Convergence through whatever means necessary

GSMA Intelligence is today publishing a report on industry convergence. Convergence to date has been driven by two factors: technology and regulation. All-IP networks have blurred the lines between networks, as well as improving quality of service. Consumer expectations of higher quality services with seamless mobility and access to data and content have increased concurrently.

While technology continues to rapidly evolve, regulation has lagged. In particular, regulators continue to place greater emphasis on specific market segments rather than viewing the technology, media and telecoms market holistically, with the greatest scrutiny on proposed transactions which would increase concentration within a particular segment of the market. This has encouraged horizontal consolidation as operators search for greater economies of scale.

For integrated operators in particular, defensiveness has been the key driver of convergence to date. Virtually all report significant improvements in churn or customer lifetimes. A converged operator’s greater scale also gives it increased negotiating leverage with advertisers, content providers, and other ecosystem partners. These savings can be at least partially passed on to consumers, increasing competitiveness and defending otherwise at-risk customers and revenue. It is important, however, that operators design and price their convergence offerings around consumer needs and desires, rather than competing on price alone, and ensure that any scale benefits passed on to consumers do not unnecessarily erode value creation.