What is Your "Core Competence?" Maybe it Is Not "Knowing How to Run Big Networks"

Liberty Global is looking at selling its Belgian tower network. Separately, Liberty and Telefonica are investigating selling  U.K. towers as well. Both deals illustrate the changing value of asset infrastructure in the mobility business. Where once tower ownership was considered essential, it now is considered optional. 

That in turn raises logical questions about the value of towers as business moats. As it turns out, ownership of radios on towers, and not the towers, is considered important. Ownership of spectrum licenses also remains strategic. 

In a tactical sense, mobile operators have found they can raise capital to reduce debt or increase investments by selling tower assets. In a strategic sense, the move to divest towers, create joint ventures or wholesale-only access in the fixed networks business raises questions about the business moats formerly provided by ownership of scarce access networks. 

Many of the same questions could be raised about digital infrastructure assets of other types, including data centers and optical fiber assets. To the extent that owners are willing to sell off all or parts of their infra assets, that suggests a business decision that such actions preserve what is essential to the business while creating greater liquidity. 

But the corollary is that those assets might not be sources of business advantage they once were thought to be, in whole or in part. 

As the asset light business model gains more traction, issues about structural separation, once thought to be a regulatory issue, not become matters of business strategy. In a growing number of cases, access providers are choosing to deemphasize asset ownership in favor of a more asset-light approach. 

Often forced by necessity, such moves still show a belief that some parts of the digital infra asset base can be shed without loss of too much competitive advantage. 

There are other corollaries. Telco executives once claimed that their core competence was “knowing how to run networks.” That makes less sense once ownership of the networks is given up, in part or in whole. 

So “running networks” turns out not to be the core competence. That might come as a shock to many who work in the industry, but is an inescapable conclusion. The ability to shape the regulatory process might arguably be closer to “core competence” than the ability to run networks.