Telecommunications convergence is here now
The world of telecommunications has changed beyond all recognition over the last decade. First, the mobile phone network enabled universal, affordable, personal communication, regardless of your location. Then in the second wave of the communication revolution, the smartphone redefined all aspects of the way we communicate with people, businesses, information and entertainment access whilst on the move.
From the user’s perspective, modern mobile devices deliver the converged, multi-media communication and entertainment experience that the telecom industry has long been promising. Behind the scenes though, masked by the power and utility of modern smart devices, telecom operators have achieved this by deploying multiple networks and technologies. Incrementally, year by year, operators are investing heavily to evolve their networks – delivering greater and greater bandwidth and moving to the goal of an all-IP network to realise greater capacity and capital and efficiencies.
But look beyond the allure of the smart phone and other smart mobile devices. Telecommunication companies – wire-line and wireless – are providing a standardised, homogenised, utilitarian service. They are providing access and bandwidth connectivity which is under disruptive competitive pressure from new over-the-top (OTT) providers supplying Voice over IP (VoIP) services that ride on the back of ubiquitous broadband and internet access.
The OTT providers are innovating on two fronts simultaneously: price-point and functionality. OTT VoIP services are delivering a richer communication experience which includes enhanced address book capabilities, instant messaging, presence and video calling at a fraction of the price telecom companies charge for basic calling. Consequently, telephony prices are falling, and margins are shrinking.
Service innovation and differentiation
Historically, telecom network operators have largely confined their service differentiation to their handset portfolio, monthly price-plans and usage bundling initiatives. The services themselves are undifferentiated in the main – consumer selection of network operator is based on the handsets available and how many bundled minutes, SMS and megabytes are offered.
The OTTs are competing using a different game-plan. They have adopted different price-points, different business models and taken communication service innovation back “in-house”. By harnessing the power of mobile devices and networks, OTTs are adding new features and functions to the plain, vanilla services of the telecom network operators. And they’re doing so at a dizzyingly fast pace too.
To compete in this new world – telecom network operators need to reclaim ownership of their core telecom network service heritage. Real-time communication services are the heart of telecom network operators and deliver the majority of their revenues. By taking these core telecom network services beyond the plain, vanilla standard, network operators can differentiate their service offerings, and so attract new, and retain existing, customers.
Within the telecom industry, a common short-hand expression for this is to ask whether the plan is to be a "bit pipe or a smart pipe?” – a question that most operators will answer “smart pipe” without hesitation. And that means take a critical look at their Telecom Service Layer.