March 06, 2006

When Worlds Collide

When Worlds Collide – Telcom Meets Computing

I admit I am an infrastructure analyst and not a telco analyst.  So my biases should all be readily apparent from the start.  Having said that, I will add that I have been spending quite a bit of time lately on the telco/mobile /networking side of the world, and it’s been an interesting experience.  I’ve come up with some thoughts I wanted to share.

The way I see it, there’s been a bit of a battle going on between the telephony model which to generalize charged for the network but not the equipment, and the computing model which charged for the equipment but not the network. According to all the research one sees floating about, the computing model seems to have won, in the sense that telephony is being integrated into corporate IT rather than the other way around.  Mind you, I’m still thinking more about infrastructure than applications (which is another topic I’m going to leave aside just now.)  Anyhow, it appears that computing is the winning model group for infrastructure provisioning, and that’s having some repercussions going forward for service providers (SPs.)

Perhaps VoIP is the best example of this phenomenon.  Since the network is essentially free in most people’s eyes (assume I’m speaking of a wireline network here), VoIP is taking off, even if quality is less than perfect (most people equate this with the adage “you get what you pay for” anyhow.) This has put fear into the traditional SPs because if they don’t change their model they could just become bit pipes – a less than attractive business model, and hardly a competitive differentiator, so off they go in pursuit of services, new ways to attract and retain business and consumer customers and so forth.

The problem is that the computing industry is 3-5 years ahead of telephony and it shows.  I’m not talking about technology here.  I’m talking about the way the industry thinks, how it sees the future and what it’s focused on.  For anyone who has ever traveled around Europe, think of the way you have to change networks in every country, and how many SPs you have to deal with.  Now imagine if your application infrastructure was that complexly organized.

Or instead, look at the way joint innovation, collaboration and open standards are driving computing.  Look at the way vendors and partners are building ecosystems to drive complete end-to-end solutions for users that combine products, applications and services.  That kind of collaboration is not yet happening in telephony.  The closest we come is the ecosystem in the mobile world, but even there joint collaboration cannot be described yet.  The whole notion of open standards bodies (please do not confuse this with open source or tell me that this is free software – again another issue) and building next generation capabilities together is moving more slowly.  Part of this is due to the lingering presence of government in telephony that has never quite plagued computing.  The telephony network was once quaintly a national issue and you can see the problems that kind of thinking causes if just once you purchase a household appliance in Germany and then try to use it in Italy.

I remain hopeful however, because we’re starting to see groups like the MultiService Forum arise.  Whether or not these groups can be successful is of course dependent on each particular group, but it’s good to see SPs starting to think along these lines.  The continuing strength of companies like Cisco and HP’s quasi-stealth ProCurve networking business are also encouraging.  These companies have feet planted firmly on both sides of the industry and if they’re clever will leverage the strengths of both sides.  For now however, telephony is going to have to go through a bit more angst before it breaks on through to the other side.

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