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Own, Rent, Rent-to-Own - New Opportunities

The "own vs. rent" debate has a long history in computing and telecommunications. In the early days of computing (1960s and 1970s), most small and medium businesses could not afford a mainframe or minicomputer, and opted instead to purchase computing power and enterprise applications through time-share services. This model allowed smaller firms with limited resources to instead take advantage of these capabilities as services. As computing costs fell dramatically and personal computers became available, a new model emerged that allowed much smaller firms to own and operate their computing environment, and the time-share model of computing is now largely a thing of the past. A similar trajectory played out in enterprise telephony, with the centralized hosted Centrex model being supplanted in the 1980s by PBX. Today, with capital expenditures replacing subscription fees, the IP PBX offers greater control, faster delivery of new features, cost savings and richer feature sets.

In the context of municipal and industrial wireless networks, there are two primary technological choices: the organization can build, own and operate its own wireless network, typically utilizing unlicensed wireless frequencies at 2.4 GHz and/or 5 GHz or it can rent connectivity for its mobile workers and applications from a cellular carrier for a monthly fee. As performance and feature-richness of "owned" broadband wireless technologies increases, and cost and complexity come down, the case for ownership versus rental becomes stronger and stronger, just as it did with telephony and computing. Build Versus Buy: Why Municipal and Industrial

Here's a great analysis of a new opportunity: owning the tool you need to get your job done. We don't often see such dramatic changes in the way we do business. We tend to go along with small incremental changes from year to year, and so it has been when it comes to telecommunications. This field has always involved billions in capital expense so naturally we have always bought services from a large telecom company. But now, there is new technology out there that challenges the base assumption that telecom is so expensive that you have to buy it from a very large company that has the resources to invest in the infrastructure and tools needed to provide connectivity. That's no longer so.

As the saying goes, its only once in a blue moon that an opportunity like this comes along, and Tropos founder Narasimha Chari - that's "Chari" for short - lays out the business rationale for ownership clearly and concisely in this well-written OpEd. I worked with Chari in 2005 when I had a consulting engagement with Tropos - as one of the pioneers, he's been hip deep in this industry and he knows what he's talking about. I'd print this article up and keep it in your resource binder. It's that good!

Posted on February 26, 2008 at 10:09 AM

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