Telecommunications Evolution - from wired and wireless to where?

By Kim Perdikou | Dec 21, 2008

This is an excerpt of an article first published in Connect-World: Asia-Pacific II 2008 in May 2008 (http://www.connect-world.com/).

Merely a few years ago, customers were generally satisfied with disparate services from different providers - for example, home phone service from the local telephone company, mobile phone service from a mobile phone provider, television channel access from a cable or satellite provider, and Internet access from yet another company. All of these "providers" built out their networks to deliver specific services to their customers and prided themselves on their ability to deliver their niche services well, making sure there were no service interruptions.

That environment began to change as customers found themselves increasingly depending on constant connection to people and information integral to their personal and business lives. Customers began feeling the inconvenience of dealing with multiple providers and wanted more control, more customization, to choose the services they wanted, ideally from a single source, to reduce complexity and optimize cost. The service providers therefore raced each other to offer multiple services with the benefits of consolidated payment and streamlined customer service.

However, the subtlety in this market shift was that customers didn't want "superficial" integration and actually started questioning why they couldn't have value-added offerings such as a phone number, or TV program access, that followed wherever they went or whatever device they were using. In essence, customers wanted truly converged services, while expecting to receive no less quality or performance they were used to. Pixilated video or dropped phone calls were not acceptable, for example.

To answer this demand of seamless, personalized access regardless location, device, or modality, traditional phone companies, wireless providers and cable operators scrambled to build and evolve their networks from supporting disjointed single services to delivering a consolidated portfolio of services. Now, these service providers are still in a race to increase customer loyalty and reduce churn by satisfying customers with a plethora of services and applications now and for the future.

While this drama unfolds between service providers, content providers - such as Yahoo!, MSN, and Google - are attempting to aggregate content and leverage new advertising-based business models. These approaches might be able to deliver the seamless "one stop shop" integration that consumers want, but they also run into a fundamental problem in terms of reconciling the customer experience with the overall monetization of the network. In other words, content providers are bypassing traditional carriers, relegating the service providers to basic transport: a commodity. This has an adverse affect on both the traditional carriers and content providers. In addition, without knowledge of and control over the network, the resulting user experience is out of the hands of the content providers, which affects their ability to deliver a predictable, satisfying experience or even impairs their brand equity and ultimately affecting the advertising premiums they command. At the same time, the traditional providers who hold vital usage information about the user and available connections - information which could be of value to the content providers - are completely missing out on the opportunity to enter and compete in the advertising-driven content world. On top of these concerns, increasingly demanding applications (such as realtime video) are competing for bandwidth with other paid subscriber services, incurring inefficient and expensive upgrade costs for the service providers.

It will be interesting to see how this all plays out in the market, but the solution probably lies in a collaborative or shared model in which carriers can derive value through shared advertising, while guaranteeing service quality to users and content providers. This will require a "high-performance" network - fast, reliable and secure - with varying levels of policy and control to deliver the flexibility providers need to quickly roll-out new applications and services to address the ever-changing needs and tastes of consumers. There is a direct correlation between the network's ability to scale and adapt, and a provider's ability to seize new service, partner and market opportunities quickly and cost-effectively enough to engage and retain customers.

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