Telecom operators are positioning themselves as all-round, value-added digital service providers as convergence has become critical for carrier evolution. Telecom convergence is characterised as a combination of various carrier-provisioned services that are supported by interconnected access methods.
Listed below are the key technology trends impacting the telecom convergence theme, as identified by GlobalData.
5G has the potential to be a catalyst for new models of telecom convergence due to the technology’s significant cost-per-bit savings for operators, high data speeds, low latency, and flexible network architecture such as EDGE networking.
Residential connectivity is the next step along the telco convergence value chain for many players as it can form the basis for advanced complementary consumer services such as cloud-based game and multimedia streaming, internet of things (IoT) with security as a service, encryption and data privacy management, self-driving cars, and telemedicine.
Artificial Intelligence (AI)
AI has the potential to improve a wide variety of business processes for telecom providers, from internal operations such as logistics and procurement to client-facing functions such as sales, customer service, and product enhancements. AI-based digital assistants and chatbots are helping customers request content and programming recommendations, set up services, and learn about new offers over a variety of different interfaces.
The automated home is often cited as the next big opportunity for telcos looking to add service value, boost spend and incite customer loyalty to increasingly converged packages of home broadband, TV, and wireless connectivity. Carriers have struggled to justify a business case for subsidising and reselling these third-party products to their own customers. They feel compelled to provide automated home services to retain brand perception in this segment but are largely unconvinced of its incremental revenue potential.
Telcos have a better opportunity to sell value-added connected car services together with wireless and even global connectivity packages. Many telcos are doing so either in partnership mode or direct to consumer. Third party conversational platform providers like Amazon and Google, however, have been aggressive in the direct-to-consumer area. Telcos have yet to come up with a good strategy for offsetting this challenge.
Consumer IoT is a natural corollary area of convergent service provisioning for telcos already acting as the primary providers of fixed and mobile broadband access in and out of the home. The opportunities are plentiful in this area including offering connectivity and broader end-to-end solutions and support for smart devices and connected gadgets of all kinds.
Most convergence service packages have been connectivity-centric offering fixed broadband and wireless packages, together with TV content for the household. Some telcos have started to look to new areas of service and support value-add that can be layered on top of such a bundle.
Cybersecurity for the household has emerged as one of the more interesting opportunities. Some carriers are starting to resell, re-package, and align home cybersecurity software with residential convergent packages.
Media consumption is now primarily occurring over digital formats. The rise in the number of devices capable of supporting digital media, along with increasing internet access speeds and a plethora of different kinds of content, has provided consumers with the ability to access media content anytime, anywhere. Telcos can serve as an aggregator of this content as they have the billing relationships, established portfolios, and networks to support efficient and scalable mass-market service delivery.
Dealing in the commerce space is nothing new for mobile operators. Direct carrier billing remains a robust area of payments, while co-branded credit and debit cards and mobile ticketing and transit products are also widespread. Some telcos, however, are considering more sophisticated digital commerce plays as areas like online payments and contactless transactions gain ground.
Commerce-related services can bolster convergent go-to-market strategies within entirely new sectors of relevance in the day-to-day lives of consumers and households such as insurance, banking, loans, and personal finance.
Online gaming is one of the highest-growth segments of the digital industry and the best early use case for consumer 5G, yet carriers are struggling to establish their position within the existing gaming value chain.
Many have already partnered with cloud gaming providers to bring new game-play options to both their fixed and wireless customers, typically for a standalone premium charge. Some have gone further, zero-rating wireless access for a smartphone package gaming app to add value and differentiation to a wireless portfolio and investing in esports projects.
Content has become a key element of telco strategies to diversify in the move towards convergence, typically in the form of a proprietary television platform combining linear broadcast channels with time-shifting and on-demand programming.
Telcos, however, are having to contend with the rise of a variety of internet TV alternatives in the form of advertising video on demand (AVoD), subscription video on demand (SVoD), broadcaster video on demand (BVoD), streaming media platforms services and social networking sites, among the many online alternative sources of TV, film, sport, and infotainment.
The telco response has been for operators to reposition themselves not only as pay TV providers but as content super-aggregators, bringing together a breadth of linear, on-demand, partner, and online audio-visual content within a single interface.
Broadband network technology has enabled third parties to create innovative applications to ride over the top of fixed and wireless networks. Some of the biggest of these innovations are social media applications such as Facebook and Instagram, Google’s YouTube, and Twitter.
Carriers, unable to match this innovation, have been relegated to access providers. They have an incentive to bundle access to these popular applications to offer value to end-users, primarily via zero-rated data offerings in markets where wireless data access is metered.
Quad-play is often the first step taken by telcos towards convergent service propositioning, commercialised as bundled packages commonly incorporating fixed-line telephony and fixed broadband internet access with cellular mobile services and television. It is a logical step for carriers with both fixed and mobile infrastructure assets in expanding revenue generating units (RGUs) per household and upping incremental revenue.
This is an edited extract from the Telecom Convergence – Thematic Research report produced by GlobalData Thematic Research.