Friday, 18 January 2013

The fossilization of networks


Facebook’s release of a voice call service via its iPhone app is the latest in a string of ‘over-the-top’ telecoms services. They follow a common pattern:

  • an emergent business delivers high-value innovative teleservices over an incumbent network operator’s low-cost data bearers 
  • the over-the-top service provider’s relationship with its consumers is strengthened, at the expense of the network operator’s 
  • the network operator’s service becomes a substitutable commodity, while the over-the-top service claims unique appeal. 
Facebook out-competed the telecoms network operators because of its ability to respond to evolutionary pressure. The network operators were large and few, and couldn’t take great risks. Tech startups were small and many: most of them failed, but Facebook happened to succeed, and its value-added service attracted a kind of user loyalty that vanilla telecoms carriers can’t hope for.

But what’s going to happen when the next wave of tech startups throws up the value-added services that trump Facebook and its kind? Presumably, they’ll offer over-the-top services on top of Facebook, Google+ and Bebo. We should expect a succession of over-the-top service layers, each commoditizing the one below, each having a brief era of novelty and loyalty, and each being in turn commoditized by the next layer of over-the-top icing. The overall service architecture will be layered like the layers of sedimentary rock, each layer presenting a stage in the service’s evolution. 

Will there ever be opportunities to drill down, to re-factor that fossil architecture and optimize it for its evolved usage? For example, by building mobile networks that are optimized, from the radio layer up, for social networking? It seems likely that the market dynamics of service operators (which tend to become large) and innovators (which tend to be small) will prevent it. We won’t escape our fossil record.

1 comment:

Clive Tomlinson said...

Fossilization in action:
"Instant messaging on chat apps, such as WhatsApp, has overtaken the traditional SMS text message for the first time, according to research firm Informa."
Thus says the BBC today: http://www.bbc.co.uk/news/business-22334338

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