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| The Failure, And Return, Of Convergence |
September 11, 2005 |
By Trevor Marshall
ONCE A HOT BUZZWORD, CONVERGENCE FAILED TO LIVE UP TO ITS PROMISE. CANADA’S TWO SUPER PORTALS—EACH NOW A YEAR OLD—WANT TO CHANGE THAT.
The Web has been around for a while, but for many people the online experience changed about a year ago. That’s when Canada’s two largest broadband Internet access providers teamed up with major U.S.-based online content providers. Bell Canada partnered with Microsoft to launch the Sympatico.MSN portal on June 9 last year. A few weeks later on July 13 Rogers Cable joined forces with Yahoo! to introduce a co-branded portal of its own.
The goal of both partnerships is to create richer online experiences for customers, and to grab market share in the growing broadband provision business. In its 2004 study of the highspeed market, Broadband Battle: Canadian Broadband Forecast & Analysis 2003-2008, market analysis firm IDC predicted that 7.95 million Canadian households would be broadband-enabled by 2008, representing 81 per cent of online households and 62 per cent of all households in Canada. By then, IDC predicts, providing Internet access to Canadian homes and businesses will be a $5.9 billion market, of which almost $3.5 billion will be generated by supplying consumers with broadband connectivity.
So, are these new co-branded portals bringing in more business?
With a year under their belts, the companies involved are effusive in their praise for their partners and portals. But the history of the Web is littered with the remains of old portal projects (Remember, for example, Excite Canada? Thanks to technology, you can access a reminder. Hit the Wayback Machine, http://www.waybackmachine.org, and type in http://www.excite.ca) so Web watchers can be forgiven if they think these new portals are simply another kick at an already dented can.
DIFFERENT CONVERGENCE
The difference this time may lie in a new form of convergence.
While the term convergence means the bringing together of multiple sources of content and distribution, the word has been reduced to marketing-speak in recent years. But these new super portals may be changing that.
“There’s a different kind of convergence looming that isn’t about content but is a convergence between networks, or convergence between access modes,” said Lawrence Surtees, director of telecom and Internet research at IDC Canada in Toronto. “I think that what’s starting to get heralded through these portals — an integration of communications services and network platforms in one. The portal is the window to whatever I want to use, how I want to use it, when I want to use it.”
Through these co-branded portals, some of these services are already available.
ONLINE PLUS PHYSICAL
For example, the Rogers-Yahoo! partnership has deployed a digital photo service that allows customers to order prints online and pick them up at their nearest Rogers Video outlet.
Mike Lee, vice-president for strategy and development at Toronto-based Rogers Cable, cites this as a good example of the second phase of Rogers’ relationship with Yahoo! “We saw there was an opportunity where a significant percentage of our subscribers were interested in photos, so we took a look at what else would make up a great photo experience,” he said. “We’ve added the video stores as another component to the relationship.
We’re always looking for new opportunities to expand the relationship.
We always build against things that are driving success and we’re already in discussions on a range of other opportunities.”
For Bell, the relationship between Sympatico and MSN is an opportunity to deliver tighter integration of services across different distribution channels. For example, customers watching a concert on Bell ExpressVu’s satellite TV service may be able to download exclusive ring tones from the concert for their Bell Mobility phones and catch exclusive concert footage via Bell Sympatico high-speed Internet. In this scenario, the Sympatico.MSN portal becomes a one-stop control centre for the whole entertainment experience.
Charlotte Burke, senior vice-president of consumer Internet at Bell Canada in Toronto, said there’s more to this service than simply moving content to multiple devices across multiple networks.
“We’ve also learned customers want to see it better integrated,” she said. “They don’t want to go to 10 different places to get bits and pieces of their Internet experience.”
Surtees said the elements are in place to change the way Canadians actually communicate. “Once I start using Sympatico’s service and the portal with MSN, which gives me my chat service, I’m not just doing e-mail, I may be substituting or supplanting my local voice phone service or my long-distance voice service with another mode of communication.”
BEYOND SPEED
That convergence of services is a tall order, and Bell and Rogers both say partnerships are essential to fill it.
At Rogers, Lee points out that until recently, attracting customers was all about how fast a company could pump out its Internet access. “Now we’ve reached a mass penetration level on Internet and for us, when we re-evaluated what we should be doing for our subscribers, we really felt we should be adding more value — helping subscribers with why broadband is important rather than simply giving them broadband access,” he said. “That led us to the conclusion that we should partner because we are in a (competitive and technological) environment where I don’t think one company can do it all.”
At Bell, Burke said Sympatico and MSN each contribute valuable assets to their joint portal. “We had always been into rich media, working closely with the Canadian music and entertainment industries, and we had deep experience and partnerships in Quebec for the French-speaking audience,” she said. “And frankly, Microsoft had the scale in the applications, like instant messaging and mail and other tools customers can use on the Internet.”
More significantly, these co-branded portals are the jumping off point for a whole new suite of service offerings that incorporate the Web into offerings from other divisions of the companies.
“There are lots of things we’d like to do together and it’s just a matter of having the right discussions and mapping out the right customer experience at the end of the day, and making sure we’re both satisfied with it,” said Steve Boom, senior vice-president of broadband at Sunnyvale, Calif.-based Yahoo!
“The portal is meant to be an anchor, a place we share,” Boom said. “It’s where the user can come in with his or her user ID and unlock a world of services that can be shared and consumed across multiple devices and different networks.”
But these offerings are still new enough that their future may be uncertain.
“(These portals) are interesting, and allow for lots of development and innovation and new services that might not otherwise be possible,” Surtees said. “These companies are still kind of in the early stages and there’s probably a lot more they can do as they start playing around with stuff.”
“We’ll see where it goes, and it may become something really different or big,” he said. “It’s not there yet, but there’s still a lot more they can do together.”
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