The divergence era

Toward the end of each year the Telephony editorial staff faces the challenge of selecting ten representatives from various service provider sectors to feature in our Ten to Watch special report. Given the proliferation of competition across the communications industry and the apparent similarity of the strategies put in place to combat it, you might assume this task becomes increasingly difficult every year. In fact, it becomes a little easier.

That's not to say there are so few viable competitors in each category that selecting one from each is as simple as choosing the category itself. What it means is that competitive pressures are so intense on new entrants - and, indeed, on the entities already occupying various turfs - that the need to clearly and completely distinguish their customer targets, service strategies and delivery methods have become minimum requirements for entry.

Finding companies that are putting unique spins on traditional approaches, therefore, becomes simpler because the strategies of so many of them become more distinct all the time.

The fact is that the very competitive urgency that created the concept of convergence in the first place is also contributing to its obsolescence. The idea that categorical lines will blur to the point that service providers of all types will become indistinguishable from one another has become passe. We have entered the beginning of an era of divergence, where service providers are so different from one another that there are in fact more classifications than ever that can be used to identify them.

Evidence of this is rampant among the companies featured in this year's Ten to Watch report. While the companies profiled were chosen in part for their accomplishments over the past year and in anticipation of their increasing momentum, they also represent current readings from the communications industry's trend barometer. Their business and technology strategies, their insurgent actions and their reactions to competitive shifts are indicative of the kinds of efforts other service providers in their particular sector will need to pursue to keep up. In addition, each of the companies featured has at least one characteristic that distinguishes it within the service provider division it occupies - a characteristic we believe to be an indicator of the necessary strategic direction of the category.

Those distinctions vary from subject to subject. Some companies are distinct because of the customers or geographical regions they are pursuing - such as New Edge Networks, a DSL provider with broad technology and service intentions that is building its networks in second- and third-tier markets. Others, such as mobile Internet operator Aether Systems, have combined new technology formats and new approaches to service packages or concentrated on delivering specific applications in a singular way.

Others have identified problems that exist somewhere within the vortex where networks and applications intersect and dedicated their business models to solving them. Equinix, for example, saw a need for neutral co-location grounds where content providers, bandwidth builders and service providers could meet, mingle, mix and match in an environment protected from competitive concerns.

Divergence will not usurp convergence in all realms. In the network technology domain, the concept of convergence is likely to remain intact for some time, given all service providers' needs for ongoing network evolution and the similarity of the technological means of accomplishing that across multiple types of networks. But the new and varied classes of content being created for transport and delivery over those networks, along with the many new categories of customers targeted to receive it, will only serve to make the structure of the communications service provider sector increasingly diverse.