1. The video-cloud business model is a third trajectory


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The video-cloud business model is a third trajectory

The third trajectory

Up until now the communications world has been based on two major business models – the voice model and the internet model. We are about to enter the third major business model era, and the change might be bigger than most players in the market expect.

The voice business model was based on minutes and initially on a differentiation on location – in other words, local, national and international. The basic model was applied across both fixed and mobile voice. The voice business model did not support internet. It started to collapse for dial-up data in the late 1990s, and a new model emerged with the large-scale introduction of DSL and cable.

The internet business model is based on a mix of “all-you-can-eat,” and peak-rate-speeds and monthly-data-bucket alternatives. The model was pioneered for residential internet and later adopted for mobile broadband. Customers are used to a mix of freemium applications for the data paradigm. Business internet/intranet services have evolved from their FR/ATM/leased-line legacy. The internet model does not support the growing video-cloud services in the marketplace, where consumer value is not correlated with bits and bytes.

The video-cloud business model for the Networked Society is yet to be defined and a lot of innovation is still to be expected. Here are some important boundaries for this model:

– New traffic patterns from video and cloud-based applications are defining the demands on next-generation communications infrastructure.
– New service paradigms enabled with software-Defined Networking (SDN) capabilities introduced in service-provider networks and tightly coupled to cloud-data centers.
– Consumerization of business services and a migration to an increasingly mobile workforce.
– A new balance for end-to-end services, with connectivity providers and application providers needs to coexist and support each other.

My predictions about the creation of the Networked Society business model supporting a video and cloud-centric world is:

– A value-based business model, diverting from the proven voice and internet models, where time/bits and volumes are key.
– It will be shaped from 2013 to 2015 in a few leading markets, for mass market adoption from 2016.
– It will be the business foundation for accelerating SDN/NFV introduction across fixed and mobile networks.
– It will contribute to major traffic shifts across LAN, metro and core networks.

Written by Peter Linder

Peter Linder is a Networked Society evangelist at Ericsson. He describes himself as a versatile visualizer, alliteration aficionado, movie maker and kinetic keynoter. His contributions focus on seven fields of market development: #SocietyShaping, #IndustryInnovations, #DeviceDiversification, #UnlockingUsers, #VersatileVideo, #NetworkNovelties and #BoldBusinessmodels. Peter joined Ericsson in 1991 and is currently based in Dallas, Texas.

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