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IT Giants: Commoditise This!

Not so long ago, Indian IT services company Wipro joined the IMS Forum and announced that from now on, it would offer a range of IMS development services. There’s a whitepaper of theirs here on IMS, but this paragraph from the EE Times story interested us more..
With the evolution of the IMS technology, Wipro has matured its IMS offerings towards becoming an integral part of the converged digital media delivery ecosystem,” said Nagamani Murthy, Wipro VP, mobile and consumer electronics group.
Clearly, Wipro sees IMS as just another data transport system; “he’s not the messiah, he’s a very naughty means of transporting information goods.” Of course, as far as developing applications for IMS client devices goes, this is precisely what IMS was meant to do (at least, one of the vast number of things it was meant to do) - open up applications development to a bigger community outside telco R&D groups. Traditional telcos might even be cheered by this as evidence that rather than letting just anyone develop applications, they are being developed by big companies on contract to other big companies.

But who would imagine it would stop there? At Wipro, they have a constant risk of a namespace collision with another IMS; Infrastructure Management Services. This is the line of business where they install, commission, and manage private networks, including (according to their website) high-capacity switching systems. And IMS is nothing if it’s not a high-capacity switching system. OK, so network outsourcing is not that new an idea, but the shift to IP-based networks means there’s something much more disruptive out there..

scientists prepare to experiment on a helpless telco

Scientists prepare to experiment on a helpless telco

What about rogue core networks? If you can send and receive IP packets to the world outside your telco, you can connect to a SIP server (whether an IETF SIP machine in an SDP, or an IMS Call Session Control Function) out there. That means that virtual carriers - MVNOs with some of their own infrastructure - might get to be better at interesting new applications than integrated telcos. Reducing the virtuality of MVNOs a little might mean a big increase in their differentiation, and hence their value.

And companies like Wipro will be delighted to help you do it. If they can outsource a switch, or a data centre, they can outsource you an IMS core or a bank of SIP media servers. The next twist; the big IT services companies have made a living out of commoditisation for the last ten years, specialising in stripping distinct processes out of other people’s businesses and wrapping them up into bundles with hundreds of other firms’ payrolls, workflow, expert systems or whatever. Pressure on margins has been intense; volume tremendous. Telco vendors, meanwhile, have been tempted to get involved themselves; about a third of Ericsson’s business comes from its Professional Services unit, and Nokia Siemens Networks has been pushing managed-service deals to its network customers very hard.

There’s no reason to think the IT commoditisation monsters won’t climb over the wall into telcoland. Even without the extra weirdness of rogue core networks, outsourced, hosted, and managed-service offerings for all parts of telco networks will exert steady downward pressure on prices throughout the industry. As with so many other things, the proportion of end-users’ bills made up by economic rents (as opposed to real costs of production) will climb, until it gets competed away. And after all, an IMS- or SIP-based carrier network can be defined as a combination of a really big database (the Home Subscriber Server in IMS, and whichever database feeds the AAA or RADIUS system in straight SIP), a private IP network, and a data centre full of servers doing a set of applications. Wipro, IBM Global Services, and friends do all these things wholesale. This, no doubt, is also why IBM chose to develop a line of IMS-compliant application servers and leave the core to Nortel under a partnership.

Stand by for a new kind of business, whether a company in its own right or a line of business within an IT services firm; the telecoms application provider, or alternatively, the non-virtual virtual network operator. It might perhaps own its own infrastructure, but it’s also very likely that it will outsource all or part of it. You could think of it as the Telco-in-a-Shed, as opposed to the Telco in a Box. Once building and operating networks is a commodity available to anyone, all you’re left with is licensed spectrum, some users, and a tired brand. time for some product innovation or customer intimacy?

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