Transformation: Do or Die

So the recession is over. Not that our industry seems to have done too badly in the recession - most people seem to have taken the view that their phone and their broadband connection are vital ingredients of modern life and have cut back elsewhere. That trend seems to have accelerated in the recession - smart phones are educating people that their mobile phone is the center of their universe and becoming an indispensable way of not just communicating, but getting information, having fun and doing work.

 

With 1.5 billion app downloads on the iPhone, service providers now see that there is a huge market for mobile content and applications. We’re finally getting to the position that we were promised in the great 3G hype that accompanied the spectrum auctions of nearly a decade ago. 3G promised us the mobile Internet, but hype got ahead of reality, and now that we have it, its speeds are rather pedestrian. Now we look to 4G for a truly global, mobile Internet with access speeds supporting the kinds of applications and services that the iPhone is letting us glimpse.

 

But in this emerging market of ubiquitous content, who will be making the money and who will be driving the market? Communications service providers today enjoy a vast $1.4 trillion market, but growth slows as markets saturate. The buzz and excitement is mainly happening “over-the-top,” driven from the handset and applications players with service providers largely getting cut out of the deal. 

 

So if we are beginning to see cracks in traditional business models, where does that lead us?

 

If the environment about you is changing but you aren’t, you’re vulnerable to extinction. And not only do you need to evolve to survive but to thrive in existing and future environments.

 

It’s the thriving bit that concerns me. The innovation driver doesn’t seem to be with the communications providers, and the nightmare "dumb pipe" scenario seems a real possibility. In the 25 years since the US and the UK liberalized the communications industry, it has been transformed out of all recognition, but that transformation process needs to continue into the 4G world of the personal Internet.