Convergence: A Paradigm Shift 

Technology, market access and the changing industry structures are driving a worldwide phenomenon, which is now known as Convergence. Convergence is happening across a wide spectrum of industries, technologies and markets. On the one hand we have digital convergence and on the other hand convergence in industry structures, media and infrastructure.

Some of the examples of Convergence are:

• Transformation of Television into a web enabled device and Internet access through Cables. 

• Convergence of media & publishing with Internet.

• Use power distribution lines for telephony and Internet access either through a technology that carries information over electricity lines or optical fibres laid along the distribution line to provide the last mile connectivity.

• Use of water pipelines for Internet access.

• Use of the "right of way" associated with long distance power transmission lines, pipelines and railways to lay optical fibre networks over large geographical regions to create the backbone for telephony, internet and multimedia

• Transformation of mobile phone into a web enabled device that can access Internet.

• Companies entering seemingly unrelated areas such as power distribution, Internet access and water distribution due to the synergies in operating, maintaining and managing these activities.

• Digital Convergence: Voice and Video over Internet.

• Backward or forward integration of the industries is also being regarded as convergence. Therefore, if an organization was primarily into gas supply, it may enter power generation and subsequently power distribution and even Internet.

Market liberalization, globalization, the Internet and mobile technologies are forcing - and enabling - energy companies in all sectors and geographies to restructure and radically change the way they do business.

The boundaries between electricity, gas, oil, and coal companies are becoming increasingly blurred as companies respond to the pressures of competition and regulatory change. As power, gas, oil, coal, and emission allowance markets have all become more volatile, development of robust risk management strategies has become a key issue. Integrating other capabilities such as trading, marketing, and e-commerce across all sectors of the organization is also acknowledged as critical for success.

Amidst all these changes companies are more aware than ever of the value of reputation management. Consumer power, pressure groups and the Kyoto agreement have put the spotlight on corporations' responsibilities to the environment and business ethics; these have risen up the corporate agenda as the financial consequences of getting them wrong have become apparent.

There is no single, right answer to how respond to all these pressures, but the underlying principle must focus on increasing shareholder value. A major transformation is taking place in industry structures with multinational organizations which were primarily energy companies, entering into water, Internet and power generation. 

There are far-reaching implications associated with these developments. For example, in India water supply in urban areas has remained in the hands of Municipal Corporations or Water Works departments who have to generally supply water at subsidized rate. Often these activities are not viable and have to be supported by the government. However, these corporations and govt. agencies can now leverage on the pipeline infrastructure that they own and that provides them access to individual households to supply Internet access and water. Services like water distribution and power distribution that have not been viable in most of the emerging markets may become viable due to the convergence phenomenon. 

Major developments are taking place in India. The Reliance group, one of the largest industrial groups in India, is laying optical fibre network across the country. The Tata group is also planning similar activities while the power distribution utility in Mumbai- Reliance Energy Limited ( formerly- BSES) has already gone ahead laying optical fibres along the distribution lines. There are also plans to lay major pipelines criss-crossing the nation, which will also be used as backbone for Internet and telephony.

The Power Grid Corporation of India Limited and the Railways are laying optical fibres on power transmission lines and railways tracks respectively. 

Further detailed & updated information on this Sector is accessible only to India Core members/ subscribers.

To gain access, please login if you are a member/ subscriber: