Dean Bubley: Disruptive Analysis report – Happy pipes worth $416bn worldwide by 2020

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Our friend Dean Bubley of Disruptive Analysis has released a report which says that Happy pipes will be worth $416bn worldwide by 2020 . I have seen Dean use the phrase ‘happy pipes’ before most recently at the LTE world summit in Amsterdam where we were both speaking. Overall, as the industry converges around the tiered pricing post AT&T’s changes, we are indeed beginning to see the ‘pipes’ being commercially happier and now they may have less to moan about the proverbial bandwidth hogs

The report predicts that wholesale market for broadband will evolve in three separate directions:

• “Bulk wholesale” is an evolution of today’s approach to MVNOs and data roaming in mobile, or loop-unbundling and open fibre access in fixed markets. The report predicts an acceleration of this type of wholesale provision, as governments force greater openness on telecoms licencees, and operators look to alternative partnerships to supply new market niches with capacity. There is also a possibility for parties other than the end-user to pick up the bill for subscriptions – for example, some local authorities are now providing free broadband to disadvantaged communities.

“Comes with data” business models have started to emerge recently, with devices such as the Amazon Kindle. Here, a product vendor or service provider contracts for data capacity with the broadband provider, and bundles it in a combined offer – the user does not have a subscription or direct relationship with the telco. The report expects this approach to be important for laptops, netbooks, tablets and various other new device categories.

• “Slice and dice” wholesale is more complex, and more controversial. This involves operators selling data capacity in fine-grained “parcels” to parties other than the user, who is typically also paying for some level of access. This type of “two-sided” business model could involve deals with consumer electronics vendors for extra high-quality streams over existing broadband lines, or to content/application providers where they pick up the bill for data transmission rather than the end-user.

Of these three, Slice and Dice seems more complex and I wonder how it would work.

Operators always speak of a mythical ‘turbo’ button where (say) a specific video could be speeded up for a fee. The problem with this scheme in a mobile context is the ‘under the bridge’ problem i.e. the customer could be paying more for the turbo feature and then ‘walk under a bridge’ i.e. lose coverage. They then ask the Operator(or in this case the electronics shop’ ) for their money back and it is impossible to prove why the coverage was poor(especially if the customer has paid a premium for it)

However, the overall concept of happy pipes seems to be on the mark.

You can see more on the Disruptive Analysis site