A lot has been written about the seeming failure of the communications industry to capitalize on the boom in applications flying "over the top" of fixed and mobile networks. Apart from the welcome growth of mobile data revenues, the revenue generated by Web-based services like Google, Facebook and iTunes bypasses the communications players.
Indeed, many service providers see the growth of over-the-top (OTT) services as somewhat negative because carriers pick up the network infrastructure costs of keeping up with the bandwidth demands of these services, while the OTT players get all the revenue. If you're an OTT provider, the cost to play around with new business models is low -- you don't have to invest millions of dollars in something and hope it works, so you can try different things with very little risk.
Actually, this feeling of somehow being robbed by the next guy in the value chain isn't exclusive to the communications industry. If you talk to people in the music or the movie business, they too see everybody, including telecom, as bad guys invading their turf. So everyone is nervous about everyone else -- are they friends or foes?
Human nature being what it is, it's probably better to assume foes until proven otherwise. But unless everyone finds a way to collaborate and grow the overall pie rather than just stealing revenue from one another, few in the value chain will make any money. It's as simple as that.
But it seems to me that things may be changing. Instead of a model where the OTT players are leveraging the investments of the communications companies, it may be possible to reverse the situation and allow communications companies to create new revenue from the Web players' investments. Or at least there's potential -- if they work together.
I'm talking about a close marriage of smartphones, fixed and mobile broadband services, service delivery platforms, and social networking. None of these things is new, of course: Facebook announced its 300 millionth member and just turned a profit for the first time in its five-year history. Today, most people interact with Facebook, MySpace or Bebo when they're in front of their computer screens, not via their mobiles, even though many of these sites have apps available for various mobile devices. Why? Because the user experience isn't great when you are on a tiny browser without a keyboard.
But smartphones are changing all of that. The user experience on an iPhone, for example, is good enough that e-chatters don't have to stop when they're away from their laptops. It can be an anytime, anyplace experience.
Social networking strategies
But how can communications companies make money out of it -- isn't Facebook just another over-the-top application? The interesting thing about Facebook is why it's winning the social networking war over MySpace and other rivals.
It's not necessarily because it's cooler or better than everyone else; it's because social networking seems to resolve down to being a natural monopoly. If all of your buddies are on Facebook, why would you consider another site? People tend to flock to the most popular site, and then it's almost impossible to peel them away, even if your service is 10 times better.
That's exactly how the communications industry can leverage new revenues -- by tapping into the concept that if everybody wants to be on the same social network, why not be on the same communications network?
People aren't inclined to do that if every mobile or fixed network gives them just vanilla connectivity, but if the service provider offered interesting new capabilities that helped bind the group of friends together more tightly than Facebook alone could, then the communications player could start to reap some benefits.
These capabilities might simply be a sort of "Facebook Friends and Family" arrangement, where a group of people could get a better tariff as part of a named group.
But it could go a lot further than that: unlocking features like location services into Facebook applications so friends who are physically near each other can meet up, providing enhanced click-to-talk and messaging services over and above those provided by Facebook itself, conference calling, enhanced voice, click-to-talk facilities that actually work, and so on. The idea would be to grow affinity groups as loyal to the communications provider as they are to their social networking provider.
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Keith Willetts is a co-founder and chairman of the TM Forum
This article originally appeared on SearchTelecom.com