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IMS Magazine logo
April 2008 | Volume 3 / Number 2
Converged Views

IMS Bridges the Gap, Part 1

 
By Marc Leclerc
Telecom operators, Internet companies, and the media world seem to be locked in mutual suspicion of each other. Many companies in all three camps are limiting their business opportunities by being unable or unwilling to work with the others. However, hope is on the horizon: IMS can provide a framework to bridge the respective businesses models.

It’s no secret that industries tend to hold a negative perspective on change. However, in the case of the convergence of telecoms with the Internet and media businesses, the parties engaged have radically different mindsets and value propositions that would appear difficult to reconcile.

Perhaps we could benefit by looking to history to see if we can learn from industrial convergences in the past: in the last hundred years, the story of the consumer retail and mass-media businesses has been, for the most part, one of enthusiastic cooperation in creating more efficient markets, better distribution, more choice, and happier customers.

Let’s start with an examination of the current situation, and lay out the challenges from each industry’s perspective. Then we’ll look at what problems existed in the early years of the convergence of consumer retail and advertising businesses, and the solutions they came up with.

The Great Divide

Traditionally, the telecom business has used retail models (subscription-, content-, or usage-based pricing) to monetize network assets, while most profitable businesses on the Internet have adopted the broadcast/advertising model in order to generate revenues. Companies from each side of this divide tend to view the other with suspicion, in fear of losing their customers, markets, or place in the value chain.




The telecom industry has delivered its “goods” for most of the last century as state monopolies, well-insulated from the concerns of market forces. The result was a bureaucratic mentality: risk-averse, driven by regulation, and more concerned with broad consistency than with innovation. The years since deregulation have led to more competition, but old habits die hard so it is taking some time to change from focusing on protecting technologic ownership and a “killer app” type of thinking, to placing the emphasis on maximizing user value and experience.

The Internet is currently being used mainly as a mass-publishing tool, and has not seen much success in delivering other business models as users expect almost everything delivered on the Internet to be provided free of charge.

The media world is still reeling from declining sales due at least in part to pirating and file sharing. It has been slow to adopt digital distribution channels, fearing disruption of its existing channels, leaving consumers to seek content via other and sometimes illicit means. Countermeasures deployed by the industry have not led to any noticeable decrease in piracy, but rather wasted investments in failed technologies, mounting legal costs, and general unhappiness for both the industry and consumers.

Each of these three parties excels in a part of the value chain that is causing grief to the other two. Telecoms offer mobility and tight identity management; the Internet offers tools to efficiently make available and find content; and the media industry provides professionally produced music and video. Naturally they are gravitating towards each other, but at a cautious pace, trying not to make things worse while progressing toward the networked multimedia world. And it does take time to achieve a working consensus on their places in the new value chains, margin sharing, business and technology linkages, and – not least of all – adjusting their company cultures to the new reality.

The Traveling Salesmen of Babylon

Can we draw useful parallels from the convergence of retail and mass media over the last century?

Let’s peer back in time to the era of traveling merchants who went from town to town, trading goods produced from far away in exchange for what was locally produced. Some towns became places where merchants concentrated (market towns). Then came the industrial and transportation revolutions, and the quantity and variety of goods available to the average person expanded exponentially. But this created a few problems: the local general store could not afford to stock so many products, so how could consumers find out about what goods were available for purchase? Conversely, how could manufacturers create awareness and demand for their offerings?

Marc Leclerc ([email protected]) has been involved in the computing and communications industries since 1982, including positions in product design for software and hardware, product management and marketing. A member of the strategy and marketing group within Ericsson (News - Alert)’s Business Unit Multimedia, he is a frequent speaker at industry events. He is also manager of the Ericsson Mobility World Global IMS Expert Center at Ericsson Canada.

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