Bit Pipe or Profiting from the Long Tail?

Mobile network operators are always pointing to the fact that they don’t want to be mere bitpipes but would rather prefer to remain a network + service provider as they are with voice telephony today. Most have recognized some time ago that this is a rather unrealistic goal and are opening their walled gardens. But maybe this bitpipe disgust could be remedied with a different perspective on things!?

Apart from the few killer apps born out of web 2.0 (Google search, maps, Flickr, Amazon, eBay, Facebook, …) most people today use quite a number of services in the Long Tail of the web. In case you are not familiar with Long Tail economics, take a look the original article by Chris Anderson published on Wired magazine which focused on goods on the long tail but is in my opinion applicable to services as well. It is these startup or niche segment services that might give the final incentive for users to consider going online from their mobile. The "problem" for network operators is that they can’t be the provider of the killer apps, since they are already out there and they also can’t be the provider of those niche apps, since there is not a lot of money to be made in the long tail as this article by Alex Isold on ReadWriteWeb aptly points out.

What Alex also points out, however, that while you can not make a lot of money in the Long Tail but you can actually make a lot of money WITH the Long Tail as aptly demonstrated by Amazon or eBay. So now look at mobile operators: Selling bandwidth is nothing but making money with the Long Tail of the web. Sounds a lot better than ‘bitpipe’, no?

Comments as always welcome!

One thought on “Bit Pipe or Profiting from the Long Tail?”

  1. The ‘Long Tail’ is an interesting discussion for the wireless environment. As convergence takes place, participation comes in from Internet, IT/Networking, consumer electronics including games, MP3 and video. Each of the associated development groups and diversity of devices and applications want to have a seat at the table to extend their segments into the wireless broadband environment.

    The cellular industry has developed in a fashion of controlled access to devices with limited openness to developing ‘ long tails’ of specialized devices and applications.

    Also at issue is the way IPR costs are expressed: the way IPR is structured has a significant impact how ease and price structure for entrance into diverse applications and device types. While development of new Internet based portals or services is not without the potential for IPR conflicts, the relative costs are much lower than for 3G wireless – particularly the cost for startups that have little or no IPR for cross licensing.

    Nokia and other dominant mobile wireless suppliers can create and extend development efforts that become more inclusive and encourage operators to open up walled gardens to more applications and services that are developed outside of core suppliers. But this model remains mired in the incumbent business model that retains barriers of entry for long tail devices, service and applications.

    At issue is how to open up development to capture open market creativity while maintaining a significant control on how revenue develops in B3G-4G NGMN. And how to allow in more diversity while maintaining conformity and a practice of creating an environment for ‘good actors’ that does not end up in security and performance vulnerabilities. There is value in openness but recklessness in the same degree of open access found on the Internet.

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