Convergence is changing the face of telecoms. In the following interview, Thomas Campbell talks to Ovum analyst Nick Thomas (Practice Leader, Digital Media) about the tendency, looking to find out what’s driving it and where it’s ultimately heading…
Thomas Campbell: First of all Nick – let’s put you on the spot. If the BT/EE acquisition goes through – is there anyone you specifically expect to follow suit?
Nick Thomas: I think it would be wrong to pull out individual companies! I think what we could say is that some well-known brands (in terms of telecoms providers or pay-TV providers ) will form alliances we didn’t see coming – let’s put it that way. I think will see some interesting alliances. That’s probably as far as I’d want to go!
How would you define the trend towards convergence among telcos?
Certainly the experience in the UK market is, we’re seeing consolidation – we’re seeing operators joining forces. What we expect to see is two or three quad play players in the market, and there’s a fear among even some successful mobile operators of being left behind, of being stranded. The tendency seems to be for consumers to take all their communications and content services from one provider.
How is all this convergence altering the very nature of the service provider?
It gives companies the scale not just to be active across different verticals within a market – from triple play to quad play – but in many cases it also gives them scale and presence across multiple markets within Western Europe. As such, it’s becoming a game for the big players. And in terms of the scale of the investment required, you have to have that scale to operate.
But whether that’s the only way the market will evolve, or if consumers will continue to be awkward and still get content and services from different players – I guess that’s the question.
What other anxieties might be attending this process?
Well, certainly for those in the fixed line business, there’s anxiety that what kept them in business for however many decades has been people paying for voice services – and now that’s becoming free or low cost for millions of users. There’s also a fear now that, although users are paying for broadband access, there’s more and more demand on the network because they’re watching more and more video.
So, although consumer demand continues to grow, in terms of the costs required to compete and the potential revenue coming in, making profit remains a significant challenge. This is why services are looking to consolidate, to launch new businesses, to launch new services to consumers.
Which brings us quite neatly to the matter of the Internet of Things. Does the IoT present one such avenue for new revenue and services, do you think?
From the perspective of Ovum IoT is the number one topic of interest to our clients across the board. I think that perhaps service providers are, as you suggest, wondering if this enables existing players in the telco business, in the network business, to say: this is the next phase of our business. We’re moving away from reliance on voice or just access for consumer services or content services.
One telco not afraid to lead the way in terms of both convergence and diversification is Broadband World Forum host service provider partner BT. In the following video, Tim Whitley (MD, Research and Innovation, BT), introduces the theme of his upcoming Keynote, ‘Monetizing the IoT as an Information Broker’ (Day 2, Wednesday, 21st October).