Cable service providers need to offer more than ‘dumb pipes’

[Commentary] The notion that telecommunication company carriers and other service providers have provided little more than basic connectivity has been an industry hot button for quite some time. Even now, despite a number of efforts to spice things up, most telecommunication companies and cable service providers are seen as companies that provide a very indistinct connectivity service that people only reluctantly pay for. The primary differentiators for competitive players in this space are price, price and, oh yeah, price, with maybe a bit of coverage or service quality thrown in for good measure. It’s little wonder that many consumers hold these companies in such low esteem — they just don’t see the value in the services beyond basic connectivity. It’s also not surprising that so many people are looking at cord-cutting, cord replacement and other options that attempt to cut these service providers out of the picture. But it doesn’t have to be this way.

The amount of data that telco and cable service providers have access to should allow them to generate some very interesting, useful and valuable services that consumers should be happy to pay for. Admittedly, there are some serious privacy and regulatory concerns that have to be taken into consideration, but with appropriate anonymizing techniques, there are some very intriguing possibilities. The fundamental problem is that service providers act more like utilities than companies that offer services people are happy to pay for, such as Netflix. There’s little sense of personalization or differentiation from service providers, and the aforementioned router/gateway boxes they currently force into consumers’ homes are a classic example of that utility style of thinking. Honestly, if your power company was to put a box into your home, do you think it would look much different?

[Bob O’Donnell is the founder and chief analyst of Technalysis Research LLC, a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community.]