New opportunities enable them to compete with larger firms, says an executive with one of the world's leading telecommunications companies.
But to capitalize, says Susan Schramm, vice-president of carrier markets for Siemens Communications Carrier Networks LLC, small companies will have to focus on their regional markets.
"It's not unlike what we're seeing in the U.S.," says Schramm.
"Those companies who are small and can create a brand and an identity in their geography have the ability to grow faster. So the opportunity - because you are so spread out - is in the local community."
Schramm participated in a panel discussion at the Broadband World Forum Americas conference held recently in Vancouver.
The term broadband is synonymous with high-speed Internet access.
New broadband technologies, which include VDSL, WiFi and WiMAX, transmit data faster through fibre-optic cables and wireless systems than copper-wire telephone cabling, enabling several services, such as telephone, TV and basic Internet, to connect to homes and businesses through one line.
Based in Boca Raton, Fla., Siemens is part of Munich-based Siemens AG, the world's largest conglomerate. It provides a range of products and services, including computers and complex network infrastructures.
Technology companies have spent a lot of time and energy on executing Internet-compatible services but little time selling them, Schramm noted.
She and other panelists predicted there will be a "trivergence" or three-way marriage between network operators, companies that provide content - ranging from voice to text to video - and firms that produce devices including computers and cellphones.
"It's not all about the 'what' of the phone and the 'what' of the Internet - it's about the how," says Schramm.
In other words, companies have to understand how a technology works and how to market it. A company's ability to sell and deliver content - be it telephone service, text, music or video - is more important than providing high-tech gadgets.
As more affordable broadband becomes available, she added, small and large companies will have to develop more strategic alignments.
Global telecommunications industry leaders are wrestling with how to market their technologies and services as broadband becomes more affordable and more widely available, and different open-access devices, ranging from cellphones to BlackBerries to computers and TVs, are able to communicate with each other online.
"You see two things happening at once," says Schramm. "You're seeing the people (i.e. companies) with the old (network) infrastructure having to shift their content thinking, and you're seeing the people who are really innovative ... thinking, 'Well, how far back (on the network) do I want to take control?' " She adds companies will have to decide whether they want to deliver content only - or provide content along with network infrastructure.
"If you want to go into infrastructure, then you also have some choices," she says. "Do you want to own the infrastructure, or do you want to lease it?" Instead of looking at the telecommunications industry for examples of business models, she says, industry players should look at the book-selling sector.
The U.S.-based Barnes and Noble bookstore chain revised its strategy by allowing customers to purchase books online, forcing behind-the-scenes employees to better understand the supply chain.
Today, most small independent bookstores sell their products online as well as on the premises.
"The competitive nature of the (Canadian telecommunications) market is helping," says Schramm.
"As you start to get more players to play in it, the stakes will become rather serious. So that's good for the buyer. You'll start to see more and more urgency on the part of the traditional contenders (for large market share.)" On the broadband scene, Schramm believes Canadian regional markets will be large and profitable enough for junior tech companies. But there will also be a market rationalization as larger Internet service providers flex their muscles. Large and small companies alike will have to decide what value-added products and services to offer.
She notes Calgary-based Shaw Communications is a great example of a company providing a wide range of services while Telus has made the "mental shift" by putting wireless and wireline technologies together.
It takes years for some companies to make that kind of mix, she adds.
The panel also examined how consumer electronics are expanding twice as fast as online content and distribution systems.
Network operators, they concluded, will have to align themselves with content providers, such as film or animation companies and other firms, and cater to empowered computers that have the luxury of accessing information whenever, wherever and however they want.
"The operators are really faced with a change in the type of service that is being delivered across their network infrastructure," says Stephen Vogelsang, vice-president of marketing and product management for ECI Telecom.
"They've evolved from a basic communication service, or basic connectivity service, to one that (consists of) more content-oriented packaging, advertising and other avenues.
"The real question is how the operators respond to that."
It doesn't really matter whether network operators supply content on their own, or get it from a partner, as long as the right network infrastructure is in place, he adds.
"It seems apparent that there's no clear winner or loser here," said Vogelsang. "If it's done right, there's a bunch of winners - where the network operators can take advantage of the consumers' desire to get access to all of this new media and supply their part of the overall solution, which is the infrastructure that delivers the new media to them."
Pano Toundas, Western Canada sales manager for Corning Cable Systems Inc., which provides network operators such as Telus, Bell Canada and Verizon with fibreoptic cable and related hardware needed to operate their systems, agrees small companies are gaining as network operators conquer the so-called Last Mile problem.
"If they're content providers and media companies and people like that, sometimes they find themselves restricted in the distribution of their content," says Toundas.
"A broadband network will definitely be beneficial for them. They'll be able to reach their final customer more easily ... and it doesn't cost them anything."
The Last Mile is effectively a bottleneck that has prevented content providers from profiting because their data was too large to be sent quickly over one transmission line.
"The Last Mile is really a show-stopper for a lot of those applications," notes Toundas.
In the past, the Last Mile problem was blamed for grainy, low-resolution video and still photos.
Now that it is being overcome, panelists are predicting that broadband TV - video that is transmitted via the Internet and watched on regular TV or a portable device instead of a computer - will cause the next major disruption to online business models.
(Monte Stewart can be reached at monte@businessedge.ca)
