“I made the point that there was one rule that had to govern any operator shift of focus to higher service layers—the network itself must remain profitable. You can’t say you’ll earn new revenue that in part at least will subsidize a network loss, because competitors with no network and no losses will then have a pricing advantage you can’t make up. What higher-layer services could do is reduce the cost-reduction pressure on networks, allowing the focus to become “break-even” and not “profitable” because profits are increasing elsewhere.”
Tom Nolle here.
Notice how obvious that sounds when it’s spelled out? If CSPs want to move to a DSP business model to counter-act the OTT business models that they’re losing share of wallet to, they still need to ensure the network remains profitable to avoid a pricing disadvantage.
But with revenue per bit declining (ie the network has diminishing ability to generate a premium) and the complexity of networks increasing (at least in terms of having an increasing array of disparate technologies to integrate), the opportunity for the network to remain profitable is also diminishing.
You can see why cost-out / automation are two of the biggest buzzwords in OSS, because for all its perceived failings, OSS represents the only way to prevent the network being a burden (think of the network on the right-hand side of the whale curve if the OSS can’t provide the necessary operational efficiencies).
The challenge for CSPs and OSS exponents alike is to identify, deliver and maintain the higher-layer services that customers are willing to pay a premium on. This is outside the comfort-zone of traditional OSS and to be honest, is probably too broad to cover by any one vendor anyway. This is potentially where long-tail dynamics come into play within the small-grid model again.Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email