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Convergence: Trends and Challenges

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VoicenData Bureau
New Update

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.



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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.




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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. The choice of the phrase "blurring

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.



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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. If one goes by this model, convergence

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.



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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. A major concern that follows from

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.

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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.

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