In 1997, David Isenberg wrote an article called the Rise of the Stupid Network. Isenberg worked at Bell Labs, the R&D lab of AT&T, and was responsible for some significant breakthroughs during the PC and the early internet era. The telephone companies were struggling with the idea of turning their "dumb pipe" into an "intelligent network" by building over-the-top services on top of calls.

Isenberg predicted that the internet would dis-intermediate the telephone network in the article. However, telcos could save themselves by 1. disrupting themselves (unlikely) or 2. reinventing their network value proposition as a "dumb pipe." Later analyses (which ended up being true) showed that the broadband providers could make more money if they stopped competing on higher-level services and opened their networks.

Many wonder if history will repeat itself with cloud and the cloud providers: will AWS and Azure become "dumb pipes" of compute, storage, and other fundamental data center primitives? Or will they continue to compete and beat third-party providers at high-level services?

Fast forward to 2021, when Erik Bernhardsson wrote an article called the Storm in the stratosphere: how the cloud will be reshuffled, where he predicted the cloud vendors

Cloud vendors will increasingly focus on the lowest layers in the stack: basically leasing capacity in their data centers through an API.

I hope Bernhardsson is correct, but I think it's optimistic thinking. I don't believe that the hyperscaler clouds become "dumb pipes" like the AT&T and telcos before them.

Here's  why I think why it's different this time:

But there's always another side to it. So I'll give a few reasons why it just might work.

The telcos didn't go down without a fight. They successfully got so many regulations passed against VoIP that it served as a severe barrier to entry for more than a decade. However, the hyperscalers have an even better card than regulation: open source. By bringing the cost of software down to zero, they can commoditize their complement. If AWS open-sourced all higher-level services, they would still be a "dumb pipe," but with fewer competitors.