Solution Providers: As Carriers Stop Being ‘Dumb Pipe’ Providers, The Smart Move For Partners Is To Add Value

by Gina Narcisi on October 25, 2016, 3:51 pm EDT

AT&T’s potential acquisition of media behemoth Time Warner is just the latest sign that carriers are looking to offer more than just the pipes, solution providers say.

As service providers such as Google and Neflix disrupt the video business, carriers see an opportunity to branch out from their core connectivity offerings and deliver premium content.

"The future is wireless, and AT&T and Verizon are terrified of becoming 'dumb pipes,'" said Michael Bremmer, CEO of TelecomQuotes.com, a telecom consultancy based in Moreno Valley, Calif. "The [carriers] are seeing that the way we consume media is going to be through streaming [services]."

Solution providers should instead be looking at delivering unique services over the pipes and focusing on strategic business outcomes for end customers, TelecomQuotes' Bremmer said.

"You need to sell something that has value and is sticky, not something [where] the price is going to continue to get cheaper," he added.

While carriers will require fewer partners to sell basic connectivity as their own portfolios evolve, they will still rely on them to sell business services, especially on the high end, according to the solution provider executive who requested anonymity.

"If you look at Comcast, for example, they are definitely relying on the partner community to drive sales of their business services," the executive said.

But partners still need to offer their own intellectual capital and services in order to be less "replaceable" to both their carrier partners and end customers, Bremmer said.

"If a partner has all its money coming from suppliers, you don't have a business, you have a job," he added. "Carriers will still need partners that think strategically for the more complex deals."

AT&T's competition applauded the carrier for the deal this week. Lowell McAdam, CEO of Basking Ridge, N.J.-based Verizon, said Monday that the proposed merger could shake up content companies' business models and "makes very good sense" for AT&T.

Marcelo Claure, CEO of Overland Park, Kan.-based Sprint also weighed in with positive feedback regarding the acquisition Tuesday.

"The way we look at it, it's a bold move by AT&T," Claure said. "I applaud them for taking that risk. It validates the point that content providers and wireless carriers can go hand in hand."