Telco as a Utility (TaaU)

Utility is when you have one telephone, luxury is when you have two, opulence is when you have three – and paradise is when you have none.”
Doug Larson

Will there come a time when telco services are simply like every other utility – a unit of service (ie Mb) that a residential user (and commercial?) can purchase from any retail provider that services their area and consume as needed?

Let’s look at electricity. It’s wired to your house and distributed to each of the power points within your house. There are millions of different devices that you could plug into your power points that don’t require complex configuration, protocol matching, specific electricity supplier product variants, etc. Nor does the electricity industry try to supply all of the devices. They simply couldn’t innovate fast enough to service the long tail of customer needs, although they may influence the certification of every new type of device for use on their networks in some countries. The electricity distributors don’t sell a huge range of electricity “products” and their pricing plans are usually just a relatively limited combination of connection/network charge plus consumption charges.

Let’s look at telco by comparison. We try to deliver a million different product variants, with another million different pricing bundles / plans. Since product / marketing is at the start of the life-cycle, these variants then flow through every other part of the business and complexity amplifies. By the time it reaches network design, business processes, OSS/BSS, etc we have to handle an incalculable array of possibilities.

Just as the electricity industry doesn’t try to be all things to all people in terms of electrical products, the telco world can’t possibly deliver to every need of every customer. That’s part of the reason why the telco industry has been disrupted by OTT products/services that utilise bulk-bandwidth to deliver innovations that service the long tail of customer needs. They can innovate at the speed of software. [As an aside, one of the reasons the iPhone was successful is that Apple did away with the keypad and opened up the interface to be fully programmable in software and hence adaptable to any future innovation the world could come up with rather than being stuck in user input via a qwerty keypad and menu control buttons. That could equally apply to TaaU].

Simpler products, processes, technologies and systems would have to lead to more efficient delivery of service (and more easily deliverable OSS projects) wouldn’t it?

This un-differentiated telco utility model would tend towards commoditisation and perhaps we’re already well down this path anyway. This model would also seem to suit the Telco REIT investor, giving reliable cashflow but perhaps with constrained profit margin opportunities. As discussed in the same link, spinning off the REIT part of the telco business would also allow for investment in the new media business units that focus on applications and content, where margins have been stronger in recent times for market leaders.

To be honest, this topic is filled with an open-ended discussion of pros, cons and possibilities. I’ve barely scratched the surface here (I haven’t even discussed regulatory implications for example). I’d love to hear your thoughts on the subject.

And assuming TaaU is on the horizon, is a similar fate awaiting data centre operators with commoditised compute/storage/network units of consumption?? DCaaU??

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