An Approach for Telecom Operators to Achieve Converged Telecom and Internet Services

    The openness of the Internet lowers the threshold for enterprises and individuals to start new businesses. This, in turn, promotes the flourishing of Internet services. Although Internet enterprises are sometimes criticized for existing on advertising and capital, two things cannot be denied: Internet enterprises have excellent service innovation, and they have made breakthroughs in profit-making models. Internet enterprises provide services such as map, search engine, instant messaging, music, and streaming media that have large user groups and strong user stickiness. With new profit models, companies such as Google, Baidu, Alibaba, and Tencent have become highly profitable. Now most telecom operators are questioning whether they can enjoy a share of the profits from Internet services and improve their user stickiness in order to meet direct and indirect competition from other telecom operators.

    Because wireless access is usually mobile broadband, the number of mobile Internet users has increased rapidly. Almost all parties in the industrial chain are transforming their businesses or trying to expand outside their core businesses. Companies such as Nokia, Apple, Google, and Microsoft are trying to expand into each other’s fields in the hope of taking a dominant position in the chain. As a result, in addition to indirect competition from other operators, telecom companies must also resist direct competition from operators expanding outside their fields in order to keep themselves from becoming a dump pipe. Operators have no choice but to counter all challenges.  As Internet services increase in popularity, operator demand for them has also increased. Convergence of telecom and Internet services can more fully satisfy user demands, attract more users, and drive the development of both services. Hence, converged services have become an important focus of attention.

    A number of measures can be taken to meet challenges, and each may work out its own solution.  A common approach involves expanding into the Internet industry and running Internet services to deliver converged telecom and Internet services. By means of convergence, an operator can attract more users, enhance user stickiness, and profit from the Internet services, as well as resist incursion from other competitors, and reduce the risk of becoming a dump pipe.

    How, then, should convergence begin, and which route should be followed?

1 Route for Service Convergence
    A telecom operator may take several steps to achieve convergence of telecom and Internet services:

    (1) Internet services such as mailbox or instant messaging are initially provided. Instant messaging is the likliest choice as it is highly popular and has a large user group. It can exploit the advantages of service interconnection to attract more users, and may promote the development of broad access services.
Instant messaging can be enhanced in many ways. For example, an operator can offer the service free of charge or at an attractive rate, provide flexible service packages, or bind the service with its existing telecom services. Such promotions are aimed at attracting users and cultivating a user group.

    (2) After a user group has been formed, instant messaging can be bound into social networking services such as blog space, friend management, forum, and news and reading to create an all encompassing online lifestyle. The contents in blog space and forum enable an operator to run content operation at low cost, while reading services allows transition into the online reading market.

    Operators may also venture into advertising by placing banner advertisements on Internet web pages or publishing blind advertisements in forums. A food forum, for example, could be created and resturants charged an advertising fee for being introduced to participants.

    (3) Within the social network, an operator can provide additional telecom and Internet services including mailbox, Multimedia Messaging Service (MMS), and directory management, as well as expanding the functions of the social network.

    Mailbox can be combined with other services; for instance, an operator can provide Short Message Service (SMS) notification service and push mail service while charging users a fixed monthly rate.

    MMS is mainly provided to instant messaging users and offline terminals. With the powerful input capability and large storage capacity of computers, MMS can be further extended and MMS user groups cultivated. Moreover, this service enables users to access via the Internet.
Social networking services can also be expanded. A network can include functions such as media sharing, music recommendation, and videos in blog space.

    (4)  An operator may include social network services on its customized handsets and optimize the functions of these handsets according to specific situations.

    Handsets can be customized or optimized in several ways. Operating systems, for example, can be unified to solve service deployment and provision problems arising from multiple operating systems. Widget platforms can also be unified. Because it may take a long time to unify operating systems, the widget platform can be unified first. Such a platform would enable operators to deliver services encapsulated as microware, and also reduce problems arising from multiple operating systems. Operators can build social networking services into handsets so that directories and contact lists can be synchronized to update with friends lists in the social network. In the handset’s media functions, one-key operations can be introduced for access to social network services; functions of social networks can be made into microware and integrated into the handset; and the links of social networks can be directly added[1].

    By developing its own Internet services, an operator can gain more control over how its terminals are used. This facilitates deployment of services in the future.

