The telecom company of the 21st Century is hereby dubbed the “Softcom.” Gone are expensive installations and maintenance of PSTN networks. Gone are service engineers putting in customer premise equipment. Gone are digital switches transmitting voice traffic across billions of lines of copper fibre in the ground.
Softcom’s hallmark is its use of software, soft-switches and the Internet Protocol to route data across millions of Internet routers across the world. Voice is just one of many data applications across its myriad of IP connections. Broadband connections to the home and office have opened up what was the privilege of those who owned the last mile. Customer service is courtesy of your best friend.
Even the most mundane industries change. And in that flux of change lie exciting and lucrative opportunities.
Don’t presume the future lies with a new kid on the block! Apple has proved time and again that it, not the start-up, is the custodian of innovation in the otherwise mundane and commoditized PC industry. Innovation and disruption can happen at any juncture – and by anyone. The Softcom may be the most likely agent of change; but it’s far from guaranteed to be the only agent or to succeed.
What does this new Softcom look like? What are its assets when it runs on an asset-light basis? What will be its revenue model? If it ultimately has to play the voice minutes’ game, will it end up being any different from the telecom it seeks to displace?
What does this mean for the telecom company as we know it? What does it mean to own legacy infrastructure? Does it fight the Softcom, partner with it, or indeed, become it? Will its deep technology, customer base and telecom operations experience ultimately make it a winner?
What does this mean for the mobile network operators? Will the Softcom challenge its ubiquity? And drive prices down to nothing. Will the fixed line telecom and the Softcom become best friends and take on the MNOs?
Is the triple play of voice, data and video is just the beginning of things to come? If that’s the case, why won’t that get ultimately commoditised making the Softcoms and telecoms companies just like other utility companies. Telecoms could look more like cable companies with data pipes being their business.
From the Internet world, we learn it’s not just content but transactional content that wins. WYSIWYG doesn’t make money, it’s What You See Represented Is What You Get, that does. Put simply, it’s not the feature on Slate magazine that makes money – it’s the deed of a house ownership sold on eBay that does.
Will that make money for Softcoms, telecoms and MNOs? Could the most valuable service be the enablement of transactions? From money transfers, payment systems, betting and online banking, the most valuable service might involve the trading of cash itself.
The future is unknown. That’s what makes it exciting. And that’s what we’re here to talk about.
(ARIADNE CAPITAL’S 4TH ANNIVERSARY EVENT, LONDON, JAN. 18, 2005)
