Digital service providers know that connectivity alone isn’t all that consumers want.
March 10, 2016
I think I’ve achieved broadband Nirvana – but it feels remarkably as if nothing much has changed.
I’ve recently subscribed to a fiber-optic Internet service that has a maximum upload and download speed of 1 Gbit/s, and, while my devices and Wi-Fi router can only handle a fraction of that bandwidth, it’s hard to imagine I’ll ever need anything faster.
While it’s great as it is to have that kind of bandwidth on tap, the process of getting connected revealed quite a bit about how service providers, even the ones that sell 1-Gbit/s fiber-optic connections, are struggling to be much more than basic connectivity providers.
In the U.S., especially, cable and telecom operators are spending billions on mergers and acquisitions to control as much of the consumer experience as they can – the connectivity, the content, and the delivery. For those businesses to be true digital service providers (DSPs), they’ll need do more than just provide a lot of services. They will need to know their customer and react with that context in mind each time an interaction occurs.
Today’s Internet innovators are providing that kind of specialized service. They’re nimble, agile companies that can personalize a service, while still offering it at scale and keeping the price competitive. Netflix, in fact, is a good example of the kind of company today’s service providers are being compared to by their customers.
Netflix has amassed 45 million customers in the U.S. alone, making it the nation’s largest video subscription service. The company doesn’t provide the connectivity that powers its video streaming service, nor does it make or sell the devices that deliver it. Instead, Netflix provides great content that’s always available, on any device, and it makes decent recommendations about what to watch next. No cable, satellite or telco pay TV service I’ve ever used has come close to doing all those things well. One of the best things about my new home Internet connection is that Netflix looks better than ever.
The most surprising thing, so far, about having a really high-bandwidth connection is all the stuff you can’t do. When I ordered my 1-Gbit/s home Internet service, my service provider provided a new DVR that recorded and stored more TV shows.
Can I watch this heftier collection of recorded shows on more devices? No, just on the TV. Can I share shows with friends that subscribe to the same pay TV service? No, just use Twitter like everyone else. What if the DVR automatically recorded shows that matched my viewing preferences, just in case I want to watch them? Nice idea but, no, that’s not available. Can I get 4K TV? Not yet.
What else can I do with this bandwidth? Online data backup, of course. I take tons of photos, and I’ve been backing them up on hard drives for years. It’d be great to have copies on a cloud backup service somewhere offsite. The catch? The online backup service I had been using for basic document storage only allowed for uploads at speeds around 1.5 Mbit/s or so, even though I was using a fiber-optic connection. That never mattered before, but it certainly does now. I spent a few hours researching other online backup services and found one that allowed you to upload data at a much faster rate. (Incidentally, Google offers a terabyte of storage for backups with its 1-Gig Internet service.)
A true DSP might have provided a very different experience from the very beginning. A DSP would, for instance, be connected with an ecosystem of service providers that it could recommend for things like online backup that offered speed as well as stability. It might also provide a self-service portal for me to discover and activate new services that would put my faster Internet service to good use.
A true DSP would do more than provide connectivity – it would think about what that connectivity enables me to do, and what I might want to do next. It would provide ways to store, share, and discover new TV shows and movies on whatever device I wanted. It might also make use of virtualized customer premises equipment (vCPE) to turn on cloud-based services for the home: multidevice parental controls, networked DVR, security, device backup, home monitoring and home automation.
I think this is a really interesting snapshot of the current trend: Companies that mostly focus on connectivity are gradually becoming digital service providers. They have a big challenge ahead of them, but by working with the right technology vendors and strategic partners, they can become the kinds of companies that provide networking capabilities and new digital services on demand, at scale and in the cloud.