Brave new world of communications

Following market liberalization and other reforms on the one hand and technological convergence on the other, end-users today enjoy multiple modes of network access. This has altered the nature of the relationship between network operators and the consumer.

In today’s world, the consumer is king and no longer a ‘residual category’ after government and large corporations. Network operators and vendors who adapt to this reality are likely to thrive in the emerging telecom environment, says Bakhshi.

As he notes, operators are shifting from simply provisioning network access (competing for more subscribers) to ensuring the end-to-end user experience (competing to retain subscribers).

Mobile operators recognize that in the steadily growing world of mobile data, provisioning robust, high-bandwidth networks is mere table-stakes.

 A desire to manage end-to-end user experiences and create a meaningful service offering is prompting them to look beyond their own networks at the entire ecology of communications, from content and platforms to devices and their operating systems – and everything in between.

The convergence of telecoms, the Internet and media will force all players to collaborate because the competences needed to build meaningful solutions span several sectors. While many players recognize the need for collaboration in a converging world, they are afraid that “value” will bleed across sectors.

Consider mobile search. Some operators may worry that big-name search engine providers will “hijack” subscribers on the strength of their brands. In response, they are looking for smaller players who can provide a “white label” search that mobile operators can brand as their own. What they may forget is that subscribers tend to resent these continued attempts to create walled gardens.

Convergence is producing what economist Joseph Schumpeter called the “creative gales of destruction.” Operators must rethink their business models, and create new ones based on alliances and partnerships, which will allow them to offer complete, useful and attractive services.

There are clear implications for vendors. In the past, they have tried to do everything in-house. Those days are over, in part owing to the proliferation of access technologies, but also to the growing role of IT platforms and software and the uncertainty over which technologies are most likely to provide long-term success.

As Bakhshi stresses, now is the time to stop being a one-man band and take the role of an orchestrator. And just as the maestro conducting a symphony does not have to play every instrument, the orchestrating vendor does not have to provide every component of the solution.

Instead, they can tap into the intellectual and financial talents of other players and still make the network sing. The principal infrastructure vendors (Nokia Siemens Networks, Alcatel-Lucent, Ericsson, Motorola, Nortel, etc), have one unique talent – they understand networks and they define and design the migration paths that are likely to take networks to the future. This gives them the legitimacy to be the orchestrator at the center of the business.

To take this role, they need to transform themselves from a mere supplier, working at arm’s length, into a “partner” willing to share both the risks and rewards.

Here, Bakhshi is alluding to the managed services business, which he sees as the new defining role for infrastructure vendors. As the principal managed services player and, in that sense, the principal network integrator, infrastructure vendors should scour the market for best-of-breed elements to design into their solutions.

Bakhshi sees IMS (IP Multimedia Subsystem) as the cornerstone of fixed-mobile convergence and the new ecology that it will support.

“There needs to be a common packet core that speaks the same IP language to any of the proliferating access technologies. At the end of the day, there is only one network. The last mile access technologies (Wi-Fi, WiMAX, cellular, DSL, cable, etc) are like access ramps all leading to the same highway,” he says.

A seamless network environment with the promise of “any service on any network using any device, anytime” is still some distance away. Much needs to be done on the back-end, with OSS and BSS. The industry must devise ways of federating subscriber identity across different access networks (that may be controlled by different players). Today, there are still technical, business and probably regulatory hurdles to achieving this.

Bakhshi has some advice for network providers and their vendors: “They should stop the meaningless search for killer applications. Instead, they need to build a ‘killer environment’ that can support different kinds of applications as well as personalization, which is the underlying premise of successful mobile data services and requires providers to meet the varied information needs of individuals.”

For the infrastructure industry as a whole, consolidation is creating a healthier environment with strong players. By joining forces, players increase the effectiveness and reduce the cost of R&D. There are also benefits from rationalizing product and service portfolios and acquiring a complementary global footprint.

Bakhshi predicts a future in which a few strong players will orchestrate complex webs of alliances with mid-sized and smaller technology providers. There will be very few monogamous business relationships.

For Nokia Siemens Networks in particular, Bakhshi sees little obvious overlap – one company is strong in mobile space, the other in the fixed world. And given the small overlap in geographical footprint, the company is well placed to reap the benefits of consolidation and become much greater than the sum of its parts.

Similarly, on the operator side, a handful of strong players in the converged space will offer compelling service bundles, elements of which are cobbled together through alliances with smaller, niche players in specific geographic enclaves.

And consumers? They will have a wide choice of services, hopefully at competitive rates. For operators, the key will be to spend less on marketing and more on educating consumers to see the promise and value of the brave new world of communications.