Carriers Get a Wake-up Call

Carriers are rapidly losing their power in today’s mobile ecosystem, and don’t seem entirely aware of that fact, according to a presentation made at the TM Forum Conference being held this week in Orlando, Fla. James Warner, a TM Forum VP, began his presentation by asking if carriers will become extinct and ended by asking the audience to vote on it.

Warner, much the way I did in an article earlier this week, highlighted how companies such as Google, Amazon and Apple have already stripped carriers of some of their power by setting up their own billing relationships with consumers, delivering GPS data outside of the carriers’ own data — even by building application stores. All the carriers are left with are their pipes and their relationships with a large number of consumers. He believes carriers needs to stop grasping at the past and move forward by acting as a broker among the various constituencies that want network access.

One possible solution involves a two-sided business model, as laid out by a Cisco executive at our NewTeeVee Live event last month. In it, the consumer pays the carrier in exchange for service, while a content or application provider pays the carrier for access to that consumer. I’m skeptical, but Warner said that in such a scenario, even if a carrier makes the decision to become a bit pipe, it doesn’t have to sacrifice revenue and margins.

He pointed to AT&T’s Glen Lurie, who’s managing that company’s machine-to-machine business as a decision by a carrier to become a bit pipe. Delivering data to various end devices that a carrier doesn’t control can drive high margins and lots of revenue. For example, providing connectivity for an e-reader broadens AT&T’s subscriptions, but because the device can’t roam on the broader Internet, it doesn’t consume huge chunks of data.

Warner doesn’t think the carriers will become extinct, but does believe they will have to become more agile, learn to share and use their cash to move out ahead of the changing ecosystem. I think we’ll start to see more carriers trying to make this happen as early as next year.

image courtesy of Warner’s slide presentation

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