Knott-Craig: social networks to rule telecoms

Cell C CEO Alan Knott-Craig says telecommunications companies should realise they are operators of "dumb pipes". By Duncan McLeod.

No matter what they choose to believe, telecommunications companies are little more than operators of “dumb pipes” and the “sooner they can get over it, the sooner they can move on”.

That’s the view of Cell C CEO Alan Knott-Craig, who says social networks will play an increasingly important role in the industry because it’s these firms that have the relationships with customers, and not so much the operators.

“As long as telcos think they are anything other than dumb pipes, we are not going to move on,” Knott-Craig tells TechCentral in an interview.

“What the hell is wrong with a dumb, dark pipe, anyway? They seem to be generating plenty of money [for operators] as far as I can tell.”

In the telecoms industry, a dumb pipe refers to the way in which third-party or “over-the-top” players using operators’ networks to profit. The operators provide only the bandwidth needed to supply applications and services to consumers and they play no “intelligent” role in the process.

Knott-Craig says the idea that telecoms operators have to provide “intelligence” by offering more than simply a reliable connection between two points is misplaced and is a “psychological barrier” the industry has to overcome.

Consumers, he adds, are not thinking about their network operator when they place a call — unless it drops. Rather, they’re using operators’ telecoms pipes to engage with social media networks.

“Social networks are not dark, dumb pipes, which is why they don’t make any money. But they have incredibly attractive qualities that people can’t resist,” Knott-Craig says. “In the same way as people couldn’t resist mobile phones 15 years ago, they can’t resist social networks today.”

He says the technology that consumers feel “closest to is the one that controls their lives, and right now that’s social networks”.

“Social networks have constant dialogues with their customers, albeit in a very subtle way,” Knott-Craig says. “The closest mobile operators can get to that is a call centre. It’s actually against the law to be intelligent. As a dumb pipe, you are obliged to be dumb. We are trying to be something more than dumb and that’s why we can’t get the quality right.”

The first company that is able to leverage the confluence of social networking and telecoms will result in a “major breakthrough”.

“Mobile operators can’t face the thought of social networks controlling them, but they will,” he adds. “Social networks play a huge role in banking, too. The social networking, banking and telco space is such a natural space for things to happen.”  — (c) 2012 NewsCentral Media