Whither the celco, arise the ISP ?

Twitter is a micro-blogging service, which limits your entries to 140 characters of unstructured text. It allows you to follow people you like, and to have others follow you. With its 140 character limit, it would not be too far fetched to say that it is the SMS of the internet, with closed user groups thrown in.

You could send a tweet, or a mass SMS using the same analogy, to everyone who follows you or you could target your tweets to smaller groups of individuals. At the same time you would be able to get feeds from the people you follow, and participate in those conversations.

Due to its simple nature, it is perfectly suited for mobile usage, as people send little snippets of their lives into the ether. Some are interesting, some are funny. Most are banal. But that is not the point.

Its the internetification of traditional mobile telecommunications services which is happening here. Slowly, we are beginning to see that more and more services which we enjoyed on circuit switched networks, fixed line or mobile, are becoming purely IP based. Sometimes with a one for one replacement as we see with Twitter or Skype and VoIP for voice. One to one SMSes have long been replaced by Blackberry Messenger or mobile IM clients for Yahoo!, GTalk, MSN Live and AIM.

Bit by bit, the exclusive domain of the Bellheads are being taken over by the Netheads. Telcos and celcos are finding it hard coming to grasp with a world which only requires a data pipe from them, with value added services coming from the most innovative companies on the internet.

Some try to cope with a walled garden, but many have learnt the folly of doing that. With over 5 million Facebook users in Malaysia, and an estimation of about 900,000 Twitter users, Malaysians are fast taking to IP as a replacement for traditional telecommunications services. It is more common to see people making plans for after work engagements on Twitter and Facebook than it would perhaps be on voice or SMS.

The death knell has been sounded, unless celcos revamp quickly and bridge these legacy services to the growing dominion of IP-based communications. This is the reason why all the local mobile players are quickly trying to position themselves as mobile broadband players. The writing is on the wall, and none want to miss out on this. With the impending introduction of LTE into the Malaysian airwaves, this will be taken up a notch further.

The notion of an IP-only world has long been forecast, but it has been resistance from the traditional players and the less than stellar data service they provide which has been a stumbling block. Consumers however have become more discerning, and now place data service quality as a primary factor in deciding which celco they sign up with. For a lot of them, voice is hardly a service they use anymore, replaced by tweeting, SMSing and writing updates and checking up on others on Facebook. It’s Generation Z at work, and boy do they have a vengance.

Does this signal the demise of traditional telcos and celcos ? Not by a long shot. Their survival is more or less assured because the new players, the pure IP and internet service providers, do not seem to understand how to capitalize on their edge. They have been playing into the hands of these legacy players, allowing them the time to catch up and throw hoards of stashed cash to come from behind.

Even with TMNet and Packet One, we still see more broadband access coming from mobile subscribers of Celcom, Maxis and Digi instead of the pure ISP plays. Pretty soon, as mobile data access speeds catch up (and quality is assured !), it will not make a difference if you are accessing the internet at home from a traditional ISP or a celco’s mobile broadband plan. The Negroponte switch in effect.

WiMAX hyped a good competitor to mobile broadband, promising dual home and mobile usage. However, the lackadasical attitude of the providers have made WiMAX nothing more than alternatives for DSL and FTTH services. The much promised mobility and service differentiation never actually happened, inspite of marketing messages to the contrary.

So, don’t sell your stock in your favourite mobile provider just about yet. I think they would be around for a while, unless the ISPs buck up and take competition up a notch instead of going for the same crowded market and services.

The continued growth of smartphones, as Apple, Google and Nokia battle it out, means that this will be a fat sector to milk, and the ones who can leverage off the best that IP can give, will win the service provider races.

The dinosaurs are going to be around for a while, folks.