Monoliths and bit pipes

After going in deep on the “bit pipe” topic for a couple of weeks I eventually came to notice that the most important telco operators are now embracing the model called,  in brief, “telco 2.0″.

The “walled garden” approach worked for years in the scarcely developed and small mobile Internet market we were used before Apple and Google debuted into the mobile platforms arena.

Now that things are melting, now that Internet and the mobile world have come together, now that the smartphone slice of the mobile handset market is getting bigger and bigger despite of the crisis, it’s somehow normal that the value chain of such products is subject to be reconfigured.

The old value chain we were used to, where operators and Handset vendors were the only actors producing value and obtaining revenues, is definitively dead. We are now seeing a couple of different approaches into the telco market I expect that most of the worldwide player in the industry will align to:

One is the Monolithic vendor approach, where the vendor can be one of following players:

  • a web content owner (such as Google for  “Powered by Google” Android based devices)
  • an handset vendor (such as Palm for Palm Pre, or Nokia for what regards, for example, the “Comes with music” and OVI propositions)
  • a technology firm, coming from a different market  (such as well known Apple I-Phones or rumoured MS Zune Phones)

well, in this model the operator usually plays what we call a “bit pipe” role:

The "monolithic vendor" approach

The "monolithic vendor" approach

The other possible model is a more distributed one, where an actual ecosystem is created around the operator that plays a central role.  Despite it has some threats as well (e.g. the content trap, thanks to Fabrizio for noticing)  that’s, IMHO, the only model suitable for an operator which wants to survive.

To align to this model, an operator is asked to change the formerly used approach: it needs to find a way to produce value from the infrastructure (read: network APIs) that is, at the end, the only thing making it unique in this chain, as well as it needs to build a developer/user ecosystem to unlock a loosely controlled content production channel for it’s handset portfolio.

Since, very often, images are better than words:

The operator owned, ecosystem based approach

The operator owned, ecosystem based approach

Most of the smartest operators in the world are moving towards such an ecosystem, for example, if we focus on EU centered operators:

  • Orange with Orange Partner Program featuring a strong Operator APIs (available internationally) platform, a Developer support site providing tech. docs, a certification program and a, even not so up to date, on device delivery channel
  • Vodafone with Betavine initiative and upcoming JIL – Joint Innovation Lab (Vodafone, China Mobile Limited & SOFTBANK) now delivering Developer support and a delivery channel ( and very soon expected to deliver SOA oriented Network APIs a dedicated and optimized Widget SDK and a more powerful delivery channel/App Store.
  • O2(Telefonica) with Litmus community including access to network API, a delivery channel/App Store (with a 70% dev/30%  opr. revenue sharing model), Developers support and a user community paid for testing beta projects and contribute with reviews and bug reports.

North American operators are, from this point of view, a bit late: you can just find  Verizon VZAppZone program featuring an “on-device” delivery channel, and Sprint ADP Application Developer Portal that is, more or less, a developer support site offering device specifications and general information.

Given that putting “monolithic products” in portfolio could be risky (IMHO it’s more a sort of ancient Japanese tradition) what other strategy could an operator follow?

None IMHO, or, at least just one. Becoming a Monolith. Like Hutch3G did with INQ.


About meedabyte

Strategist, Consultant and Collaborative Pathfinder

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