Convergence (telecommunications)
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Telecommunications convergence is a concept dating back to AT&T in 1928 [1] but has evolved in the 21st century to dominate the market positioning of telecoms operators. It is reflected in the product portfolio operators offer (vertical integration), and in the channels through which their products are sold and serviced (horizontal integration). Telecommunication convergence is a disruptive technology.
Communication media including electronic media, telecommunications media and broadcast media were discrete business operations providing distinct services. Broadcasting, voice telephony and on-line computer services were operated on different platforms: TV and radio sets, telephones and computer and were managed by different Business Support Systems. Different broadcasting media were each regulated differently by different regulators.
Telecom Media Convergence [2] is about crossing multiple industries. No longer are companies confined to their own markets. Fixed, mobile, and IP service providers can offer content and media services, and equipment providers can offer services directly to the end user. Content providers are consistently looking for new distribution channels. Convergence is the combination of all these different media into one operating platform. It is the merger of telecom, data processing and imaging technologies. This convergence is ushering in a new epoch of multimedia, in which voice, data and images are combined to render services to the user.
The key result of convergence at a macro-business level is the merger of the telecommunications and media / entertainment industries.
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[edit] History
The historical roots of convergence can be traced back to the emergence of mobile telephony and the Internet, although the term properly applies only from the point in marketing history when fixed and mobile telephony began to be offered by operators as joined products.
- Traditionally, fixed and mobile operators were, for most of the 1990s, independent companies. Even when the same organisation marketed both products, these were sold and serviced independently.
- As the Internet emerged, fixed operators started marketing Internet services. This phase is not generally labelled as convergence yet, as internet services originated as an offspring of fixed telephony.
- Triple Play. The first step of convergence is the fusion of the marketing of fixed telephony, mobile telephony and fixed-line internet services: the products started being linked, cross- and up-sold and serviced together. This is called fixed-mobile convergence[3], and the operators who operated in the space of the market are called triple-players (fixed, mobile, internet).
- Quadruple Play. The following step is the bundling of cable or satellite television services by telecoms operators. This is called quadruple-play.
Convergence gained rapid adoption and revolutionises the market. Beyond quadruple play, convergence starts assuming a dual significance, which can be described as vertical and horizontal.
- Vertical Convergence. Vertical convergence consists in marketing products beyond telephony (fixed and mobile), internet and television. Examples are ringtones, music, event tickets. This definitively puts what were telecoms operators in competition against media and entertainment industries.
- Horizontal Convergence. Horizontal convergence consists in marketing all the above products, selling them and servicing them through a mobile channel. Examples are music downloads through the mobile phone, mobile email, mobile TV, mobile news alerts, mobile mapping services (e.g. Google Maps on the Blackberry).
[edit] Messaging Convergence
Combinational services are growing in prominence, chief among these being those services which integrate SMS with voice, such as voice SMS (voice instead of text – service providers include Bubble Motion and Kirusa) and SpinVox (voice to text). In addition, several operators have launched services that combine SMS with mobile instant messaging (MIM) and presence.
The Text-to-Landline services are also trendy, where subscribers can send text messages to any landline phone and are charged at standard text message fees. This service has been very popular in America, where it’s difficult to differentiate fixed-line of mobile phone numbers.
Inbound SMS has been also converging to enable reception of different formats (SMS, voice, MMS, etc.). UK companies, including consumer goods companies and media giants, should soon be able to let consumers contact them via voice, SMS, MMS, IVR or video using just one five-digit number or long number. In April 2008, O2 UK launched voice-enabled shortcodes, adding voice functionality to the five-digit codes already used for SMS. Mobile messaging provider Tyntec also provides a similar service based on long number, converging text message and voice calls under one number.
This type of convergence is particularly helpful for media companies, broadcasters, enterprises, call centres and help desks who need to develop a consistent contact strategy with the consumer. Because SMS is very popular today with any demographic, it became relevant to include text messaging as a contact possibility for consumers. To avoid having multiple numbers (one for voice calls, another one for SMS), a simple way is to merge the reception of both formats under one number. This means that a consumer can text or call +44 7624 805555 and can be sure that, regardless of the format, the message will be received.
[edit] Business drivers for convergence
The key business drivers are around customer centricity, synergies and brand value.
