Name your own price...for wireless Internet bandwidth

So, would you like to name your own price for high-speed Internet access? It may sound a bit far-fetched, but it may be on its way – imagine William Shatner over your shoulder telling you to demand $1 for unlimited 4G wireless for the day. Don’t think it can happen? Well, let’s take a look at the competitive environment for your wireless bucks.

Competition is the engine that ignites innovation. One product emerges, such as the iPhone, and sets the standard by which all other products are measured. This type of competition drives to differentiate a product in order to break away from commoditization to gain market share without having to engage in cut-throat pricing.

Consumers and business benefit from this type of competition, getting higher performance and more features from a larger number of companies. However, there is another type of competition that also benefits consumers and business alike. Essentially based on the commoditization of a product or service, price competition, driven by consumer selection increases the value received by enabling the consumer choices in the selection of a lower cost item or service.

So, what does this have to do with telecommunications? The general observation is that communications equipment has commodity items and competition that has driven down the cost of routers, switches, and optical transport equipment. For service providers, it has also dramatically lowered the cost of Internet services. This includes both wired and wireless.

For this article, let us focus on Internet services. Anyone with experience in purchasing wired Internet service knows that much of the cost is driven by the number of access providers that have their own transport assets into your building. If there is only one, then you are at the mercy of the provider, if there are several then even a bit of negotiation can significantly reduce your cost for service.

However, right now, there is a robust market of multiple providers that exist virtually everywhere. This is the wireless marketplace. Only a few years ago, with the best wireless Internet service limited to around 1Mbps download and several hundred Kbits per second, these services were good for road warriors, but not as a replacement for wired services (or WiFi connected to a wired service). The situation changed a bit with 3G services, and now even more with multiple 4G service providers available and more on the way. This means that there are multiple service providers banging into your mobile devices that can provide multi-Mbps enabling a whole range of applications.

The wireless companies want to lock us in to contracts, or at least monthly plans, at a fixed cost and fixed maximum use (without paying an additional cost). However, at any moment, unlike the wired situation, you are surrounded by multiple wireless providers, each providing essentially the same commodity services. But with a contract or device limited to a single provider, it is not possible to take advantage of this rich access environment.

This situation will change. With embedded 3G and 4G multi-band capabilities built into portable devices (e.g., laptops, tablets, phone, etc.) and new market could emerge that puts the power of the moment and choice in the hands of the user. Like Priceline, a user would advertise the fact that Internet service is needed and either set a price or let a real-time market set the price. Competition among the several carriers will most likely drive the price down, providing the best value to the consumer. This type of service could be implemented via a subscription service that will handle the auction, and then enable the programming of the wireless device to use the selected service. Options would then exist for improving the current pricing schemes of monthly data transfer caps. For example, it may be possible to pool multiple accounts, by using a central administration and allocation mechanism that dynamically assigns an account with ample unused data transfer available to a requesting mobile device.

So, when will this happen? With applications demanding more and more bandwidth, the flexibility of our mobile devices increasing, and the volume production of flexible wireless hardware, one or two things will happen, each to the benefit of consumers and business users alike:

• One of the several 4G wireless providers will decide to break with the pack and introduce higher data caps or even a plan with no cap at all
• An enterprising company will develop an approach to enable reverse auctions or bandwidth pooling

Maybe both will happen, or not, but the precedent has been set in other areas of business including:

• Least cost routing for voice call termination
• Reverse auction hotel costs and airline fares
• Credit cards that offer travel points on any airline

New business models are starting all the time, maybe this is one that is about to get some wireless legs.

Orchestration - It Should be the Focus of Most IT Organizations

You've got the best Information Technology (IT) department in the world, your organization develops and cranks out new applications and capabilities to your customers both internal and external like clockwork – you are the Chief Information Officer (CIO) of the century. However, one day you wake-up and find the IT world has actually passed by you and your company. How did that happen? Just yesterday it appeared that all was well.

Well, several things happened. Your crack team:

1. Loves to run systems
2. Loves to buy hardware
3. Loves to interact with vendors
4. Loves to develop code
5. Staffs for each new requirement 
6. Staffs to maintain each new application

All this sounds good, so what is the problem?

This is a team that hugs its environment. They want to be able to see their babies, listen to the noise of the fans, and watch the blinkin’ lights. This may also be shared by executives who want to see where their money is going. High self-esteem for the team is generated from having vendors come in and parade their wares, and doing show-and-tells of the latest feature or cool system configuration trick to corporate leadership.

In addition, the organization likes to grow. Success for many is measured by the size of the organization. So, for each new business demand, the size of development team increases, the size of the IT infrastructure increases, and the operations staff to keep it all working increases.

These two elements combined to cause the IT organization to stagnate. The organization grew too large and the culture becomes focused inwards on the tools and systems developed. Your competitors become more nimble and out execute your organization. As CIO, you see this coming, and want to take action to fix this (just as your CEO is starting to get on your tush).

There are several options you can take, but you really want to understand the root cause of the problem. To get a bearing, you engage some excellent consulting firms, and they tell you all about the best practices that will enable a technical course correction. You put the plan into action. You get your IT team trained based on consultants’ recommendations and you set expectations and goals. You wait for the changes. However, the changes do not come. What was the missing ingredient?

The problem is that the change necessary was not directly technical, but related to the overall manner in which your organization is run. The change is not technical but directional. The change is from engineering to one of “Orchestration”.

Orchestration means that you need to change the culture of an organization that loves engineering IT solutions. The culture needs to change based on new thinking and new goals as the current culture which hugs things must now embrace software and system capabilities that exist outside of their direct control (paraphrasing Obi-Wan: “use the Cloud…Luke”). For customized applications, a new development approach, based on commercial tools environment needs to be created that enables targeted outsourcing of development. The culture must understand what must be done internally, and what can be competed and placed into the hands of other companies. Engineering and development is only one of the dimensions, the other is to ensure that operations is also uses an orchestration model, tailoring its support to the specific items of high-value to your organization, and not to areas where benefits of scale are best served by another provider.

The is the approach that Netflix has taken in choosing not to continue to own and expand their own data centers, but to outsource virtually all of their IT system growth using Amazon Web Services. The basic issue was that the cost of scaling their own environment could never keep up with the cost to performance capability provided by an outsourced Cloud Services provider. In addition, it enables Netflix to focus on its real capabilities – obtaining content and differentiating their services in a competitive marketplace.

Some actionable points for an “Orchestrator CIO”:

1. It’s the Job. Get the team together and tell them that they love their job and not machines and software
2. Benchmark. More than determining comparative costs of different internal IT approaches, you need to benchmark against costs of completely alternative implementation approaches
3. Move Budget. It’s difficult to affect change if the engineering organizations control their budget and continue to do what’s comfortable. Move the money and move the organization
4. Reward. It cannot be all punishment (moving budget, benchmarking that the current approach is not cost effective, etc.). There must be a method to reward innovation and risk taking
5. Never Rest. Practice Constructive Non-Complacency