|Topic:||Emerging opportunities in a destructive environment|
|Title:||Corporate Vice President, Global Marketing and Strategy, Networks|
Raghu Rau is Corporate Vice President of Global Marketing and Strategy for Motorola Networks. He is involved in the development of strategic plans for the networks business as well as managing the global marketing of communications solutions to wireless and wireline carriers worldwide. Mr Rau has more than 17 years experience in the telecommunications industry. He has held assignments in Asia, Europe and the United States, and has prior experience with multinational corporations and the establishment of start-ups. Mr Rau has guest lectured at reputed universities worldwide and has spoken at numerous industry conferences. Raghu Rau earned a bachelor’s degree in Engineering and an MBA from the Indian Institute of Management, Ahmedabad.
The Internet-based communications standards and the digitisation of content underpin convergence in the telecoms sector. These merging trends are often considered ‘destructive’ because of the impact of convergence upon traditional business models. Traditional mobile and fixed-line business models can no longer protect and grow business in an environment that is much more competitive. Convergence is a challenge, but it also provides a range of opportunities. The integration of IP technology into telecoms networks is a highly constructive, not destructive, development.
Of all the changes underway in network development, two are very important. The first is speed of connection. Whether it is a mobile company, fixed-line player or new entrant seeking to provide wireless broadband, speeds to the handset will increase within the next 18 months to 1-1.5Mpbs. That is comparable to compressing the capabilities of a fixed-line broadband-connected PC into a mobile handset. Secondly, telecoms companies are integrating IP technologies that can marry previously independent networks using the same IP core platform. This development enables users to access services in a more intuitive and flexible manner. Other advances are also important. Digitisation of content is shrinking more into less making it easier to send video, music and images. Content is becoming more diverse. Media owners are seeking fresh ways to deliver their product while programme makers are seeking to broadcast mini-versions of shows to mobile devices. Consumers are also becoming more familiar with digital technologies. The iPod and digital camera generation now expect consumer devices to offer a richer experience with multi-function applications. Mobile devices with larger coloured screens, higher-resolution digital and video cameras, and hard disk capacities that rival MP3 players are meeting this demand. Devices are also more intelligent, providing highly intuitive interfaces that will influence user behaviour, encouraging consumers to access content from their mobile device rather than from their PC. These developments will support more advanced services and interactivity for consumers that are tailored to their location and usage demands. Advanced services Services will especially improve in three areas: person-to-person communication, entertainment and business applications. Thanks to exciting developments in Push-to-X services, communication between individuals and groups will advance. Push-to-X utilises an ‘always-on’ handset to provide single button access to a range of products, to instantly snap and send a photo or video to an individual or group or contact people in their area (who will be visible on the handset) and receive directions on how to find them. They can conference with a group of friends as if using a walkie-talkie, and be able to Push-to-Ask their handset a question, or to alert them to events when they happen – a stock price event, the snow’s falling, the surf’s up or when plane tickets become available at a predetermined price. Entertainment will be enhanced through high-speed Internet access. A consumer will be able to buy a track or album that he or she has listened to on a handset’s radio, a touch of a button will download the track in less than a minute. Enhanced data transmission speeds will also support richer games, similar in game-play to today’s dedicated handheld consoles. With enhanced video codecs (coder-decoders) enabling movie clips to be easily accessed, subscribers will travel with a games console, jukebox, video conferencing and video library device. Wireless broadband, on the go, will enable travellers to check traffic, review local restaurants and reserve a table, and, whilst waiting for a meeting or plane, watch the news on broadband TV or download a new game. Business users will benefit from ubiquitous, enriched, intuitive mobile communication. There will be one-button access to mobile video and voice conferencing, while emails with attachments can be accessed and sent. Fully mobile connections will have an always-on high-speed link to the corporate network for impressive productivity and efficiencies gains. The services outlined are compelling products in themselves and offer a genuine change in performance for businesses and consumers alike. The ‘seamless mobility’ environment will offer uninterrupted, always-on access to information, entertainment and communication, when, where and how consumers want it regardless of device, network or location. Seamless mobility The newly integrated IP core technologies at the heart of networks will connect new and legacy service systems. Networks will be able to handle a user request intelligently to ensure that the optimum delivery technology is automatically assigned to the device. For example, if a person is accessing the Internet using a mobile device while walking down a street, the wireless network will supply the service. As they walk into a coffee shop with hot-spot access, the session will automatically swap over. If an executive is on a conference call and needs to drive the children to school, the call can be carried over to the car. If they are listening to the car radio, users can pause the programme while they park and walk into the house before pressing ‘resume’ on the home stereo. Such seamless mobility works with users to meet their communications demands with a range of rich and compelling products, at home, at work or on the move. The new experience these services provide addresses concerns over its prospects, particularly regarding voice ARPUs (average revenue per user). Analysts, once again, predict a strong period of growth for telecoms companies in both the fixed and wireless markets. Data services, especially, show huge potential (see Figure 1). Services, however, are the icing on the cake. The foundations of success will rely on technology integration, realignment of business models and pricing structures. Enabling technologies – the core There are several important enabling technologies at the heart of flexible, high-speed service provision. The increasing integration of IP systems into network cores, in particular, the Internet Protocol-based IP Multimedia Subsystem (IMS), provides flexibility for the automatic transfer of services between Bluetooth, mobile, wireless