I've maintained for some time that the No. 1 obstacle to convergence is service provider revenue. In particular, how do you support real convergence across technologies without destroying the fundamental voice and data business model? Perhaps more importantly, how do you properly account for revenues as the user roams between technologies? None of the cellular providers today wants to become a "fat pipe" supporting applications; there's too much money to be made (still) in pure voice traffic, and this still accounts for the majority of yearly revenue. As their networks have become more efficient in this area, margins have grown considerably. This isn't necessarily a bad thing; I think we can all remember when none of the major providers was making money. Another fact is that data revenues, on a per-user basis, are still maturing. The percentages regarding growth are encouraging year over year, but the dollars involved still do not come close to where this market will be going. A standard for the clearing of roaming revenues between technologies needs to happen for all involved to embrace it and for the technology to move forward.
Another obstacle in the path of real convergence is the cultural, personal, end-user perspective. The facts point to a (domestic) population of customers that are finally grabbing on to chat, multimedia messaging, video, audio and other value-added offerings. Is the general population, outside of large business, ready for a seamless, IP environment? These types of presence and peer-to-peer services will become more stabilized and mainstream over time but linger today in a younger demographic and segmented market. This drives the service providers yet again to slice their research, CAPEX and support into differentiated pieces -- complicating the business model and incurring costs. It will slow growth and progress to real convergence in the short term.
A further obstacle is technology. In the U.S. market, we have created a wonderful world of all things proprietary and a marketplace full of walled gardens. The mantra has been to maximize revenue and margin on proprietary technologies and satisfy a Wall Street expectation to continue supporting those investments and yielding profit. GSM, CDMA, iDEN, AMPS -- you name it, we have it. We've built our markets around it. This again, in my opinion, hampers our ability to adopt convergence quickly. Handsets will compensate for this in the short term but don't solve the fundamental problem.
The fourth major obstacle is global leadership and, in particular, the position of the U.S. in global broadband. In many ways, we (the U.S.) lead the charge in the global economy. The reality is that -- all things remaining equal and unchanged -- in 10 years we will be far behind many major foreign economic powers in broadband deployment. That is clearly unacceptable for a variety of reasons and certainly has an impact on convergence. The reason global leadership is important to you, very specifically leaders in the IT and business community, is that it will be incumbent on many of you to drive change and alter this trend. You will be the front line in driving open standards, better security technologies, and accessibility for people beyond the enterprise. You will make it happen, and the time is now to contemplate and act on driving change.
About the author: Michael Voellinger is widely respected as one of the nation's top technology strategists and is considered to be a thought leader in telecommunications. With more than 10 years of experience, Michael's analysis of security risk mitigation, compliance and the convergence of telecommunications has been continually sought out by leading corporations, government, and financial institutions. Michael's commentary has shown up in The Wall Street Journal,New York Times, Investors Business Daily, Smartmoney.com, and CNN Money, as well as numerous industry publications.