Multimedia business over Telecom network

Multimedia in Telecom: A business perspective. 

Author: P. Abraham Paul. 

MD& CEO   FCOMNET - FUTUREGROUPS (India)  

Introduction: The past many years saw much hype, due to over projection of the business potential of 3G Telecom, Voice over IP and growth of INTERNET dependant e-Commerce and e-business. Realization came late that most of these high tech propositions, though conceptually attractive and forward looking were going to take time to develop, huge investment and coordinated efforts of various business, technology providers and ISPs  to convert these to marketable and revenue earning products. 3G and other New Generation Networks are great advancement in Information Communication Technology, but concepts alone cannot make a viable business case and many Telecom and Internet service providers broke down as their original business plans later turned un-sustainable. However, lately the business approach has been more pragmatic and realistic. 

The objective of this analysis is to look how to get over the obvious hurdles and make the ICT and Multimedia possibilities suitable for contemporary and future business needs so that the presently stagnant e-business would really take of.  It is envisaged that the next one or two years will see a quantum leap in the realization of these concepts. 

In the GSM arena, the SMS has become a powerful communication tool, WiFi, WiMax bearers for more viable SOHO network that dramatically changed the wireless data world, and FTH end link alternatives for high speed data communication and VoIP over Internet becoming more practical, user friendly, economic and faster, and therefore, are gaining universal acceptance. Virtual Mobile Networks will bring down investment and operation costs and cost to users drastically. All these are good news to the end users but may be the picture may not be that rosy for the Telecom Service Providers and Telecom equipment vendors.  

1.   Impact of Data communication and Voice over IP.

The advancement in technology and convergence of voice and data will hugely impact the Telecom & ISP providers and vendors business because of the major shift of circuit switched Voice based usage to Internet based Wireless Data service will inevitably take away the business and along with it a major chunk of the revenue. 

The reasons are: 

i) Limited scope  of Network Operators/ISPs taking the role of Application Providers. 

The GPRS / UMTS / WCDMA are bearers which provide suitable network and pipes for access and WAP is only an application protocol. The telecom service provider and ISPs are mainly access providers and cannot become application providers except for very generic and universally specific and ’Device to Device’ multimedia services, which are going to be a miniscule of the whole business potential. Why because, the major data related activities will be in extremely large base of end clients in the PDN, widely distributed in the limitless IP world and their requirements will be highly diverse and dynamic.

The vast amount of individual and standalone e-business units and service related systems and applications will be spread beyond the boundaries of individual Network operators licensed service areas, and therefore will have to be taken care of by external Service Providers and Business units in the PDN.  

ii) Shift of revenue from Network Operators to external Service Providers & e-Business units in PDN.  

Impact of Voice Data convergence and transition of major part of usage from Voice to Data service will have great impact on the of Telecom business models in terms of investment and revenue realization. The Network Operators have no control on tariffing, rating, charging and billing of "external client" based service and usage. At the most they can only charge their subscribers for the access by measures of quantity and not for the real value of the transaction. But then, value of content / transaction is known or  is determined only at the content provider level and in most cases the onus of revenue realization also rests with them. In fact the end service providers are going to be the real beneficiaries of the advancement of high technology. 

Therefore, as the scenario changes, a good part of end user revenue will move from PSTN/PLMN Network Operators to various Content Providers/Service Providers/e-Business units in the PDN that are spread far beyond the licensed area of the individual network operators.  

iii)  Network operators will eventually lose exclusive ownership of their customers:  

With opening out of Private Long Distance carriers, the users ability to to choose carriers according to their will, the VMNs.Convergence of Voice and Data and with predominance of Data service and Number Portability,  ownership of end user will no more remain stuck with any single Network Operator.  As the e-Services and e-Business takes of, the Telecom Network Operators and ISPs will further lose their monopoly in holding on to exclusive ownership of their customers in terms of the revenue generated from them.  

