TORONTO – There is no shortage of business models to choose from when it comes to optimizing opportunities in a converged world. The challenge is choosing which business model to use, said Bell Canada’s senior vice-president of marketing, Heather Tulk, during a panel discussion on Monday afternoon at the Canadian Telecom Summit in Toronto.
“One of the hardest things for the industry in the next number of years is going to be selecting from among the opportunities, whether that’s banking, machine-to-machine, mobile payments, near-field communication, location-based services, advertising data monetization, big data – the opportunities for new ways to enable Canadian businesses and consumers are bigger than I’ve ever seen in my career,” said Tulk, who spoke during a special panel session titled “Business Models in a Converged World”.
Tulk said the term “convergence” has been kicking around for virtually her whole 19-year career in the telecom industry. And over the course of that time, there has often been talk of various threats to the industry, she said.
“(People said) VoIP is going to kill landline, mobile is going to kill TV, over-the-top video is going to kill something else,” Tulk explained. “The reality is there’s never been a more exciting time to put this business model together and really drive forward.”
She added there is an opportunity now for carriers to optimize their cost models to make investments and singularly monetize the same network investment across multiple screens. “So as LTE and WiMAX and other acronyms you’re familiar with come on board, there’s a real opportunity to start investing in a singular way that drives a multiplatform environment.”
Another panellist, Jeff Gilchrist, communications sector leader for IBM Canada, wasn’t so quick to dismiss perceived threats to the traditional telecom market. He cited the example of Google Fiber, which is the search engine company’s foray into the broadband Internet market, albeit in a limited number of U.S. communities so far, such as Kansas City and Austin, Texas.
Google has priced its Google Fiber offering in such a way that, for a one-time US$300 construction fee, customers in select service areas will get free Internet in perpetuity, Gilchrist explained. “Google has crossed the threshold of being a threat to you as an industry. They’re now jumping over into the infrastructure side. So how are we going to combat that and react to that?”
The answer is for communications service providers to begin monetizing their customer data through real-time digital advertising, Gilchrist said. “We think this is the first step towards carriers becoming part of the digital commerce piece,” he explained. “You have information about who your subscribers are, who your customers are, and you can now think about how to monetize that information.”
To address privacy issues, Gilchrist said carriers couldn’t actually “cross the red line” and sell specific data about individual customers to advertisers. Instead, Gilchrist said, carriers would become the “information broker”, using data such as customer location as a way to provide value to clients in terms of serving up targeted advertising.
More than one panellist spoke about over-the-top (OTT) applications as being a potential threat to wireless service business. Dave Caputo, CEO of network management systems provider Sandvine, said WhatsApp is an example of an OTT app making significant inroads in the text-messaging space. According to Caputo, OTT messaging is already starting to overtake traditional SMS messaging, and by the end of 2013, two times as many messages will be sent using OTT applications than using SMS.
Mike Couture, general manager and senior client business executive, for customer care systems provider Amdocs, said the trend now is moving away from fighting OTT app providers and toward collaborating with them instead. He believes there are three emerging business models to address the OTT app market: a resale model, a preferred service model, and collaboration models. In the first case, carriers would simply resell existing OTT applications to their own subscribers, Couture said.
In the preferred service model, service providers would leverage their network assets to provide a value-add to differentiate their OTT app offering, Couture explained, adding this could be done in three different ways: premium quality of service, unlimited application use for a fee, or zero-rated apps.
In terms of collaboration business models, service providers would be looked at as a “trusted payment gateway” for the purchase of applications, he continued. So this would mean connecting the service provider’s infrastructure and back office to the app store itself, Couture explained. “So it’s something that has to be thought through, but it’s an absolute way that service providers are leveraging their assets, not only to compete but to cooperate and monetize their networks.”