LAN and fixed telecoms environments. Since IMS uses common protocols, it becomes easier for customers to access – and operators to bill content provided by media owners. Moreover, IMS automatically connects to the best available network. Handsets will use another Internet-sourced technology, Session Internet Protocol (SIP). The ‘session’ is effectively a request for a service from the handset, be it for a simple voice call, a video or a voice-only conference between colleagues. SIP’s inherent adaptability makes it attractive. Services are available simultaneously so a customer can select the most appropriate combination of media for their communications needs (video, voice, text or instant message) in real time. Access technologies A range of new standards-approved access technologies lets operators increase network efficiency and speed connections to end users. The most prominent are the Worldwide Interoperability for Microwave Access (WiMAX), CDMA 1xEV-DO and High-Speed Downlink Packet Access technology (HSDPA). All will offer broadband, or higher, speeds to devices. HSDPA and EV-DO will primarily be applied to 3G-and-beyond networks while WiMAX will be used in metropolitan areas to support wireless data and Voice over Internet Protocol (VoIP) applications. WiMAX permits fixed-line companies to offer low cost broadband and VoIP services, but can also give mobile operators enhanced network capacities and additional transport options to support data and VoIP services. CDMA 1xEV-DO embraces convergence through an expanding range of IP-based features. It enables the provision of advanced wireless services and applications and as it is a more efficient technology offering enhanced system capacity, lowers acquisition and management costs. Peak download speeds are 2.4 Megabits per second – with average speeds of 300 to 500 Kilobits per second to the mobile device – let operators take full advantage of multimedia services and applications. In addition to high-speed data, the three technologies promise low acquisition costs due to their standards-based equipment, which will encourage competition between manufacturers and improve the ability of networks to enhance investment returns. The technologies are at different stages of development. Several CDMA 1xEV-DO handsets and cellular gateways are already available to operators. The standard is evolving and the next release termed ‘EV-DO Rev A’, that will commence carrier testing in 2006, will enhance quality of service for low latency applications such as Push-to-X services, instant messaging, full multimedia content and interactive gaming. HSDPA trials are underway now with networks in Europe planning launches this year, with momentum building in 2006/7. WiMAX equipment is currently being installed to lower the cost of fixed backhaul services. Trials are now starting for the next generation of WiMAX standards termed ‘revision E’, that will extend the technology to support data and voice mobility. Commercial market launch is expected in 2006/07. These services can be extended beyond the home and enterprise as mobile devices that are compliant with ‘revision E’ standards for transmission equipment become available in 2007 and beyond. The launch of new high-speed services will gather pace over the next 12-18 months. Interest will be driven by consumer demand, demonstrated by fixed-line broadband, for high-speed data services and the motivating effect of competition. Business planning At the heart of concerns over convergence lies flexibility. The ease of provisioning high-speed wireless networks removes the traditional boundaries that require a customer to have different contracts for mobile, ISP and landline services. This development will have a liberating effect on the market – there is no doubt that competition will encourage companies to invest in new technologies to protect and grow subscriber numbers. New VoIP companies are a concern for traditional networks but it’s unlikely that any one sector of the telecoms market will secure clear dominance. However, success can be achieved through astute assessments of service requirements, coupled with flexible service packages and tariffs. At the top end of the scale will be a service level that provides ‘one number’ communications encompassing all a customer’s requirements. Individual products can also be marketed, from broadband through to voice over IP and mobile packages. It is likely that major fixed and mobile brands with large numbers of existing subscribers will push hard to provide ‘one number’ services. This will become a highly competitive front as the new high-speed data technologies come on-stream. Constructive developments Convergence is dramatically changing the telecoms market and mobile, fixed and ISP players face a period of uncertainty. However, while it is understandable, given the level of change, that industry observers refer to the ‘destruction’ of traditional modes of business. Astute risk assessment, though, along with in-depth customer profiling can mitigate investment risk. Moreover, as IP technology provides a modular investment option, companies can scale quickly to meet changes in service demand and to counter competitor activity. It is a cliché that challenge brings opportunity, but the statement certainly applies to technical convergence that, combined with the progress of digitisation, brings unprecedented opportunity for telecoms companies to provide a new product that consumers have already shown they are keen to utilise. Indeed, networks can create new ways to deepen customer loyalty, attract new customers, reduce churn and realise new sources of revenue. Convergence provides creative freedom for content and media owners to develop new ways to distribute their products. This new cycle of innovation may well exceed that achieved at the start of the Internet revolution. Convergence is also having a major impact on society. People will communicate, interact and collaborate on personal digital content customised to personal preferences, location, circumstances and availability. Vehicles and their occupants will communicate with the world they travel through keeping them safe, informed and entertained. Convergence will also have a liberating effect on productivity and efficiency. Executives will access fully functioning mobile offices that provide the same user experience as a fixed, office-based, connection. They will be able to communicate with colleagues through voice, video and dedicated collaboration applications that provide the scope to achieve more in less time. It is also having a major impact in streamlining business by supporting ubiquitous access to data, and by introducing new ways to sense, monitor and control the physical world to enhance supply chains and make manufacturing processes more efficient. The impact of convergence suggests that the ‘destruction’ of traditional business models in the telecoms market will have a liberating effect. It constructs a new platform to create and market products, attract and retain customers, and apply technology to transform the way people communicate to make their lives easier. That, after all, is the goal of technology innovators.