With Carrier selection, the end user at their own will and pleasure will have option to choose and use different Network Operators / Service Providers who would provide them efficient, competitive and quality service and eventually will have direct dealing with the e/business Providers for the services and with it these service related revenue also goes to them.  

iv)  Impact on  business of Telecom equipment vendors:

a) The Telecom Vendor’s business will have adverse impact due to Network Operator's    constraints in funding the high-tech investments. The advent of telecom evolution is great business for vendors as far as their customers are willing to invest for inducting advance technology in their networks. Added to this with less demand on existing technology systems will have some amount of negative impact in the business of Telecom Network system vendors.  

b) The Telecom Vendors cannot get into Application Business in the PDN. Major telecom vendors cannot get the vast business of Application and Business support system sales. The Application and Business support systems in the limitless area of PDN is the most revenue earning part in the whole business. These are highly diverse, dynamic and widely distributed across the whole IP world. Such infinite number of standalone, low cost value, and individually tailored systems and applications cannot be customized, sold and maintained by major telecom vendors. It is not foreseen for any major vendors to venture in to this business and majority of the service providers / e-business units do not need and also cannot afford the major vendor systems. Business of telecom vendors is limited to selling of generic and very specific Application systems for the Network operators which is going to be only a small fraction of the market as the real business value lie in the external IP world where each unit need tailor made systems and solutions.

2.   Need of  Payment Gateways in PDN for apportioning of revenue. 

       2.1     Special methods are needed to handle Micro-payments involved in e-business.   

The e-business and e-services related to 3G and multimedia services over Internet involve high volume low value payments and these cannot be done by direct payments or handled economically by the banks, regular credit card companies etc. Also these payments can neither be handled by the Network operators/ISPs nor by the Service provider/e-business units as the value of each transaction is known only to infinite number of e-Business/Service providers, who finally sell or provide the service.  To over come this, the network Operators /ISPs therefore, need to find strategies and methods to get adequate share of the revenue collected by e-business units from their customer who use their network and resources. 

This is the most critical issue and the high tech telecom and IP related e-Business cannot take of and the Network Operators/ISPs cannot hold on with sustainable business plans until this issue is addressed and resolved. Micro-payment Gateways in PDN is one such idea to get back part of the revenue generated from e-business based on data services.  

2. 2   Concept of Payment Brokers as middle way systems.  

To be in line with technology advancements, the network operators have no other choice but to induct the new technology systems in their networks and find means and ways to ensure sensible business propositions and its sustainability. For this, Network Operators/ISPs have to look for methods to grab their share of revenue generated in the PDN to survive.  This need coordinated efforts by all stakeholders and the regulators.   Here is the emphasis of the need of Payment Broker systems, that can manage the accounting of payments, apportioning of it and sharing the revenue generated between the stakeholders. 

A Charging gateway is just another network element sitting in PDN. Interestingly the Payment broker system can be located any where in the PDN and can provide service to large number of Network operators /ISPs and the e-business units and application service providers in PDN.  The payment broker system cannot be managed by individual Network operators/ISPs as the Service Providers and e-business units are common platforms shared by customers of many different Networks/ ISPs. The Payment Broker systems shall be a common platform Service Provider system in the PDN.

Conclusion: 

Most of the advance technology systems are now the monopoly of Network Operators/ ISPs and System vendors.  However, the voice call revenue is dwindling due to competition as well and saturation of usage and it is necessary to forge into more and more broadband products business in order to survive. It is necessary to take these out into the user premises by melding the technology with user intensive systems and applications and value added services. To realize all these effectively, it is necessary for the Network operators/ISPs and regulatory bodies to standardize the e-business related charging, billing and payment procedures.  

Common Payment broker systems are needed to take care of adequate revenue share to network Providers / ISPs so as to compensate the high investment needed to induct high tech and provide enough pipe for their customers to access the Service providers and e-business units.  

This could be the ideal philosophy to adopt in every country, in order to avoid stagnation in the e-business growth and full exploitation of benefits and advantages of modern technology. With right perception and direction, these disconnects in concepts can be rectified and the e-Business will see ample growth in the coming years. It shall be possible to achieve quick overall telecom growth, with benefits for all, the Network Operators/ISPs, Business owners, the Service providers, the Telecom Vendors and over and above for the consumers as end users. 

-Concluded-