up in the air

Verizon is terrified of it. Time Warner is trying to bundle their way out of it.  Dish and DirecTV are desperate.

Carriers, cable companies, and satellite providers are all trying to stay relevant. They don’t want to just deliver data service to us. They want to provide content, additional services, apps, and anything else they can tack on to our monthly bill.

The question is, how long can they keep the charade up? All that matters is data. I don’t care if my iPhone is on Verizon or AT&T. And I could care less if I place calls over Skype or the cell phone network. All I care about is a fast, quality, reliable connection.

I don’t care if I watch a movie on Apple TV, Netflix, or HBO – I just want to be able to watch what I want, when I want it. And I could care less if the picture is delivered via cable, satellite, or the Internet.

The advent and increasing domination of VoIP (voice over IP) is making traditional phone companies and even wireless phone companies irrelevant. Skype requires only a data service to make a phone call to anywhere in the world. And Netflix is killing cable and satellite. Why pay $150/month for “cable” when you can pay $10/month for Netflix and watch whatever you want, on demand? Other services like Boxee, Hulu, Amazon, and Joost have great video content and only require an internet connection to work.

The first provider that wakes up and realizes it’s not so bad to be a dumb data pipe will win, because that’s where they’re all headed anyway. People want what they want, when they want it. And to have a great viewing, listening, or call experience, all that’s required today is a quality data connection. In short, with high speed, always on, available-anywhere data, you don’t need anything else other than the data itself, with independent services on top.

It wasn’t always this way. Providers used to add value, and it used to be huge business (anyone in the music industry eight years ago will remember how lucrative the ringtones business was). But it’s not anymore. Providers are scrambling to not become dumb pipes. And it’s the wrong strategy.

Here’s a new strategy. Embrace the dumb pipe. Become the best damn “dumb pipe” out there, with the most reliable connection, highest speed, and lowest cost. Work on making things like carrier billing efficient and inexpensive. Do that and you can replace physical credit cards. Build an ecosystem with 3^rd party services on top (and reduce tension by not competing with them). Become more efficient by only providing a single thing – fast, quality, wireless data.

The future belongs to the fastest, most reliable, ubiquitous wireless pipe there is. That’s not dumb, that’s the future.