Over the last couple of months the holy grail has started to take shape, and it is beginning to look like the gigabit speed landmark. The big question is what do telcos do when they can actually achieve it?
This point was raised by Adtran’s Ronan Kelly at The Great Telco Debate in London. Do telcos have a clue about what their ambitions are? Do they know how to make money out of incredible speeds and capacity? Will the telcos give into the low hanging fruit and screw themselves over in the long run?
This is the argument which leads back to the statement made in the headline; once you let the genie out of the bottle, it is almost impossible to squeeze it back in. Taking this metaphor into the realms of reality, once you offer consumers ridiculous speeds and capacity, you won’t be able to take it back, or up the price.
The major trend over the last couple of years for the telcos has been offering more for less. It is crippling the telcos on a profitability perspective, and managing the strain on the network is becoming increasingly complex. When gigabit speeds appear, the telcos might be tempted to continue this trend, snatching the low hanging fruit in terms of attracting new customers with more attractive data tariffs.
But one question you have to ask is whether this is the most profitable use of the network. Is there more money in continuing to encourage the customers insatiable appetite for data, or would it be better to serve the B2B community, who might come up with an idea which could actually make use of gigabit speeds for a price which reverses the spiralling nature of telco profitability?
Once the gigabit milestone has been reached, the innovators of the world will start to get to work. The applications which need gigabit speeds will follow the milestone, but telcos need to ensure the strain on the network is managed effectively so there is a suitable environment to allow these applications to flourish.
This is the question which Kelly proposed to the room; can the telcos demonstrate patience and long-term ambition to reap the greatest rewards, as opposed to the soonest. One of the themes throughout the day is the commoditization of data. Margins in the consumer world will get smaller, and the B2B world will become more attractive. But the telcos need to ensure they haven’t given the gigabit away for free, before they can actually make some genuine cash out of it.
Part of managing this ROI will be managing the expectations of investors. The fund manager who represents thousands of different faceless bank accounts needs to understand the ROI from these network infrastructure investments is a slow burner. If the ROI is managed responsibly, it can be a long burning fortune, but only if patience is shown and the telcos reach for the riper fruits at the top of the tree.