Vijay Gill wrote a nice article today looking at the common telco fear of becoming a dumb pipe. He suggests that they are digging their own hole by outsourcing their networks and personnel, that they are de-emphasizing the very things they should be putting their effort into. To put it another way, if you can't do the 'dumb pipe' properly and make decent money then how can you expect to be the best 'smart pipe'? That only works if 'best' means 'only'.
I think he has it right. Last mile providers fear the openness of the internet because they have never truly transcended the bellhead mindset to build and operate networks with an adaptive business model. That's especially true at the incumbents of course, but the cables and even the next generation network operators have struggled with it as well. As Amazon has showed us, if you have the best dumb platform then you can make both dumb and smart money while your customers don't feel constrained, and that's how you really win the game. To fear being a dumb pipe is quite simply to fear that even with that advantage you just can't compete as a smart one.
But as I tried to point out a few days ago, that is precisely the reason that last mile operators fear opening their platforms. They know deep down that their billing relationship with almost every customer in their territory is far too often based on being the only option. It is forced loyalty and they know that Amazon's is not. Rather than seek the latter, they wish to extend the former.