Making the Carriers Earn ItMaking the Carriers Earn It

All things considered, the carriers have built great networks. Perfect for running other people's applications on.

Dave Michels' interview with David Gurlé is fairly long, but it's a very fast read, because Gurlé is such a keen observer of the industry, and offers so many great insights about the key trends, especially those relating to his former employer, Skype.

For my money, the best answer Gurlé gave was to Dave Michels' question about the advice he'd have for the carriers:

"The carriers will always try to move to a world they control end-to-end. I don't want to be too tough, but they are not on your side. The Internet didn't come from the carriers even though they had the ability to create it. They had the vision with ISDN but didn't have the business case to take it to the mass market.

The carriers have to earn the right to own the application. If we had developed Skype for just one carrier, it would not have been nearly as successful. Applications must be universal. All of your calls won't be in one network....Either you know you can't be in the application space, and be the best at being open to applications (the people that move first have the advantage). Or, if you want to be in the application space, it is universal and follows different rules that build beyond the core network."

The carriers have to earn the right to own the application. If we had developed Skype for just one carrier, it would not have been nearly as successful. Applications must be universal. All of your calls won't be in one network....Either you know you can't be in the application space, and be the best at being open to applications (the people that move first have the advantage). Or, if you want to be in the application space, it is universal and follows different rules that build beyond the core network."

Saying that the carriers "are not on your side," isn't too tough; if anything it's too tame. The carriers aren't on your side, and I guess they'd face shareholder lawsuits if they truly were. From the earliest days of the Bell System, carriers have understood the value of having a vertically integrated monopoly, and they clutched onto that prize with all their might for as long as they could, until it was pried from them by force.

I especially liked the line that, "The carriers have to earn the right to own the application." I think that gets it just right. The carriers always gave the impression that they felt entitled to own the application, and back when the only application was voice on a 56-kbps analog channel--and that application was inseparable from the copper wire that carried it--maybe they even were so entitled.

But as Gurlé points out, when the application was separated from the network and became known as the Internet or the World Wide Web, the carriers weren't interested in winning by providing a better product; they held back on DSL deployments and let the cable companies steal the march on them in residential broadband. And they generally pouted about not being able to dictate terms to all parties involved in this new Internet thingy that so many people were making money off of by running services over "their" pipes.

No one knows better than David Gurlé how doomed that carrier model was; it was Skype that basically killed the long-distance POTS telephony business, or at least delivered the coup de grace, as the French-born Gurlé might put it.

So can the carriers earn it? I think the real question is, do they really want to? As much as everyone has denigrated the idea of "bit hauling" over the years, the fact is that this is one job the carriers are actually quite good at, over both wireline and wireless networks. And they make sturdy profits doing so. They aren't yet delivering the applications, but still are making a lot of money running networks.

Especially on the wireless side, they even compete on the quality of their bit-hauling--"Can you hear me now?" And lest you think that's a latter-day, 3G-cellular phenomenon, ask Dave Michels where he got the name Pin Drop Soup for his blog.

All things considered, the carriers have built great networks. Perfect for running other people's applications on.