|North America 2006
|All paths lead to convergence
|Dr Arun Sobti
|CEO and Chairman
The telecommunications industry is moving towards convergence – network convergence, service convergence, organisational convergence – convergence of any sort one can name. Accelerated adoption of the Internet Protocol is largely responsible. IP has made possible the interconnection of mobile, wired and wireless networks and the transmission of voice, data and video using any and all of these networks. The combination of existing services and the new services convergence has made possible and has changed forever what subscribers expect and what service providers offer.
Arun Sobti is the Chairman and CEO of IP Unity. Prior to joining IP Unity, Dr Sobti was Senior Vice President of ADC and President of ADC’s Broadband Access and Transport Group. Before ADC, Dr Sobti was at Motorola for 24 years, where he ran a number of their global businesses. Prior to leaving, he led Motorola’s efforts towards participation in the third generation of wireless. Arun holds 18 patents, and has served on a variety of industry standards committees. He is on the boards of Onotologent Networks, Airespace, Inc. and ManyStreams Networks and is on the advisory board of a number of funds and companies. Arun Sobti earned his Ph.D. and M.S. in Electrical Engineering at the University of Kansas and his B.S. in Engineering from Punjab Engineering College in India.
Every participant in the networking environment, whether end user, vendor, carrier or content provider, will experience a substantial thrust toward convergence in the coming year. For several years now, the rise of IP as the dominant network protocol has enabled operators to extend affordable and consistent network access nearly everywhere, and created a strong impetus for seamless network and service interworking. As the traditional boundaries separating network types erode, there is now a nearly irresistible compulsion for network operators, service developers, content providers, equipment vendors and both consumer and enterprise end-users to push for – or concede to – full convergence, not just interworking. Each group has its own motivations for wanting to deliver, or benefit from, transparency and consolidation, and some market segments are moving faster toward this goal than others. What drives each segment, and who or what will be most successful in meeting the demands for convergence during 2006? Network convergence From the network providers’ perspective, the market is seeing incumbent carriers and new operators fiercely battle each other to gain or maintain subscriber loyalty. As research firm TelecomView notes, the 1.6 billion mobile users of today’s 2G wireless networks have already outstripped the 1.17 billion users of fixed line telephone service. Every carrier and each segment – fixed telco, wireless, satellite cable, and mobile wireless – wants to keep its subscribers on its network and to lure others to it. Fixed operators want to avoid the loss of their subscribers to mobile substitution and loss of average revenue per user (ARPU), which curtails their ability to offer appealing new services to the remaining base. Operators also want to generate more revenue from their currently underutilized infrastructures. Network operators who make geography irrelevant — call just about anywhere for the same price – and infrastructure variations transparent to their subscribers are primed for success. Operators can begin meeting subscriber expectations, building upon their legacy networks, by migrating to hybrid IP/circuit-switched wireline networks. Later they can add cellular and Wi-Fi networking – perhaps via acquisition or partnership. If they start as a mobile operator, they can add Wi-Fi hotspots and provide a range of additional services by working with the subscriber’s home cable network. Those operators who can merge delivery types can position themselves to add value at the higher-margin services level, because they will have already made seamless mobility across different types of networks a reality for their users. At the vanguard of these changes are North American cable operators and a number of incumbent wireline and mobile operators mostly in Europe and Asia; several dozen carriers are already operating the first generation of converged networks. In the works are innovations that can — while a call is in progress and without user intervention — enable the seamless and secure hand-off of calls between fixed network and mobile or cable networks and back. Carriers using this latest wave of network convergence will take roaming, session mobility and network transparency to the next level of performance. Convergence – end user experience The greatest push for network convergence stems from user desires for seamless mobility. Both consumer and enterprise end-users want transfers between networks, and between one location and another, to occur with minimal interruption. In fact, they do not even want to be aware that they are moving from one network infrastructure to another. They want one number, one set of graphical or telephony user interfaces, one set of directories, one consistent set of network performance parameters, one unified set of stored messages, and universal availability of network connectivity for voice and data networking, wherever they are. Heavy users, the most profitable for any operator, accustomed to WiFi hotspots and the mobile benefits of inexpensive cellular, SMS and Blackberry connectivity, are not going to accept less service from any provider – in fact, they are upping the ante and asking for more. Service convergence Service convergence occurs where voice, data and video services merge and morph into integrated feature sets and customizable bundles for users. A typical