    (5) Boss function is introduced into the social network to expand its advantages and attract more users. Users can easily manage and recharge their accounts online by logging onto the social network.

    (6) More telecom services are aggregated into the social network so that users can manage their own Call Detailed Records (CDRs), voice mails, and SMS and MMS records as well as replacing private ring back tones.

    The operator’s social network acts as a content center; with a large user group, the center boosts content service operation.

    (7)  Family services and enterprise services are aggregated into the social network, expanding it into a release center, a shopping center, and a center offering diverse services. Services can easily be released through the social network, while users conveniently do their shopping.

    Due to IP and Web technologies, Internet services are not affected by differences between terminals; any terminal capable of IP access and Web technology support can facilitate Internet services. Moreover, as the end-to-end feature of Internet services becomes independent from access, an operator need not consider the roaming and interconnection capabilities of services. Therefore, it is possible to achieve convergence over a broader scope—for example, triple-screen convergence or even multi-screen convergence[2]. Triple-screen convergence here refers to convergence of telecom, Internet and enterprise network services. It is more significant and covers a broader range than commonly-recognized triple-screen convergence, where the media content of handsets, TVs and computers are accessed via a unified interface and continuously served.

2 Strengths of Telecom Operators
    Telecom operators may be hesitant to enter the Internet industry, but they have many advantages in Internet service operation as well as convergence of telecom and Internet services. The advantages are:

    (1) User Groups
    Telecom operators already have large user groups, which are potential customers for their Internet services. By retaining the groups, they can easily enhance their stickiness.

    (2) Services
    In the initial stages, an operator can attract users by binding Internet services to existing services and by integrating telecom services into social networking to deliver convenient one-stop services. Then, with integrated telecom and Internet services, both are pushed forward at the same time.

    (3) Service Offerings and Charges
    By offering various packages and favorable charges, an operator can attract more users and rapidly create its own user groups. With a widespread service network, better services can be delivered.

    (4) User Directory
    User telephone directories can be accessed and CDRs retained to reflect real social relationships between users. Through directory management and friend recommendation, an operator can accelerate the development of social networks to increase its users.

    (5) Terminals
    Internet services can be driven by customizing terminals and building Internet services into terminals.

3 Challenges Facing Telecom Operators
    Despite the sizeable advantages of delivering Internet services, telecom operators are confronted with some challenges:

    (1) They lack experience in Internet operation. A service provider’s capability plays an important role in Internet services operation. For example, 5460.net is a well-known alumni website in China. Although it provides a sought-after service of linking alumni, and has a large user group with great consumption potential, it does not operate as successfully as kaixin.com.

    (2) The introduction of Internet services may reduce operator revenue in existing telecom services. If free Internet services are delivered in conjunction with telecom services, they may impact SMS and MMS markets. As a result, an operator may be cautious about taking such an approach.

    (3) Existing platforms do not support all Internet services. Although many Internet functions such as SMS, MMS, mailbox, and Boss, are easy to transfer, some—especially family and enterprise services—are difficult to transfer onto existing platforms.

4 Conclusion
    Telecom operators can capitalize on their advantages to gradually develop their own Internet services and transfer their telecom services onto Internet platforms. In providing Internet services, they can promote the development of both telecom and Internet services and gain control over their terminals. Further along the route of service convergence, telecom operators may work towards Internet platform based triple-screen convergence or multi-screen convergence. This approach can help operators deliver telecom services, Internet services, and converged services in order to avoid becoming a dump pipe and to meet competition head on.

References
[1] CCSA TC5 WG7 移动Widget研究报告 [R]. 2009.
CCSA TC5 WG7 Mobile Widget Research Report [R]. 2009.
[2] CCSA TC5 WG7 移动社区研究报告 [R]. 2009.
CCSA TC5 WG7 Mobile Community Research Report [R]. 2009.

[Abstract] This article discusses a possible approach for telecom operators to achieve converged telecom and Internet services. It involves integrally developing telecom networks and Internet businesses through the convergence of their instant news and social networking services. Some background, benefits for telecom operators, and possible challenges are analyzed. A new service convergence approach such as this can also facilitate triple-screen and multi-screen convergence in the future.

[Keywords] social network service; convergence; triple-screens convergence