The telecoms operator of the future

The era of converged telecoms services is bringing big changes to the operators. Stewart Baines looks at what they'll need to succeed in the future.

Operators are undergoing the most radical change the industry has seen since digitisation. Broadband has brought data services to the masses and GSM has helped make communications pervasive. Underlying this is a wholesale migration to IP.

The end game is more than the construction of a converged network that can deliver voice and data: it's a new service provider that can deliver business and personal communications at home, at work, on the way to work, travelling abroad.

The next-generation operator will no longer be a bit carrier. On the menu are media-rich offerings such as video on demand, music downloads, hosted applications and collaboration tools. Business telecoms services will be delivered over networks optimised for enterprise applications. They will be access- and device-agnostic, allowing employees to work wherever they are. The network will be ubiquitous.

That's the idea at least. While the technical standards for realising these goals are rapidly developing, operators have significant challenges knitting it all together. It's uncharted territory and will push the industry into a state of constant change for the next five years. So what will emerge from the convergence of telecoms, IT and media? What will the future telco look like?

Sandra O'Boyle, senior analyst at Current Analysis, says: "Operators, particularly incumbents, know they have to completely change the way they deliver services and operate their networks. With everything moving to IP they face the prospect of loosing virtually all of their control to Microsoft, Google or YouTube, and seeing their own position relegated to that of a bit carrier."

More on converged communications and SMEs

♦ Research report
Read the full analysis of research into converged communications conducted by The Bathwick Group and silicon.com

♦ Video with Jonathan Steel
Watch a video interview with The Bathwick Group analyst Jonathan Steel discussing SMEs' use of communications technologies

The response must be to transform their networks, organisational structures and relationships with suppliers, partners and ultimately customers. Next generation networks (NGN) and IP Multimedia Subsystem (IMS) are seen as the core technologies that will not only enable network transformation but every aspect of the service provider's operations.

O'Boyle says: "Converged operators will need to change everything from the back-end to the customer-facing functions. They may not need to run all the services over the same network but will need a single view of the customer. The current offerings are bundled. They need to get to a point when they are blended."

BT and the Netherlands' KPN have been particularly vocal about moving to this new environment. Both incumbents have embraced major transformation projects that will see their legacy networks become next generation networks. O'Boyle says: "Of all incumbents, BT and KPN are taking the biggest risks. But if it works, they'll get the biggest pay off."

IMS, a standard for next generation networking, is expected to have a major impact on the global telecoms market. ABI Research forecasts operators will generate close to $50bn in service revenue from IMS-enabled applications around the world by 2011. Ian Cox, analyst at ABI Research, says: "Networks are going through a period of profound change as they adopt service-oriented architecture and implement IT systems based on open standards."

IMS allows operators to deliver fixed and mobile multimedia services over the same network, and interconnect seamlessly with other networks. Developed by the 3GPP, an industry partnership defining the technical standards for 3G networks, IMS is also being adopted by the fixed-line community. (continued on next page...)