Telcos Face a Web 2.0 Identity Crisis

Like it or not, telecom network operators are on a collision course with a group of competitors that pose long-term challenges extending beyond conventional services such as voice, data, and video. Companies that are approaching next-gen services from a non-telecom (i.e. Web 2.0) framework are angling to disintermediate network operators, relegating them to supplying bandwidth and little more.

The collision of the Web 2.0 and telecom worlds is beyond the control of network operators. As Web 2.0 applications become ubiquitous, users will demand service experiences that have little or nothing to do with the networks delivering those services. Users want to be able to access the full range of communications options and services over a single device, using a single point of contact.

As the latest edition of Light Reading Insider details, identity management (IdM) will be a key enabler of that transparent, all-encompassing user experience. In a nutshell, IdM is an integrated system of business processes, policies, and technology that lets an organization control user access to online applications or services while protecting the user’s privacy and the organization’s resources. In other words, an IdM system can be the gatekeeper to the entire user experience.

Right now, most IdM systems used by network operators are specific to particular types of service or application. Each application has its own password and authentication setup, meaning that the more services or applications a user wants to tap into, the more password and authentication processes that user has to go through. The result, of course, is far from a seamless experience.

Providing an integrated IdM experience isn't going to be easy, and it isn't going to be cheap. But as the latest Insider points out, next-gen competitors such as Google (Nasdaq: GOOG) are deploying Web 2.0 technologies to achieve robust IdM. If network operators cede IdM leadership to these competitors, they will lose an important mechanism for customer retention – as well as potentially significant revenue.

Forward-looking operators see the threat and are acting on it. TA Orange Co. Ltd. , the wireless arm of Orange (NYSE: FTE), is among a handful of European and Asian network operators that are implementing IdM technology and learning to become identity providers – companies that can, in effect, vouch for a user’s identity in transactions with Web-based service providers. Orange may not really know yet how it’s going to make money as an identity provider, but the company is certain that IdM will help it deliver services that can reduce customer churn.

In the United States, network operators are moving to embrace IdM more slowly, and that could end up being a costly mistake if waiting allows non-telecom competitors to move in and provide the “sticky,” personalized services users are looking for. One study from The Liberty Alliance Project , a group of more than 150 companies working on IdM standards, suggests that trillions of dollars in revenue could be lost to such competitors over the next several years if network operators don’t embrace IdM technology.

In its latest report, Light Reading Insider looks at how identity management has evolved over the past several years and explains how network operators can become identity providers. The report examines the infrastructure needed to build an IdM platform and discusses the business case for deploying IdM technology, considering some early telco IdM implementations and discussing in detail four protocols battling to become the standard of choice. Finally, the report profiles 11 vendors hoping to sell IdM software and other products to network operators.

There's no clear-cut path to IdM supremacy, but network operators aren't in position to wait until that roadmap is in place. “The biggest fear that telcos have is to become pipe providers," notes Guillaume Garnier de Falletans, a project manager working on identity management at Orange. “To maximize profit, we definitely have to provide more and more services to our customers. We need to manage their identities if we want to keep them loyal.”

— Dawn Bushaus, Analyst, Light Reading Insider

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Identity Management: Telcos vs. Web 2.0 Titans , a 21-page report, is available as part of an annual subscription (12 monthly issues) to Light Reading Insider, priced at $1,595. This report is available for $900. To subscribe, please visit: www.lightreading.com/insider.