Three Battlegrounds in the War over the Broadband User

Apple’s thievery continues. 

At the beginning of March, Apple replaced AT&T on the Dow Jones 30 Industrial Average.   It’s unlikely that when AT&T first introduced the iPhone in 2007, they understood the significance of allowing the use of an Apple ID as part of the onboarding processes.  This was likely the first time AT&T allowed a direct user relationship between a third party and their end user.  Not one to waste an opportunity, Apple took advantage of it.  This seemingly innocent business arrangement helped Apple build device and content ecosystems around end users, contributing to what would eventually become the world’s most valuable company.

AT&T, with pre-existing relationships with every wireless subscriber in their base, couldn’t be overly thrilled with sharing an end user with Apple.   And, through the twists of the digital age, these users have even more new relationships from next generation players like WhatsApp, Netflix and Google.

And so emerges the war over the broadband user. 

On the one side we have the Operators.   Operators are Telecom and Cable Companies like AT&T and Comcast.   They build and run the broadband networks on which digital services run.    For years and years they bundled digital services like voice, messaging and television with their networks.   And while they still offer these bundles, end users are unbundling the network and using new Internet-delivered digital services like iMessage, Hulu, Skype and others.   These services are offered by the challengers; the Over-the-Top, or OTT Companies.

At the intersection of the broadband network, and the digital services that ride over them, is the end user.  

As Accenture notes in its 2015 Vision,  “the end user is at the center of every digital experience”. 

Operators will continue to own networks on which services will ride, and compete with each other to supply the user’s broadband.   Operators and OTT companies will compete fiercely as purveyors of the digital services that run on top of those networks.   Some OTT companies, like Google, are even building networks and becoming Operators on their own.   

With so many networks and digital services offered by Operators and OTT companies,  end users have tremendous choice.  But with choice we have to manage what becomes a fragmented experience.  Cobbling together a TV experience by piecing WIFI, broadband, Netflix, iTunes and traditional cable isn’t exactly seamless.  If someone could tie it all together, we might hand over our entire relationship to them. 

Winning the broadband user will depend on creating a digital experience that compels the end user to create a multi-service relationship with an Operator, or an OTT company.    This war is being fought week-to-week on a few key battlegrounds that anchor our digital experience.    While we don’t know who will emerge victorious, here is my take on 3 key battles underway today:

1. Communications: The First Frontier

While this battle - beginning with original VoIP upstart Vonage - has been ongoing for 15 years, stakes remain extraordinarily high. Witness Facebook buying WhatsApp for $19 billion.   As communicating one-to-one remains core to our social fabric, and as we find new ways to stay in touch with each other, digital services (Facetime, Facebook, Viber, Oovoo, WhatsApp & Instagram) may challenge the phone number as your primary calling card. But so far, most of us still prefer those ten digits.  Advantage: Operator

2. TV: An Increasingly Fragmented Landscape

My friend Jim has a Netflix account.  He’s set up profiles for his wife Maureen and his daughters Katie and Maddi.  He also subscribes to cable television and has an arsenal of Game of Thrones episodes downloaded from Apple’s iTunes store.  Seven years ago – putting aside Blockbuster - his family’s broadband ‘audience’ was tied to solely to his cable operator.  No more.  As Millennials shift everyone's behaviours to mobile viewing and binge watching, Over-the-Top players sit well positioned to disrupt and effectively destroy the traditional viewing model.  Advantage: OTT

3. Connected Home: Unchartered Territory and the Final Chapter 

Cisco's CEO John Chambers stands firmly behind his firm's vision of the Internet of Everything.  This is the age of the cloud, and as he said on eNBC’s Squak Box, “everything will be connected”.  So, who will it be that gives us seamless access to our connected things, from light bulbs to music, from home security to wearables? Will it be Google through their $3.2B acquisition of Nest? Apple's HomeKit? or AT&T's Digital Life? The future here is wide open.   Advantage:  TBD

The Victor Will Be Determined By…

Operators have a long way to go before they can effectively manage the relationship and lifecycle of every end user, seamlessly across services. Their existing systems are loaded with constraints that prevent a fully digital experience that can aggregate communications, entertainment and connected home services.  And OTT companies have a clean slate upon which to innovate, but are a long way off from seamlessly integrating the network connectivity that the operaors have spent billions building.  

As long as the intersection of these two domains remains the end user (which it will), the war will be won by the players who can deliver a fully digital, seamless and personalized experience across networks, services and devices. 

Sooner or later, someone will put it all together, and begin taking hold of the broadband user, once and for all.