The box mobile operators find themselves in

I joined Sprint in 2003. Until then, my entire career had been in wireline telecom. In previous roles, I’d cared about wireless because it could be either an opportunity (driver of growth) or threat (substitution). But 2003 was the first time I had really looked at the world as a mobile operator.

One of the first questions I asked was “what applications really require licensed spectrum?”

I was surprised that no one inside the company seemed to understand my question. In 2003, WiFi really wasn’t a threat to mobile operator core revenues (primarily voice in 2003). While I had been talking about a future where everything would be connected to the network for years (I called it “bandwidth built in”), very few people were really thinking about an “internet of things.” The only smartphones with any commercial success (and tiny at that) were Palm and Nokia/Symbian. In fact, in my first few years at Sprint, there was real resistance to including things like Bluetooth and WiFi in our handsets. Can you imagine?

What I was seeing was the first side of the box that mobile operators find themselves in.

Over the next 11 years in strategy roles at Sprint I began to see the other sides of the box. I wish I could claim that I’d been successful helping my fellow executives to see them and to either build the best possible inside-the-box business or launch and fund outside-the-box growth businesses. But Big Bell Dogma rules.

So what are the other sides of the box?

The four sides of the box can best be seen by asking four questions, starting with the one I mentioned above:

  • What applications require licensed spectrum? (e.g. what won’t work on WiFi?)
  • What applications/services work best using network vs. device intelligence? (e.g. GPS/location based services)
  • What applications can best be met by a single operator? (e.g. RCS/joyn vs. WhatsApp)
  • What applications are best served via carrier billing? (i.e. What could never be offered for free?)

There is no question that mobile operators offer an incredibly important infrastructure that has enabled innovation that has literally changed every aspect of our lives. I’m proud to have been a part of that. Unfortunately, telecom companies move slowly and have expensive operations. Innovators can’t afford to wait for, or pay for, the mobile operators to provide what they need, so they have innovated around them and increasingly pushed operators back into their box.

To be successful, operators need to figure out either how to be the best inside-the-box (nimble, low-cost commodity transport and related services providers) or… (I tried to find a hopeful way to end that sentence, but each option I thought of I could shoot down. There’s nothing in the nature of a telecom company that positions it to prosper outside the box.)

For today, mobile operators can have some level of success selling voice and data connectivity services to consumers. That’s clearly inside the box. Will the box shrink to squeeze even those services? What options do operators have for growth? Those are great and important questions.

One Response to “The box mobile operators find themselves in”

  1. Carl Helwing says:

    Great bog post as always Russ. Glad to have you posting again!

    Carriers tried to hold onto many application areas themselves too long, and wasted a lot of investment dollars that could have been spent on networks and technology to make them have the best quality and lowest cost box for others to build around. Now that the carriers are in that position, the only real option I see is for operators to acquire technology to expand and leverage the transport box themselves (e.g., ATT / DirectTVNow) or continue to push costs to drive scale up and maximize margin and accept the commodity position wholeheartedly (also not it a carrier’s nature).

Leave a Reply