Changing Telecom Model

Kevin Werbach points to James Seng who captures the shift in the telecom industry:

A traditional telco designed their infrastructure using one technology to deliver one service (voice) for their customer. And they do it extremely well, due to their smart network design. Other services, like data is an afterthought and not taken very seriously for a long time. “Customers are dumb so the network must be smart” mentalities are very common.

But in the last 20 years, the “stupid network” Internet design is getting popular. With the smart devices, users finds they are able to do much more and they love it. Suddenly, consumers aren’t as dumb as the telco thinks.

In other words, vertical integration is out of favour and horizontal layering is in. Vertical integration is where you build your network for one services whereas horizontal layering is one where you build a (dumb) network but able to deliver multiple services over it and you separate them via layers.

What are the layers? The first layer is the infrastructure, the pipes to move the bits. The second layer is the Internet, the service provider who route your IP packets. The third layer is the rich variety of content and service (including voice). (Joi’s comment is that there is a layer zero, ie. “power” but lets leave that out for now).

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.