The walls between industries are coming down as providers seek to entrench their hold on customers by offering broadband and content on top of their core businesses.
Swift Consulting CEO and tech analyst Liron Segev says the boundaries are blurring between industry verticals such as retail, banking and technology, and services like broadband and content are being added to make life more convenient for customers. He notes this creates opportunities to monetise content, as broadband providers could discount their products, but in return force people to watch advertisements.
Ovum analyst Richard Hurst says telcos are talking about providing content, but it will be a massive mind shift for them to work out how to monetise it. Financial service companies will be in a better position to benefit from the move than retailers, and First National Bank is already moving that way, he adds. "There is always something new to disrupt the current model."
Mark Harris, CEO of Kagiso Media, adds the lines between broadband, content and industries are becoming more blurred, and mobile virtual networks are the platforms that allow companies that do not normally play in the cellular space to hook up subscribers, offering them mobile services, and content, on top of traditional offerings.
Happening now
Earlier this month, MVN-X - the year-and-a-half-old subsidiary of Durban-based Ignition Group - said it would offer established retailers and banks a platform enabling them to reach their customers with a quick-to-market, targeted product.
Hurst says there is room for this sort of convergence, which has been talked about for so long it seemed as if it would never arrive. He says it will be more of an over-the-top play than MVNOs, but notes those with content will be in a better position than companies that only offer the "plumbing".
Harris says this shift is happening at a rapid rate. "The only thing keeping SA back is the cost of broadband." However, he notes innovative telcos are coming up with ways to circumvent the cost issue.
Own the customer
Segev says what companies are trying to do is the typical South African tactic of owning the customer. He says if one provider offers broadband, mobile and content, it is difficult for customers to move, and this is why Vodacom is buying Neotel for R7 billion, and why MTN bought into Afrihost.
In addition, fibre-to-the-home - which will enable more content to be delivered - is happening at an increasing rate, says Harris. Several telcos have been putting fibre into the ground and are pushing fibre to homes and businesses.
Telecoms companies are also increasingly moving into content, and can afford to subsidise their subscribers, says Harris. MTN recently dipped its toe into this sector, launching a streaming music service on the back of an exclusive partnership with South African-based simfy Africa, while Vodacom is also in talks with content providers.
Harris also points to First National Bank's bundling of smartphone and tablet deals, as well as airtime, for its customers. He notes this allows the bank to make money on the financial side.
Tons of data
However, with this shift comes privacy concerns, because companies will know everything about end-users, allowing them to target advertising, Segev says.
Segev says security will become a nightmare because there will be no end to what companies can do with the information. The Protection of Personal Information Act has come into law, but an effective date has yet to be set. It details how individual and company information must be dealt with.
Analysing data as the boundaries between services blur - for example a retailer offering cellular services and content, and bundling that in with its store accounts - will become key, says Harris. He notes that predictive analytics are becoming crucial to predict how customers will behave, and to work out what will go viral.
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