Over the last few years we all have witnessed the convergence of three industries. Nowadays voice, data (mostly for internet service) and TV services are all provided by a limited number of companies.The days of ATT as phone provider, COX, ComCast or Charter as cable providers and AOL as internet service provider (ISP) are long gone. Traditional telephone companies now offer voice, Internet and TV. In the same way, traditional cable companies sell also phone and internet services. The traditional internet services providers as we knew them in the late 90s and early 00s have basically disappeared.
In the last years we are also noticing a migration from traditional services such as voice and cable TV to internet based services. It is not uncommon the people who do no longer have the traditional phone service and it is becoming more popular those who, together with a cell phone or not, use services such as Vonage or Skype. Regarding TV services, we are more and more migrating to services such as Hulu, Amazon, Netflix or iTunes which also use internet as the main distribution channel. The traditional pre-scheduled run of TV shows or movies is being replaced more and more by a model of TV a-la-carte or on-demand.
With that in mind it is not a surprise that the consolidation of services’ movement that we saw in the early 00s seems to have been reached its peak and new steps are being taken to move forward.
We watch TV and movies more frequently in the non traditional way, we watch what we want, when we want and where we want. We also talk and communciate with friends and colleagues with services that are also new, such as Twitter and Facebook. In that regard we can mention that Europe has seen in the last 18 months a drop in the number of SMS messages sent and received, which had become a great source of revenue for the phone industry in the last few years. People communicate more than before but thru new tools and some of what had had become cash cow services are on the decline.
How are these companies reacting to this new challenge? The wrong way, late and negatively:
a) The traditional unlimited data plans that we grew up used to are disappearing
b) The network neutrality principles we thought were embedded in the industry are vanishing
Those reactions represent obstacles to the new ways of, for example, watching TV and movies. Streaming movies using Netflix or Amazon services will get us into trouble with internet plans that have a limited amount of data transfer included. Also, providers could slow down access to sites or protocols that affect some way or another their interests and partnerships.
Despite all of that, and surprisingly enough, Skype hasn’t been bought by any major telephone conglomerate (AT&T, Telefonica, Deutch telecom, etc). All of them could have easily afforded that expense. Their strategy seems to go more to fight these threats rather than embrace them and transform them in opportunities: “There is nothing better than owning the pipes and what goes thru them”. Providing internet access and also VoIP provides them with economies of scale in regard to their current technology investments.
Microsoft can keep running Skype as now but that it will only provide marginal income. Integrating a service like Skype in Windows and Office applications can make those products attractive and prevent customers for trying alternatives (OS X, Linux based-systems,….). Windows and Office are cash cow products for Microsoft. Whatever it takes to keep those two products that way can make the investment worthwhile. Another thing to see in the near future if if they are able to take advantage of it.