Solution Providers Need to Own the Pipe

While the great search for sources of recurring revenue has mainly focused on managed services, one of the most overlooked sources of such revenue for solutions providers is the Internet connection itself and the increasing number of applications that are running over it.

What was once considered a tactical opportunity that many solution providers felt was mainly the province of telecommunications providers is rapidly becoming a strategic issue for solution providers as they gear up to face new forms of competition.

The main source of that new competition comes from companies that were formerly known as ILEC (Incumbent Local Exchange Carriers).

Many of these companies got started because the Telecommunications Act of 1996 gave them the right to sell Internet access at the same price as the major telecommunications companies.

But, since then, the courts have revoked that right, so now many of these companies are morphing into becoming full-fledged solution providers.

Their competitive advantage is the fact that they already own the customers Internet connection, so its a relatively simple matter to start moving up the stack to providing Internet-based applications and services.

And, of course, many of them tend to discount the network hardware to get that business, just like the big-boy providers do.

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