example is a unified messaging service where voicemail, with content formatted as a wav.file, can be delivered via email, and email can be accessed in audio mode via text-to-speech conversion, all within the same messaging service. A unified set of message waiting alerts is delivered to fixed telephone, PC, mobile phone and/or PDA. As more rich media applications come to market – enabled by more powerful networks, more broadband connections and more IP-based services – the messaging content can now contain video clips and links to streaming media. Customized ringtones, colour ringback tones, user prompts, privacy, presence, security and screening options can be incorporated individually or together, in one unified service. There is an additional force driving the service convergence scenario — increases in available user bandwidth and the proliferation of video-enabled end devices have created growing user demand for more than just store-and-forward video clips. Users viewing a recently retrieved stored message now want to be able to click directly and send a live conference call request to one or more conference or chat partners. Such video chat and instant group communication services are already commercially available to consumers in several Asian markets, and are continually enhanced by new personalization options and downloadable premium content. The concept of service convergence is much more sweeping than a way merely to provide triple-play or quad-play services. It is more than just having discrete voice, video, data and wireless services in a service portfolio; it also leads to the ability to: • Mix and match features between all service types; • Operate, bill, and manage a service for any type of access media used; • Integrate voice and video features, • Port content between data and voice; • Apply wireless features such as ring- back tones to wireline services, etc. Service convergence delivers a fundamentally different user experience. Content convergence Content is already experiencing full-blown convergence. Broadcast network operators, content brokers and portals are converging and repackaging premium broadcast video, images, music, educational content and custom information for purchase and delivery to an increasingly broad range of end user devices. More networks can now parse (separate data into readable chunks), transcode (change from one format to another) and transrate (change from high definition to standard definition, for example) their rich media information into formats that display effectively on mobile device screens. As a result, providers can narrowcast – direct their content to single users – anywhere in real time. What this ultimately means for the mix of content available in mature IPTV offerings, the changes in traffic patterns, the revenue models and the success of new services is just now being discovered. Significant preference patterns and differences between cultures, age groups and, of course, between consumer groups and enterprise users have already been found. Thus, the market is likely to see even more micro-segmentation and customization of offerings. One final form of convergence, not discussed in depth here but which is taking place across the enterprise landscape, is that of organizational convergence. Organizational convergence refers to the merging of IT and telecom staffs and the shift in focus from network management to application management. Enterprises are driving their global network strategies to deliver VoIP, consolidated business operations and security, the delivery of integrated video communications and mobility for the majority of business applications. Research houses, including IDC Corporation, have pegged 2006 as the year when enterprise convergence begins to take off in earnest. First waves of network and service convergence As previously mentioned, dozens of network convergence trials and rollouts are already taking place in North America, Europe and Asia. Some of them take advantage of the content convergence phenomenon; others are primarily geared toward seamless access and mobility for all applications. The most prominent network convergence carriers include BT, Deutsche Telekom, France Telecom, Telefónica, Teliasonera and cable operator NTL in Europe, Time Warner Cable and Telus in North America, and KDDI in Japan. In addition, a select number of North American carriers are collaborating for future network convergence through partnerships, including a consortium of Sprint-Nextel, Comcast, Cox Communications, Time Warner Cable and Advanced Newhouse. A limited number of bona fide service convergence deployments are proceeding among incumbents, such as the rollout of dual-mode handsets for convergence of voice over cellular and WiFi by NTT DoCoMo in Japan and trials by Brasil Telecom. New, so-called greenfield providers, next-generation ISPs and portals are making headway as well. Companies like Vonage, Skype and Earthlink truly bring together the worlds of the Internet, entertainment, seamless mobility and telephony through the deployment of converged services with unlimited calling. As we have seen, market forces are already making convergence a reality in 2006, and a growing number of participants on the supplier side are accelerating their convergence plans for the networks, service and content to deliver a richer, more flexible and more unified user experience across all devices and all networks. So which network model is most likely to succeed? The converged network model will most probably beat the competition, since subscriber defection and revenue erosion will soon marginalize traditional, non-converged networks. It is clear that end users are delighted with today’s new network and service choices, and that they are not likely to settle for less.