Mobile Operators Cannot Fully Escape "Dumb Pipe" Business Role

At a very fundamental level, no mobile or wireless services provider can ever fully escape being a "dumb pipe provider."

With the caveat that the future cannot be predicted, it is a relatively safe bet that “dumb pipe” services (simple best effort access to the Internet) will be an enduring function and possible revenue stream for Internet service providers and other communications service providers.

In fact, that “prediction” flows simply from the architecture of present and likely most future communications protocols, the most important principle being that networks, applications and protocols are loosely coupled.

In other words, there are application program interfaces and protocols for communicating between functions and layers, allowing what happens within each layer to be disaggregated from the rest of the ecosystem.

At a high level, that is why the constant concern on the part of Internet service providers that they might be relegated to low value, low margin “dumb pipe” status is understandable, but in some ways unavoidble.

For the most part, that separation of applications from access was decided the day Internet Protocol became “the” major protocol for communications globally. As this chart by Telstra illustrates, the “network” (transport and access) is separated from the apps enterprises and consumers want to use.

That is not to say every valuable app is an “Internet” app. Many important managed services continue to be offered, ranging from carrier voice and messaging to video entertainment and other private and specialized networks.

Still, for the most part, modern IP networks necessarily separate apps from access. Functionally, that makes the whole network a dumb pipe. That is how the protocol works.

For that reason, it is virtually impossible for any communications services provider to avoid operating as a dumb pipe, for a goodly portion of its business. In fact, to the extent that an ISP makes money serving consumers, it is, by definition, doing so as a dumb pipe provider.