New services, new technologies,
new market structures, new business models, and less stringent
regulations. Convergence has brought change not only in the
way we live, but also in the way we think. But then, not everything
is rosy about convergence. The truth, however is, the challenges
have to be met. There is no run-away option.
Medium is certainly not the message.
Not anymore. Today, each message can have its own virtual medium-which
offers the advantages of each traditionally different medium
while removing the limitation of each. The receiver now has
got the capability to "customise" the medium. Till
yesterday, he could only choose.
With digitalization, commonality
among technologies is increasing and the specific characteristics
of traditionally different media (and hence traditionally different
services) are fast becoming a thing of the past. For example,
broadcasting was a transient medium. Storing and retrieving
was certainly not a characteristic of broadcasting. Today, that
is no longer the case. The news capsule at 10.00 can be watched
at 10.30. And it does not have to be stored at your end. Somebody
else does that for you. Similarly, you do not have to sit with
all the newspapers in the last six months for researching on
something. Just go to the web site and search for the items
of your interest.
There are two important identifiable
trends here. One, the selection of media is no longer an either-or.
It is a mix-n-match. Two, the control over the message is steadily
moving from the source to the receiver.
Now, that itself is convergence for many. But then, there is
much more to the word.
Making Some Sense Out of the
Chaos
Convergence is a cool word, with lots of marketing value attached
to it. It looks good in advertisements and sounds impressive
in tag lines. Network, terminal end, telecom, datacom, broadcasting,
IT, voice, data, video, computer telephony… there are as
many definitions as there are stakeholders.
Without going into the specifics like what should be included
and what should not, we give a definition here which is quite
broad, all embracing, and so naturally not very helpful for
those who want to jump to examples. Like modern physicists,
it tries to put a unified picture, a sort of Theory of Everything
(ToE). Yet, one will not be surprised if some still find it
correct yet inadequate, the most common phrase to describe all
these definitions.
Convergence refers to the blurring
of dividing lines among traditionally distinct products and
services, technologies, markets, industries, and regulatory
structures.
of dividing lines'''''''''''''''' is deliberate, in preference to the more
commonly used "coming together". This is because,
whereas the latter is description of a definite phenomenon,
which may or may not be happening, the former describes only
the capability. Similarly, the choice of phrase "traditionally
distinct" is to envelope all that can come under it, and
not to define it in specifics like computing, telecom, entertainment,
etc. Similarly, we acknowledge the fact that more words could
be added to service, technology, product, market, industry,
and regulatory structure. Words like say, media, which can be
a physical media like cable, wireless, satellite, etc., (in
which case it will come under technology in the above definition)
or media as in television, press, cinema, etc., (in which case
it will come under services in the definition).
However, while it is certainly
more correct, a broad, holistic definition does not always clarify
things to a great extent. Going in-depth to specific issues
is not always possible by using an umbrella definition. Take,
for example, the challenges of convergence. They are different
at different levels. Different levels such as technology, market,
industry, regulation, and services have their own characteristics,
issues, challenges, and barriers to convergence.
One tries to approach the phenomenon
of convergence from the user end (See Figure 1). One does not
claim that this approach is superior to any other. But one has
to start somewhere. Also, one makes a concentric representation,
rather than a linear model like that suggested by Analysys''''''''
value chain model. A concentric circular model denotes that
the centre to the activities of all companies-even semiconductor
companies-is the end user. But more importantly, it makes it
easier to represent traditionally (completely) distinct services
in one model, and so to whatever extent possible, their co-relation.
A linear model on the other hand is good for depicting different
levels of one service, such as say broadcasting. A linear model
can well represent the positioning of a cable operator, a satellite
channel provider, and the television software (content) provider
with respect to the user and also to each other. But it cannot
represent the counterpart of a cable operator in the field of
what has so far been known as communications or telecom services.
Traditionally, the user has received
services from different service providers. While communication
services-for a long time known as telephony-came to him from
telcos, usually state-owned monopoly PTTs, he received information,
education, and entertainment from service providers like radio
and television broadcasters, and printed newspapers/magazines
known collectively as the media. Again traditionally, broadcasting
has been state-owned in many countries before being opened to
competition, while newspapers have been state-owned only in
a few countries. With the advent of computing, small computing
devices known as PCs came as a productivity tool, which soon
enhanced itself to act as a communication terminal like a telephone.
