Broadband networks, both fixed and mobile and especially the â€˜nationalâ€™ kind, may spell the end of the industry as we know it. Iâ€™m not trying to be sensational or a harbinger of doom but there a signs appearing that many CXOs and their boards should take notice of.
The NBNs (national broadband networks) being established in Australia and Singapore are excellent examples. Although the routes being followed to provide FTTH (fiber to the home) in each country is different, the end result will be a single high-speed national network, funded primarily by the state and operated as an â€˜independentâ€™ entity, that any aspiring retail service provider (RSP) can utilize as a Virtual Network Operator (VNO). With no network infrastructure to worry about the RSPs will live or die by the products and services they can offer and at what price. Since everybody will have access to the same network at the same wholesale price it will be interesting to see who makes it and who doesnâ€™t and what tactics will be employed to win, to survive or to be acquired.
Without wishing to over-simplify things doesnâ€™t that sort of NBN sound very much like the monopolistic PTTs of old? Havenâ€™t we spent the last thirty years trying our best to deregulate markets and stimulate competition by allowing competitive networks to be built? Does Keynesian economic theory apply here?
Surely the same does not apply to mobile networks, right? Well, when you consider that they operate wholly on spectrum â€˜licensedâ€™ to them by the state and managed by the state, then you would have to say that the industry is also controlled, and certainly regulated, by the state. The big difference here is that many competing networks have been established and are slugging it out by providing faster speeds, better and cheaper services, products and applications. However, as markets become saturated and growth slows we will likely see increased M&A activity, effectively diminishing competition.
They say that things go round in circles only to come round again. They also say that history has a habit of repeating itself. One famous economic theory expounds that monopolies eventually lead to deregulation, the increased competition leads to market saturation, which in turn leads to increased M&A activity creating oligopolies and finally, in due course, back to monopoly again. That sounds a bit like the NBN story earlier, doesnâ€™t it?
Coming back to mobile networks again, and using Thailand as an example, the state has effectively throttled 3G spectrum and the state-owned operator, once a monopoly, is arguing that it should be granted spectrum until the correct auction procedures can be established. Unconfirmed rumors a rife that it has been suggested to the Thai government that all mobile networks be taken over and merged under one national mobile broadband network, with all the 3G spectrum it can handle, and the existing commercial operators act as MVNOs. No details of how much they would be compensated for the loss of their existing assets has been mentioned, these are just rumors after all.
Hmmm, sounds a lot like an NMBN (national mobile broadband network) and may be the ideal situation for an emerging market like Thailand, but how many other countries would see this as an option and how many governments would like to wrest back control of its most important national asset – its communications network. It may only take one national disaster or a major attack for a government to introduce laws ceding control of a whole industry back to itself. Donâ€™t think for one moment it canâ€™t happen in todayâ€™s world. Many years of civil liberty gains were theoretically lost in the wake of the 9/11 terrorist attacks under the guise of national security.
Does this â€˜cycleâ€™ theory hold water? Could we really be heading there? Only time will tell.