Telecommunications started a long time ago, March 10th, 1876 (Mr. Watson come here, I want to see you – was the first -officially recorded- message ever spoken on a telephone).
Curiously, the business model at that time was to make money by selling the telephones.
Pretty soon, in less than a year, it became clear that in order to sell phones you needed to have a network and there was no way to recoup the investment needed to create (and operate) a network by just selling the phones (you would have to charge an outrageous price, no one would ever buy the phone!). You had to sell the service.
The reason was the cost of the technology, its scarcity (in volume and performances) and the market volume. It didn’t help the fact that as market volume increased the CAPEX increased as well keeping the gap (and actually making it wider).
There was also another fundamental factor at play: the usage of network resources, and hence the cost sharing of these resources one could reasonably expect to charge to the user was marginal. The average use of network resources was some 15 minutes a day per user. You had to create a centralized structure where the usage increased to the point of being able to recoup the investment. The more expensive a network resource the more it made sense to centralize it.
Telecommunications network architectures and the way telecommunications services have been deployed were the direct consequence of these factors.
So were the market structure and the players distribution. The telecom biz was a capital intensive one (in line with the industrial revolution), resources were sort of alien to common folks and required specialized skills, also in short supply.
Well, that was 140 years ago. Something changed along the way. And yet our telecommunications networks and the biz structure are still rooted in the past, and it shows.
What if you were to design a brand new telecommunications network with today’s technology and today’s market distribution? Would you end up with the same architectures of today? Unlikely.
Just for fun, let’s try a gedankenexperiment….