THE NEW CONTENT VALUE CHAIN

Major content, service twists help to transform telecom.

The Telecom Industry stands at a crossroads. It's in an expanding market sector with more complexity than anyone could have imagined.

Today there is a cat's cradle that includes content providers such as Disney and YouTube; content delivery companies from the cable, telco and wireless worlds; and companies at the end points such as Cisco Systems and Sony. New players such as Apple represent not only new products, but powerful brand and service delivery approaches.

It would be nice to depict this as a linear value chain in which content guys hand off to service providers who hand off to home gateway people, but life is never that easy. In reality, there are major changes happening simultaneously that are helping to transform telecom forever — and twist the traditional value chain in new ways.

Users are much more in control, with information available about content, services and devices to make them more discerning in their choices. Handset and device manufacturers are becoming more powerful, too. And there's no doubt about the desirability of premium content sources, such as the BBC and Disney, so when it comes to content distribution, these sources have substantial market power and leverage.

There are innumerable sources of content, ways of delivering it and ways of dealing with it once you have it. Unlike the telecom world where the end-to-end experience is controlled by the telco, in this any device/any service/anytime world, many combinations can coexist.

For example, in the U.S., Apple has agreed with its iPhone carrier, AT&T, on a set of interfaces between the two companies. So when you activate your iPhone on iTunes, it has to hook into the AT&T back-office system. Any other mobile provider offering the iPhone will have to do the same.

Now just imagine if Disney said they were going to deliver content a specific way to providers, and it's different for each company — every combination of content player, communications company and device being managed in a different way. You can guess at the chaos that would ensue.

This kind of any-to-any world demands some basic rules, but today there are no agreed-upon end-to-end management standards for these kinds of services.

To its credit, the telecom industry, through the TeleManagement Forum, has been working on common business process, information and application models, and plug-and-play standards. These types of rules are generally optional within a telco, but when they want to connect externally, they will need standards to make things happen.

These management frameworks must be extended quickly by working with the media, Web and cable industries to provide a ubiquitous set of capabilities for the management of content, devices and services.

The telecom industry has 100 years of thinking positively about standards, and that has carried forward to modern standards such as IP, which were born out of a need to connect things together. But the content and Web worlds haven't come out of this experience. They might understand that 35 mm film is a standard, but in terms of managing services, there's no understanding yet of all the requirements.

By the same token, it's not clear whether the telecom industry understands what the content world really needs when it comes to delivering safe, secure content that works the first time, every time.

These different tribes with their fundamentally different outlooks and experiences are coming together, and one thing is certain: They need to communicate. Once all players in the new content value chain can understand one another's needs, everyone will win.

KEITH WILLETTS is chairman of the TeleManagement Forum.