The world of convergence – services, devices, networks and sectors
January 29, 2013
Convergence has become a pervasive trend with the advent of new technologies, enabling “anytime, anywhere” access to resources. It has redefined “communication” by combining telecommunications and broadcasting sectors and offering multiple services using a single device over a single network. For example, today “watching TV”, “accessing emails” and “phone calling” can all be performed on an IP network (instead of traditionally separate networks) using a single device (like a smartphone). Thus, as shown in Exhibit 1, the four facets of convergence are services, devices, networks and sectors.
Convergence of services is the bundling of two or more services – voice, video, data and other value added services – into packages which are sold to the consumers. Although there are several combinations possible, the more popular packages are triple play (voice, video and data) and quadruple play (triple play plus mobile voice and Internet). In the past, consumers went to different companies for different services – a fixed telephone operator for fixed line, cable company for television, Internet service provider for data and mobile operator for mobile services. However, convergence has resulted in one company providing multiple services to the consumers. Examples of companies providing converged services include AT&T, Verizon, PCCW, Optus, SingTel, Vodafone and Virgin Media.
Convergence leads to more competition for the companies but it also increases revenue and decreases customer churn. Consumers also benefit with discounted package prices and a single bill for multiple services. In addition, convergence has paved the way for growth of new services for entertainment and communication. For example, VoIP has emerged as a significantly cheaper alternative to traditional telephone. Similarly, IPTV is replacing traditional cable television and IM is replacing SMS. Other popular new services include video chat, video and photo sharing, P2P file sharing and social networking “apps”.
Convergence of devices refers to the integration of the traditional service-specific devices – telephones, televisions, computers and mobile phones – into a single device providing converged services. This has led to the development of “smart” devices such as smartphones, smart TVs and tablet computers. In particular, smartphones (and “apps”) have grown rapidly over the last few years, allowing moving users to make calls as well as access Internet and entertainment sources. Convergence enables consumers to share content – music, videos, movies, photos and even phone address books – across devices. For example, a movie ordered on a set-top box or a photo clicked using a smartphone can be watched on the smart TV, smartphone or tablet.
Convergence of networks is the implementation of an all-IP network to replace the service-specific networks used previously. Traditionally, the public switched telephone network (PSTN) provided telephony, cable network provided television services and data networks allowed Internet access. However, the growth of Internet Protocol (IP) networking, packet switching, fibre networks, WiFi, WiMax and LTE along with a multi-fold increase in computational powers have made it possible for a single network to support converged services and devices. As the operating companies have to install and maintain a single converged network infrastructure, their capital and operational expenses (CAPEX and OPEX) can be reduced significantly. In addition, convergence encourages efficient network capacity utilisation as well as inter-platform competition as different operators now provide the same services.
Convergence of sectors is the change in the regulatory environment due to the blurring boundaries between the telecommunication and broadcasting sectors. Convergence has also had an impact on several other sectors including education, financial and health. The converged services, devices and networks have driven the change from single-sector regulators to converged regulators to resolve overlapping issues. The converged regulators face the challenge of reforming the regulatory framework and policies to:
- implement appropriate and simplified licensing
- enable technology and service neutrality
- manage the spectrum efficiently
- encourage fair competition
- adopt proper policies on interconnection
- promote innovation, research and universal access
- regulate the content and QoS
- ensure security.
Examples of converged regulators include the US Federal Communications Commission (FCC), the Canadian Radio-television and Telecommunications Commission (CRTC), the Australian Communications and Media Authority (ACMA), the Telecom Regulatory Authority of India (TRAI), the Office of Communications (Ofcom) in the United Kingdom and the Communications Authority (CA) in Hong Kong.
In conclusion, convergence is a positive and irreversible step that has led to significant advancements in communication services. It has also opened multiple opportunities for the development of society, fostering improvements in education, health and business facilities.