Last year I was reading Jack Weatherford’s book “Genghis Khan and the Making of the Modern World.” One of Genghis Khan’s early critical achievements was stopping the inter-clan wars, so the Mongols focused outside Mongolia, and went on to conquer most of the known world. Taking each city-state in turn through a simple 3 step plan:
- Shock and awe;
- Containment with the latest siege weapons; and
- Logistical support to outlast the city and cause its fall.
The above summary is a gross simplification as they also innovated in war technology and strategy (feigned retreat). The simplification is for the purpose of this analogy.
The success of open web-based APIs got me thinking about that early achievement of Genghis Khan. It has enabled a far richer service environment over the web than any individual service provider could hope to achieve. One simple example, check out the latest Samsung’s InternetTV with a whole range of widgets built into the TV covering YouTube, Flickr, Yahoo! etc.
Telcos are still behaving like the city states. Thinking they’re safe with the wall granted by a state license from the OTT (Over The Top) threat. But looking to history showed those walls were of little use against the 3 step plan. So drawing an analogy to today’s situation:
- Shock and Awe: The financial analysts and investment bankers (both of whom grossly lack regulation, but that’s another story) have partially created the ‘shock and awe’ in the valuations they assign to telcos versus the cloud/web-based service providers. As well as the popular prophesy-type messaging on the inevitably of the Telcos’ demise, it reminds me what Cisco did in the ’90s with its evangelical marketing on the inevitability of IP. But more importantly, operators themselves are creating a self-fulfilling prophesy: I’ve presented many service innovations, and talked about some of them in this weblog, yet the common refrain remains “Yes, but…”
- Containment with the latest siege weapons: Service innovation is the latest weapon of choice from the cloud-based service providers, its success is evidenced by customers increasingly using OTT (Over The Top) services, not just on mobile phones such as iPhone, but on any internet connected device, e.g. Samsung’s InternetTV.
- Logistical support: The vast global data centers of cloud-based service providers; e.g. Google has over 350k servers distributed throughout the world. It is so vast that it has changed the structure of the internet in the passed 2 years, creating a category of hyper-giants such as Google and Microsoft who are no longer dependent on a global transit backbone and directly connect to IXP (Internet eXchange Points) forming a significant component of the internet backbone.
For operators to avoid the fate of the city states, in becoming vassals of the Mongolian state they must harness the same principles of acting together, open APIs, service innovation, and global logistics.
- Act together: this goes beyond GSMA’s OneAPI, which is critical. Cable Labs in the US is a great example of an industry co-coordinating. Fragmentation is killing the industry, co-ordination is required in committing to common OS(s), committing to devices over multiple years (like Apple’s commitment to the iPhone), committing to common cross-carrier services that do not require IMS, committing to acting as a vibrant innovative services industry. Also as a petty peeve of mine; there are very few ‘special requirements’ – the number of meetings I have with multinational operators and hear about how one OpCo (Operational Company) has special requirements based on what appears to be no other rational argument than maintaining their job.
- Open APIs: operator must bring together the web, network and device based APIs in a way that’s easy to use for developers, content owners, enterprises and their customers. I’ve discussed API management in the SDP Asia Summary article and will also be discussing it in more detail in a later article in December.
- Service innovation – just do it, no more “Yes, but…” We should be honest with ourselves as an industry, we just don’t know exactly what is going to be a successful service; so its important to fail and fail often as that is the essence of innovation (as long as you learn a little each time you fail.)
- Global Logistics. The telecoms industry as whole has a combined computing resource far in excess of the Cloud-based service providers. Operators need to examine how to create a federation of clouds to share services, capabilities, and application-level connectivity to deliver valuable services to end customers that just work.
The Telecoms industry must meet the ‘Genghis Khan’ challenge head-on with the same tools and strategies, else become a vassal (pipe provider) of the Cloud-based Service Providers. Being a pipe provider does not give an operator the same valuation multiple as a utility (generally 7), Telecoms operators do not have a monopoly like water or electricity – hence their multiple will tend to 1!