Connectivity provider operations are complex, almost anyone would agree. Perhaps everyone would agree that simpler, less-complex operations are desirable. The issue is how much less complexity is optimal?
Zero touch is one possible goal: the ability to provision any service with as little friction as possible. But there are larger questions.
One difference between wholesale and retail business models is that wholesale operations are less complex by design. Wholesalers sell only to a relatively small number of other business customers who want to use those assets to sell products directly to customers.
The reason mobile virtual network operators exist is that their business models allow for lower-cost operations. By avoiding capital investment in networks, they can focus their spending on marketing and sales.
Automation in various forms helps both wholesalers and retailers, of course. But if the purpose of automation is to lower operating costs, there are potential business levers to pull beyond automation as such.
Among recent trends beyond wholesale are co-investment in facilities, joint ventures or spinning off facilities, often to private equity firms.
Telenor, for example, has just divested 30 percent ownership of a new infrastructure company, Telenor Fiber AS.
A consortium of investors led by KKR includes Oslo Pensjonsforsikring as a co-investor.A bit unusually, the new fiber company’s sole customer will be Telenor. Most other wholesale entities want to be able to sell access services and capacity to all comers.
The motivations for such asset sales often include raising cash for other purposes such as reducing debt or reducing the expected cost of new infrastructure.
All such deals, however implicitly, do raise questions about the value of access infrastructure assets. Such assets are an essential feature of modern computing and application usage. Less clear is the strategic value of digital infrastructure ownership. Mobile towers provide an essential function, but no longer are universally viewed as “must own” contributors to business value.
Many mobile operators have concluded they can acquire radio sites as an operating cost, rather than investing capital in owned networks and facilities. Some fixed network operators seem to be concluding that full ownership of access networks is not necessary.
In other markets, such as Malaysia, structural separation (retail mobile operators lease network services from a third party) might be acceptable, but with mobile operators also owning portions of that asset.
More automation of operations--for both wholesale or retail operations--obviously is a good thing to the extent that it lowers operating costs and boosts customer satisfaction. But more automation is an example of the distinction between efficiency and effectiveness. “Efficiency” means doing what you do with less cost and overhead. “Effectiveness” means doing things that matter.
Automation, ostensibly a matter of efficiency, also can raise questions of effectiveness. Where does greater value lie: automating present practices or automating different processes. In the past, we used to describe such choices as “digitizing your business practices without redesigning them.” The often preferable option was to change business practices using new technology.
Choices to automate often should also include a deeper examination of what needs to be done, and why. Perhaps the greater value comes from reimagining what has to be done, and by whom.