Today, different services are increasingly coming from one source,
while one terminal is likely to act as the single receiver for
multiple services in near future.
has today happened not only within the same layer, but between
different layers shown in Figure 1. To cite an example, a cable
TV provider at Layer 2 can provide telephony service as well,
a distinct service in Layer 2. Or he can even be a content provider,
a Layer 3 service. Most of the companies that provide some of
the product/services see their immediate next area as the scope
of convergence and hence try to expand to those areas. They
define convergence as the convergence of their area of operation
with the immediately expandable technologies, services, industries,
and markets.
While this model is customer based,
it more or less defines the positioning of the providers of
products and services, in relation to the user, and in relation
to each other. However, the scope of regulation is all pervasive
and can be thought of as impacting all the players-including
the user-in this model. Also, the regulatory issues are much
more complex, as it involves an objective that has also to include
social needs, in contrast to the providers of services and products,
who are driven by only commercial needs. So challenges and models
of regulation have been consciously kept out of this model and
are discussed separately.
The Issues
While no one can deny that convergence is happening today, there
is a wide gap between the perception and reality regarding the
nature, extent, and pace of convergence at different levels
such as infrastructure, consumer devices, markets, and regulation.
For example, while more of the talks revolve around accessing
Internet from cellphone or through television sets, they are
not a large-scale commercial reality anywhere in the world.
But a less glamorous convergence like Intelligent Networks at
the carrier infrastructure level or Internet over cable (not
through TV, but through cable modem and PC) are realities.
This has primarily three reasons.
One, the network has to be ready for offering new services and
capability before the end user can access it through fancy consumer
devices with new capabilities. Two, the service providers have
traditionally been in one business (telecom, broadcasting, etc.)
and they want to expand the scope of that business by diversifying
to other services or offering newer services. Hence, they are
adopting newer technologies for the purpose. Last but not the
least, selling to the service providers is more focused and
the selling cycle time is lower. For consumers, it requires
a lot of marketing effort.
But it has one fallout. Since,
it is the operators who are the ones taking the lead in investing
on converged new technologies; the technology development is
taking an evolutionary, rather than a revolutionary path. This
is because the investment that has been made earlier has to
be protected.
Interestingly, while there has been a spate of mergers and acquisitions
of late, many believe (like the majority of respondents to the
European Commission''''''''s Green Paper on Convergence) that while
convergence at the technology and network infrastructure is
happening, it does not necessarily mean that convergence of
markets would follow automatically. Nevertheless, convergence
acts as a catalyst.
the impact of convergence is that monopolists-both the traditional
state-owned monopolies and ambitious new market leaders-are
using the convenience of technology convergence to enter to
other markets, killing small companies there. Though, it is
essentially a regulatory challenge, it nevertheless affects
the direction in which technology moves. Some IT companies,
for example, are driving the convergence, because IT is the
common platform for most convergence and also because some IT
companies are extremely cash rich, because of their high market
value. The consumer electronics companies who understand the
consumer well, have been sidelined in this game. The IT companies
are trying to export the PC business model to consumer electronics
and communication, resulting of course, in open standards and
price drops, but at the cost of simplicity. This might be a
reason why despite the new capabilities today, convergence has
not really happened at the end user side. The new technology
that is coming is anything but simple.
There is another drawback of IT
companies leading the game. Most major IT companies are US-based
and have tried to export that market model in IT and succeeded,
whereas companies in other segments have to play by the local
market rules. While the IT market dynamics in US, Europe, and
India are not very different, telecom or broadcasting markets
in these regions are completely different. This is creating
a situation where common people learn to use technology, not
because they like it, but driven by fear that they might possibly
lag behind.
Another danger of convergence is
that the objective of business organizations is drifting away
from serving the users. The Net has made it possible to create
new services easily. Many companies find a niche, package communication,
information, entertainment, commerce in a unique manner and
float a company, with the objective of building a high paper
value, keeping the stock market and not the market for their
products/services in mind. Their valuation is also done with
the short-term objective in mind. These companies create converged
products/services that is aimed at becoming an instant hit and
no more. Naturally, technology convergence takes a wrong direction.
End Note
Like its most visible symbol, the Net, convergence defies all
definitions, regulation, and market rules. Many companies spend
time to understand the phenomenon. The smart ones try to invest
their time in directing the way it moves.
We just need some smart companies,
which are responsible enough.