Convergence is a global marketplace dynamic that is blurring the lines between competitors and collaborators. In telecom, communications service providers (CSPs) are increasingly competing against non-traditional competitors like device manufacturers, service and content providers, and retailers that are all on the same quest: to own the consumer by owning the customer experience.
To achieve this goal, they use the access provided by the CSPs. Simultaneously, these new competitors are challenging CSPs in their core businesses. Most CSPs have realized that status quo is not an option, and they typically can either choose to compete against the OTT providers or partner with them to develop the best solutions for consumers. If they choose to compete, their options are to prevent OTT services by blocking their transmission through their network, reduce OTT services' attractiveness by taking pricing actions or compete head to head by offering similar products.
To add complexity to the matter, in most situations, these actions are not mutually exclusive. For example, Google and Apple are both partners of CSPs for smartphones and apps, as well as competitors to CSPs, which is contributing to the decline of mobile voice and SMS.
Core under attack
The shift is clear: in maturing markets, CSPs' voice and SMS APRU is decreasing while data ARPU is rising. Operators have to manage this shift in revenue, but ultimately most of this revenue will disappear in the near future.
CSPs are also being challenged in the area of access. For example, in the US Google is now providing fiber services to some select consumers, and has asked the FCC for permission to run an experimental wireless network in the 2.5-GHz spectrum.
Similarly, Apple's next big move has been rumored to be providing wireless service directly to its iPad and iPhone customers via an arrangement with a mobile virtual network operator, which could be a global play, potentially impacting CSPs' very profitable revenue stream for roaming. Voice revenue, meanwhile, is expected to decline worldwide at 2% CAGR between 2012 and 2017.