Convergence of ISP, Telecom & Media

Manav Mehra, Director - Finance, Ericsson IndiaAn IIM-Bangalore alumnus, Manav has 17 years of experience in the corporate realm, during which he has worked with multinationals like TCS, IBM India, and Oracle India, prior to joining Ericsson.

Just a minute please’ This is a phrase which most of us use daily without giving it a second thought, but do we actually realize the value of a minute? Given today’s digitally connected world, the value of a minute goes much further than one can imagine. The infographic attached shows the value of an internet minute in today’s world. Some of the numbers are so huge that the only way to understand the actual impact is to look at the transactions on a 60second basis.

There are more than 4.39 billion internet users in 2019. Obviously a digitally connected world like this one would have a profound impact on the ecosystem around it. ISPs are no exception. There are several interesting changes happening at the ISP level some of which I will enumerate below.

The globalvideo streaming market size is anticipated to reach $124.57 billion by 2025, according to a new report by Grand View Research. The expected CAGR of this market is about 19 percent. In India itself, the market has grown in the last two years to $107 million. Surprisingly in India, 65 percent of this demand is coming from rural India that has only 40 percent internet connectivity. This has been driven by low priced data plans and the availability of cheap 4G devices. Increasingly, mobile broadband is becoming the primary source of internet connection as opposed to wired broadband. One of the largest reasons for the increased consumption is the availability of content through various providers. Even in India which is a nascent market, there are more than 32 online content and video streaming platforms. Increasingly all three players telcos, ISP and content providers are converging to provide the appropriate solution to the consumer.

Wi-Fi Hotspots:Today's consumer is always connected. He expects the internet to be available to him
irrespective of his location. Unfortunately, there are constraints under which the telecom operators have to work with in terms of spectrum and availability of sites. There are also cases where there is a congregation of multiple consumers at a single small location. To ensure the availability of continuous high speed data to the consumer most telecom operators are working with ISPs to allow seamless transition between the mobile network and the Wi-Fi hotspot provided by them. This allows both the ISP and the mobile operator to work together to provide the best experience to the consumer.

Dynamic Pricing Plans allow the ISPs to decongest their network, and also encourages increased network usage by giving users reduced rates during off peak hours

Bundled Solution:Given that content drives most of the traffic in today’s world ISPs are tying-up with content providers to offer a bundle of services to the customer. There are two different models which ISPs are using to provide content to the consumer. In the first model ISPs have created their own apps, wherein they have purchased content directly from content providers in order to provide a bundled offering to the consumer. In the second model ISPs don’t create their own app, but tie-up with content generators (Netflix, Amazon Prime and others) and give either free or discounted packages to the consumers. Both the above models help the content reach a much larger base while driving the usage of the internet, turning it into a win-win for both the parties.

Dynamic Pricing Plans:Using analytics on the data usage pattern and trends ISPs can generate dynamic plans which offer consumers cheaper rates during off peak hours. This strategy has a dual benefit. It allows the ISPs to decongest their network as a block of users start accessing the network during off peak hours. It also encourages increased network usage by giving users reduced rates during off peak hours.

Replace Satellite Television through IPTV: While satellite television still forms a large chunk of the television viewing market, increasingly, ISPs are looking to see if they can make inroads using IPTV. The ISP provider is already a part of the home network. Consumers today don’t want to deal with different service providers, and would be happy if there is a single solution which takes care of both their internet needs as well as their television needs. IPTV allows the ISPs to be a single point-of-contact for the consumer, taking care of two of his major requirements in one go.

Machine to Machine/Internet of Things:Smart homes will eventually become a reality. There have been several inroads in developed countries. However the scope and potential in developing countries is phenomenal. As the ISPs are part of the home, they would be best placed to take advantage of this phenomenon, allowing the devices to talk to each other over the network.

These were just a few examples of the evolving trends in the ISP world today. The world around us is changing at a very rapid pace. Data has become a commodity and is allowing hitherto unthought of solutions to be available to people who did not have the same kind of access even five years ago. ISPs are at the fore front of this change and are uniquely poised to help explode the market even further.