home decks of Operators are an interim solution for what is to come. Many of the ISPs have their own site with content. Do you use it at all? Do you really find the Comcast videos very catchy compared to YouTube?
Operators are not good at managing and being distributors of content, it’s time they move aside and let the experts drive.
regards,
–mario
Hi Mario,
Thanks for the comment, but I think you’ve misunderstood my point. I’m not saying that operators should continue to try to become content providers, rather that they should make their networks more useful to external content providers by offering more than just connectivity or aggregation. As Chetan and Bill have said, there are a number of services operators could offer to content providers so they could enhance their content and services, such as location information, user demographics, or better billing systems.
Content providers have been waiting for years for the kind of infrastructure you’ve described, chief among them is probably location information. I’ve heard countless times where people would say, wouldn’t it be nice if the carrier can pass along the lat and long in the HTTP header/Java API. We’ve been waiting for them to build a system where a user can choose what kind of information to expose to what publisher, so a community of mobile developers can take advantage and innovate.
We’ve waited long enough. Instead, they have chosen to do the easiest hacks, such as deploying transcoders, that serves to alienate the mobile community instead of helping.
I have lost hope on the carriers. They have done too little. My hopes are on Google and other non-incumbents to come in and turn this thing around.
Along the lines of attracting larger audiences, Peter Chernin of News Corp put a finer point on it at CTIA in 2006. He said “No one needs FOX ’s entertainment content, however they [FOX employees] have succeeded in making people want it on multiple platforms.”
This is the key issue; consumers don’t need mobile content and the assumption is normally the opposite. It’s this skill in marketing that makes these media companies special and you can’t replicate that by hiring one guy to be in charge of video, for example.
Further, there is a fine art and skill to pulling this off in a profitable manner – look at the millions lost every day through media missteps. You can’t dip your toe in the water, your either an audience focused media company or you are not.
The march toward the “pipe” is a long but inevitable one and the most successful carriers in 2012 will be those who accepted it, taken control of management and moved to position themselves best in terms of their competitors.
Do we really want carriers to become smart pipes? Carriers in the US are already far too committed to the walled garden approach, and we shall see how far off the carriers version of “open access” is from “open”. AT&T is already considering filtering packet data for “pirated” material, do we really need to encourage carriers to increase the intelligence of the pipes? Data services, imho, are just conduits.
Americans love their phones, but hate their carriers. Carriers are already blocking access to many mobile services, do you really want carriers to make the choice of whether you use yahoo or google (or x vs.y) for anything? Carriers consistently screw over consumers every chance they get, and have low trust levels in the marketplace. Nobody wants to spend money with a carrier if they don’t have to. Unless carriers are willing to becoe trusted in the eyes of the consumer, they will never gain mass acceptance of any other services they provide, be it advertising, music, or anything else. i have no doubt that carriers would have no problem selling location based data to consumer reporting data bans such as choicepoint. Imagine the wealth of insight to your life and consumer habits your bank would have if they bought your location based data, and overlayed it with your transaction records….