Customer centricity is the concept according to which providers of services are to revolve around consumers, rather than the consumers going to different providers for each service. The telco / media company becomes a wrapper of services to satisfy the customers' every wish, affecting several aspects of his/her life. The ultimate goal of convergence is for the operator to become the single point of contact for all their customers' needs. This is reflected in the operator becoming the "single point of payment" for a large portfolio of services. Both these aspects have the advantage of making life easier for the individual consumer.
Synergies due to a centralised business model, reduced overheads and costs to serve, joint marketing, upselling and cross-selling driven by a centralised view of the customer, and consolidation of technologies make convergence a very attractive strategy for operators in an increasingly competitive market. As telecommunications reach a new stage of maturity, margins get eroded and traditional services become commoditised. Convergence generates value by reducing costs through efficiencies and consolidation.
The other way in which convergence generates value is by spreading brand value to new products and services, which have the potential to invert the spiral of commoditisation. The customer base of one company and its brand identity can be transferred to new products, imbuing them with the value coming from the original, established brand.
[edit] Technology implications
Convergent solutions include both fixed-line and mobile technologies. Recent examples of new, convergent services include:
- Using the Internet for voice telephony
- Video On Demand
- Fixed-Mobile Convergence
- Mobile to Mobile Convergence
- Location Based Services
- Integrated Products and Bundles
Convergent technologies can integrate the fixed-line with mobile to deliver convergent solutions. Convergent technologies include:
- IMS
- SIP
- IPTV
- VOIP
- Voice Call Continuity
- Digital Video Broadcasting - Handheld
- Video On Demand technologies
[edit] Telecommunication convergence business support systems
Convergent solutions extend beyond network based technologies like VOIP and IPTV. Convergent solutions require a realisation of the limitations of single product Business Support Systems and Operations Support Systems.
The ability for an organisation to deliver complete converged packages may be dependent upon the following factors:
- Ability to model converged products and services in a single product catalogue
- Billing convergence
- Provisioning convergence
- Single view of customer
- Usability and Quality of Service
- Policy based security and authorisation
[edit] Product catalogue convergence
Many organisations face the problem of delivering logical bundles created from existing products distributed across non integrated product catalogues and non integrated provisioning systems. An example would be a mobile operator unable to deliver a new prepaid mobile handset and SIM offering with prepaid preloaded ringtones. Separate product catalogues modelling historic products require connecting in order to be sold as converged bundles. Up-sell and cross-selling matrices are localised to individual product catalogues. The modelling of relationships between bundled products requires a dedicated rules engine for managing cross-sell and up-sell opportunities.
[edit] Billing convergence
The ability for the telecommunications industry to deliver convergent services is the dependency to sell services. Different convergent products may require different subscription models. For example a pre-paid mobile contract may provide a mobile data subscription requiring real-time mediation of data usage. The delivery of convergent solutions can involve multiple content providers and multiple network providers. The maturity of convergent solutions shall depend upon the telecommunications industry’s ability to resolve the complexity of interconnect billing
[edit] Provisioning convergence
As technologies support convergent solutions evolve different organisations seek to deliver content and services. The role of the content provider shall disseminate into the traditional realm of the network operator. The delivery of convergent solutions requires provisioning of many different products in many different locations. Provisioning of convergent solutions shall continue to depend on the management of OSS and the integration of policy servers delivering authorised access to convergent content.
[edit] Single view of customer
Convergent solutions integrate with marketing and customer relationship management in order to target bundled offerings at specific user groups. The integration of multiple services as convergent solutions requires the network operator to examine the interests and the value adding opportunities of extending base products. As convergent solutions involve multiple billing and provisioning systems so too must convergent solutions provide unified and enhanced customer support [4]
[edit] Usability and Quality of Service
The maturity of convergent solutions beyond early adoption models depends upon the usability and quality of service provided by convergent solutions. Packet Cable Multimedia [5] is an example of an application independent Quality of Service architecture for real-time IP based services.
[edit] Policy based security and authorisation
Both fixed-line and mobile operators use policy servers as part of a policy-based network that provides authorization services and control of network systems. As part of a convergent single view of customer network policy servers must control access to content and services delivered by multiple providers.
[edit] Convergence regulation
Convergence has also raised several debates about classification of certain telecommunications services. As the lines between data transmission, audio cast and voice transmission are eroded, regulators are faced with the task of how best to classify the converging segments of the telecommunication sector.
