Analyst Angle: Real Convergence

Editor’s Note: Welcome to a special CTIA Show Daily edition of our weekly online feature, Analyst Angle. Every Monday at www.RCRNews.com you can find columns from the industry’s leading analysts, including Current Analysis’ Avi Greengart, Compete’s Miro Kazakoff and Jupiter Research’s Julie Ask. Visit www.RCRNews.com/analyst for more Analyst Angle.
Convergence is a term used often in the telecom world, but the meaning varies depending on who is speaking. To many GSM operators, convergence refers to UMA and the ability to handoff to a Wi-Fi connection-in other words, convergence between GSM and Wi-Fi. To a telco, with landline, long distance and broadband services, convergence refers to the ability to bundle the services and connections into a single package. And to an ISP, convergence is often used to describe the ability to support voice calling over an IP connection together with traditional Web content. Given these different perspectives, it is understandable how the convergence term results in confusion.
Rather than worry about how the industry uses the term, we really should be considering the customer and how they consider convergence. After all, it is the end user who will decide if they are going to use converged solutions. But the question then becomes as to what convergence really means.
Firstly, iGR uses a very simple definition of convergence:
What I do today but easier.
Convergence does not mean that users will suddenly start demanding new services or applications. But the customer will always adopt an easier solution if it is priced correctly. In the way of example, consider my own family’s behavior.
We like music and movies. I have always listened to music while working, driving and reading. We have a sizeable collection of CDs and we have had CD players in our cars since they were first available. I also bought one of the first portable CD players to listen to music on planes. So Apple Inc.’s iPod was a natural extension for me-the rest of the family followed. ITunes quickly followed such that 99 percent of our music purchases are now through iTunes. The availability of videos and TV programming now means that I rarely watch live TV-I am far more likely to download a season of “Law & Order” and watch them on my frequent flights. So I have converged my music and TV requirements onto an iPod.
The second example involves my wife. I recently gave her a new Cingular 3125 with Microsoft Corp.’s Windows Mobile and told her that she would be able to get her Roadrunner e-mail on the phone. After setting up the 3125 with her account information and syncing up to the PC to move over her contacts, a quick 10-minute tutorial had her up and running. From that point on, she has been able to check, reply and send e-mail directly from the handset (of course). She is now using mobile e-mail multiple times per day and frequently tells me how convenient it is to have all of her Outlook with her at all times. She views, reviews, replies to and deletes e-mail throughput her day.
The important point here is that my wife has not suddenly started using e-mail because it was on her phone-she has just extended her current use of an application to a new network and device. If you had asked her 12 months ago if this would have been important or useful to her, she would have said no. If you would have asked me three years ago if I would be watching TV on an iPod, I would have said no. But both now occur on a regular basis, which brings us to the second thought on convergence:
Today’s mobile users need converged services but just don’t realize it.
Due to the nature of the telecom industry, the applications offered to customers are directly linked to the network. Landline voice connectivity is the application. Broadband connectivity via cable modem or DSL is the application (even the names “cable modem” and “DSL” are marketed to the public). The same is true of cellular voice services and Wi-Fi-the network defines the applications.
But in a converged business model, the applications and services offered are independent of the delivery network. The end user decides what content, application or service they want to use and then selects their preferred device. The actual connection available to that device is really immaterial-the end user assumes that the device of choice will support access to the appropriate converged application/service/content.
Convergence is therefore not just “merged” bandwidth and connectivity, but is really defined by the applications and services. This can be neatly summed by the final definition of convergence:
Convergence is not simply more bandwidth-users will only pay so much, no matter the speeds available. New revenues are created by converged content, applications and services.
This means that the converged device will have more advanced capabilities than the traditional cellphone or mobile device today. For example, a consumer may want to watch a movie or a TV program and starts viewing the content on a laptop in a hotel room. They do not finish the movie and so continue on a smartphone on the plane home. The content is the same and the basic capabilities of the laptop and smartphone are similar (processor, memory, storage, connectivity, etc). The devices differ in their screen size, form factors and input methods. But there is no reason the smartphone will not have a 100 gigabyte hard drive (or flash memory), as the laptop does.
Convergence means many things to many people. But ultimately, it is the customer that will decide what the term means for them. The consumer will need to be educated on what is possible and what to expect-this will occur as new services and devices are rolled out. A good example is Verizon Wireless’ Vcast Mobile TV, which is certain to get considerable media attention and hence promote the idea of watching broadcast TV on a small mobile device. Get the pricing right for these types of services and in five years time, the mobile world will be a very different place.
Questions or comments about this column? Please e-mail Iain at iain@igr-inc.com or RCR Wireless News at rcrwebhelp@crain.com.