Tuesday, January 27, 2009

IBM Examines Social Networking Impact on Telecom Providers

Social Networks have become primary destinations for a rapidly expanding universe of online users to manage and enrich their digital lifestyles both personally and professionally. This rapid rise in traffic to social networking sites will have a major impact on telecom service providers, according to a new report from IBM on "The Changing Face of Communications."

Social networking has moved beyond being a fad. In June 2008, unique monthly visitors to social networks represented approximately two-thirds of the world's Internet audience. Based on the projected growth of the global Internet audience, IBM estimates that by 2012, the number of unique monthly visitors to online social networking sites will surpass 800 million.

Not only have social networking sites become a primary communication platform, but these sites are also increasingly being used as distribution channels for digital content which leverages the "viral" nature of an individual's network of relationships. While first gaining a foothold among individual online users, companies are now more actively recognizing the potential benefits of a social media strategy to build brand loyalty by involving these networks of consumers. Depending on the brand and its goals, establishing a social network site dedicated to its clients can attract a better-targeted audience, more actively engage them, and allow them to exchange information among a community that is most suitable for the user.

According to the IBM study, the rise of social networking is changing the fundamentals of the telecom industry and creating a future that is being shaped by two key trends:

  • Communication patterns are shifting from point-to-point and two-way conversations, to many-to-many, collaborative communications; sharing videos, photos and other multimedia content that substantially enrich the user experience.

  • Control of communications is shifting away from the proprietary domain of Telecom providers to open Internet platform service providers.

"The option of doing nothing is not a luxury many providers can afford, as a new ecosystem is emerging from these long-term shifts in communication patterns and trends that will require bold, significant changes by existing providers" said Gary Cohen, General Manager of IBM's Communications Sector. "By adapting new capabilities like social networking, communication service providers can develop new forms of communications and spark interactions that breed collaboration and innovation across all businesses and thereby, improve efficiency, reduce cost, increase productivity and enhance the quality of life."

IBM argues that the evolving communications marketplace represents both a window of opportunity and a challenge for telecom providers. Over the long-term, communication service providers (CSPs )should broaden the scope of their traditional "voice" business to more actively encompass both point-to-point communication and many-to-many collaborative models that include "voice, internet-based communications and content", and align their organizations and industry partnerships accordingly. This has strategic and transformational implications for the business, impacting areas such as product and services offerings, skills, platforms, revenue models and markets, among others.

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