Listed are 4 reasons as to why commoditization of network services is a possibility:
Making it up in volume
Can you explain each.© BrainMass Inc. brainmass.com August 15, 2018, 10:00 pm ad1c9bdddf
"Making it up in volume"
Here is an example.
Look at the cellular telephone industry. Ten years ago, you could pay nearly $1500 for your portable phone and that was an incredible deal. But they couldn't resist using price as the distinguishable factor. Today, most cellular companies practically give phones away (commodity) for free and attempt to lock customers into loyalty with service agreements. Because they adopted the concept of cutting price, but making it up in volume. Network service providers could take a similar strategy and lead to commoditization of network services.
Studies show that when buyer literacy falls, commoditization isn't far behind. "You can't create meaningful features to a buyer class that doesn't know the meaning of anything. The lack of technical comprehension for the average buyer means that transport/ connection services, the mainstay of carrier service, will simply get cheaper over time. The peak profit per bit for these services was reached in the period from mid-1999 to mid-2000, and we'll never see that level of profit for basic services again. There are a lot of strategies today to protect profits, from IMS to settlement- based IP peering, but none of them will be enough" .