We all know that incumbent telecoms operators and service providers around the world are facing a massive 're-think' of their business models and strategies as they encounter the increasing impact of the abundance of the digital technologies that are threatening their hitherto secure revenue streams.  Anyone who has any real understanding of this movement of tectonic plates will appreciate that at its heart is the issue of whether the incumbent and community of conventional, vertically integrated telco service providers should focus on being 'infrastructure utilities' (and all that entails in terms of reduced risk and lowered returns) or whether they should focus on being service, content and application service providers.  Many of these incumbents remain in two minds - facing in both directions.  It is my contention that those that persist in this schizophrenic mindset, will eventually end up facing disaster.  Meanwhile, they are pouring millions into the pockets of managing and strategy consultants to help them find an answer.

Now, those of you who know me well, will find it no surprise that I hold a healthy disdain for consultants - few of which, from my experience, manage with integrity to square the impossible circle of, on the one hand, "...telling it like it truly is" and on the other, "..keeping the client happy and on the fee-hook."   It is often an impossible fence to sit on and, not surprisingly, most consultants come down on the side which secures the relationship with their client.  Therefore, as telecoms incumbents face the ultimate challenge outlined above, of deciding which way to face the future, I was most surprised and extremely encouraged last week to read an article written by a leading European telecoms consultant, George Salisbury.  It is entitled, 'Trends in telecommunications services - does the traditional operator have the advantage' and you can read the entire article here.  George is Managing Consultant for Detecon and is in charge of the "Technology Strategy" group.  The front cover of the article suggests that there is only "One Way" - in whichever direction that may be.

Let me make a few choice quotes from George's inciteful paper.   "...The creation of the current generation of packet based IP networks has proved to be a "double-sided-sword" for the network operators.  They have found that it is possible and economical, to deliver multiple services that require different transport capabilities over a common (IP) transport infrastructure.

The problem, at least for the network operators, is that end-users have discovered this too.  End-users have found that the internet is capable of transporting interactive voice and interactive video and of delivering real time multi-media streams, without requiring any service support from the Internet operator beyond simple packet transport."

The paper then presents some fascinating and well researched data which basically concludes that an owner of network infrastructure enjoys an ever reducing competitive advantage in the marketing of services or content in the IP world compared with third-parties without network infrastructure.

This may be self-evident to those of us whose 'minds are open to open networks' and who inhabit the world of Bit-Torrent and P2P behaviour, but this is brave talk from a leading telecoms consultant whose pay check depends on keeping his clients sane and alive.

George then outlines a number of radical ways in which a network operator can respond to this challenge - all of which I basically agree with as being the only options available.  He ends his paper with the following words of wisdom, "Before following one of the above courses of action an operator is advised to consider:

• how the regulator will respond
• how the user will respond
• how the competition will respond."

Well, that's good advice!   Oh, and I forgot to mention earlier that Detecon is owned by Deutsche Telecom!  Makes me think of those words of wisdom from the New Testament (Luke Chapter 4:23), "Physician heal thyself"