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
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
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
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