Backlash against the Stupid Network

By David S. Isenberg

The Stupid Network concept is under attack. And Communications Week International is providing a convenient sniping gallery for its assailants.

Ericsson vice president Per Jomer, in his article "Why Stupid Networks need a little intelligence" (CWI, 20 July), opens by calling "The Stupid Network" a buzzword. He understands that it is important to separate "the network layer" from "the service layer." But he fails to acknowledge three things:

That this separation greatly increases the rate of innovation;
That it tends to put distance between the source of innovation and established telecoms equipment and service providers;
That it facilitates discovery of hugely valuable and disruptive innovations (such as the Web browser) for which there may be no a priori customer need.

In his book The Innovator's Dilemma (1997, Harvard Business School Press, Boston Massachusetts), Clayton Christensen makes a case that incumbents are never market leaders through a technology discontinuity. He supports this thesis with data from the disk drive industry, the steel industry, and retail, among others.

Extending the idea, incumbent telecommunications players, in both equipment and service sectors, have much to fear from the technology-induced market discontinuity called The Stupid Network.

The rise of The Stupid Network is about a shift in value from the center of the network to the edge, from a service model to a more product-oriented model, and from telco-provided services to third-party generated and user-controlled services. So if Christensen is right, Ericsson might realize some sustaining value from fusing Intelligent and Stupid, but it will miss the big action. At best, it will become a much-diminished follower as new market leaders seize the initiative.

From this perspective, AT&T's and BT's plans for a new network are both ambitious and risky (CWI, 10 August). In addition to huge execution risks, the venture is also subject to Christensen's "Innovator's Dilemma."

If, as AT&T chief technology officer David Nagel indicates, the company follows its customers' needs, it will, at best, reinvent the present.

Customers are notoriously bad at communicating (or even knowing) what they will want on the other side of a market shift. It is possible to determine current customer needs, but it is not necessarily easy - often it requires a volatile mix of high science and black art.

Assessing future customer needs is trickier still. So if the joint venture takes a stab at inventing the future network, it risks fielding something that customers might not want.

Furthermore, BT chief executive Sir Peter Bonfield's vision, explained in his CWI interview, of a "fully functioned, intelligent IP network" strikes me as an oxymoron that bespeaks yesterday's understanding of network value. The very strength of the Internet is that it is not intelligent, and that it has few functions beyond transport.

So despite bold talk of new networks, it is more likely that AT&T and BT will execute against tried and true models. Being a follower in times of great change is difficult enough. For a big company with established customers that depend on it, it may be the only workable strategy.

Date last modified: 8 Oct 1998

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