Thursday, September 6, 2007

Convergence Necessitates Mutual Understanding for IT & Telecommunications Industries

This week’s International Telecommunications Union (ITU) Trends in Telecommunication Reform, 2007 report concludes that poor regulatory rules are a key inhibitor to telecommunications development in some regions, and governments must put better licensing frameworks in place to achieve the full economic value of next-generation mobile communications.

Several recent articles about wireless spectrum releases in Russia and India underscored this issue. In Russia, high costs and technical/bureaucratic regulations are slowing the clearance of public spectrums (from military use), and may even push the launch of 3G services in Moscow past the 2009 deadline operators agreed to last April. In India, where over 7 million new subscribers sign up for mobile phone service each month, the Ministries of Defence and Telecommunications ended months of wrangling to free up spectrum for 50 urban areas around the country by December.

Operators, networking companies and handset manufacturers have been focused on high-growth emerging markets for years. The opportunity presented by millions more mobile subscribers and increasing data-service revenues is clear, and many of these companies are lobbying hard for the regulatory reforms advocated in ITU’s report. Research by Vital Wave Consulting, however, suggests that the 3G environment in emerging markets is far less clear to IT companies that could benefit from the convergence of data services and mobile communications. An upcoming report, Demystifying 3G in Emerging Markets, explains how forecasts of 3G penetration rates are muddied by inconsistent definitions of networks, variable handset functions, and even industry data from organizations with a stake in the success of 3G services. The report characterizes the top 20 emerging markets in a 3G Readiness Index.

As data services and mobile communications converge, IT companies that learn the telecommunications industry’s technologies, regulations and business dynamics have the best opportunity to form profitable partnerships and fend off competition. (Similarly, mobile industry players would benefit from studying the IT industry). A clear understanding of the 3G environment in emerging markets is crucial for any company interested in capturing revenues from the products and services enabled by broader network access. Businesses that lack extensive in-house research capabilities and relevant emerging-market experience risk misaligning resources based on insufficient or incorrect data. A better understanding of the 3G environment in emerging markets will help companies develop and offer relevant, valuable products and services on a broad scale.

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