Paul Gainham is Juniper Network’s senior director for solutions marketing EMEA

By Paul Gainham, Juniper Network’s senior director for solutions marketing EMEA. 

As a UK citizen, I have the somewhat dubious privilege of being able to select the supplier of electricity to my house. Those suppliers, who number around five or six, are well known major utility companies who compete with each other in an open market, the downstream supply side of the electricity marketplace having been privatised in the UK some time ago. Clearly, the supply of electricity to any household is vital – without it, mine and my family’s lifestyle would be severely impacted.

And yet, curiously, I attach zero value to it.

I expect it to be delivered; I expect it to be there when I need it and most crucially, I will look for the supplier who provides the best deal in terms of who I select to supply it.  In essence, this is the definition of a true commodity market – a market (in this case) which is vital, yet holds no value in the eyes of the purchaser and is traded for on price, and price alone.

When I see the discussions, the energy and the investments the mobile operator community is making in LTE, small cell deployment, hetnets etc. I wonder if the industry is making the fatal mistake of confusing ‘vital’ with ‘valued’.

To be clear, the drive to install capacity and coverage that began in the days of 2G is vital. Users need and demand higher and higher speed access, but there is no inherent value in bandwidth – it is a commodity and to my opening analogy, commodities get traded on price and price alone, there is no long term differential value to be had from them.

Of course some operators may get the ‘bounce’ from being first to launch a service in their area of operation, but history teaches us this is only a temporary benefit.

I wrote in a previous blog that the new currency of LTE is experience and exclusivity. Mobile operators, whose goal it is to develop a long term value differentiated business model need to be much more focused on layering incremental value on top of the transport layer, not focused on the transport layer alone.  The only winners in that model are the content brands.

So, how did we end up here?

Quite simply, user expectations have been set that high-speed broadband, whether delivered in fixed or mobile formats is almost a ‘right’, a table stake.

Human emotions tend to develop in similar phases around new trends and developments and whilst I grossly oversimplify here, it could be argued that those are

  • Phase 1: Excitement – the service is new, cool and the latest ‘must have’.
  • Phase 2: Expectation – the service is widely available and has become mainstream.
  • Phase 3: Exceed – I expect and want to see more.

If you looked at mobile in a standalone manner in the context of LTE launches, it could be argued that aggregate human emotion will be at phase 1 – a phase where clearly operators have an opportunity to maximise revenue and differential.

The reality is that users have become conditioned to the benefits of broadband from the world of fixed and that operators launching LTE services will be doing so into a user base that is more likely at Phase 2 or 3 of aggregate emotion, not Phase 1.

The golden lesson for mobile operators in all of this is that whilst capacity and coverage are indeed vital, they are not necessarily valued. The key to long term value differentiation lies beyond the basics.

To paraphrase a famous statesman’s quote, “capacity and coverage is not the end, nor are they the beginning of the end but they are the end of the beginning”.

Juniper Networks is shortlisted for two categories in the LTE Awards 2013; the Best Mobile Backhaul Solution and the Best LTE Security Product. Paul Gainham will be part of the Juniper team at LTE World Summit and invites you to join the Juniper professionals to find out more.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

Tag Cloud

%d bloggers like this: