As media companies continue to aggressively enter the wireless market, a never-before-witnessed two-sided geography will emerge, with fully integrated new “telemedia” companies on one side and re-energized, multi-service RBOCs on the other.

Driving the industry trend is, first and foremost, new technology, particularly digitization of IP and its potent cousin IMS SIP (see story page 38). With content and communications traffic now offered in identical packages delivered seamlessly across networks by IP, we see the collapse of formerly impervious industry boundaries. Cable TV companies can offer traditional bundle services in a highly integrated fashion by leveraging IP and IMS SIP.

The second driver is the remarkable transformation of the wireless industry, in which innovation in handset electronics, software and broadband networks has enabled new media services. A.T. Kearney research predicts that mobile TV service will be a $40 billion market by 2010. The third driver is the emergence of a large and lucrative bundle segment. In the new paradigm, he who controls the home controls the market, making differentiated multi-services home offerings vital to success for large telecom and media providers.

For these three reasons, media companies will be compelled to enter wireless first as MVNOs and then through deeper relationships with one or more non-RBOC wireless carriers, ultimately leading to full acquisition. To capitalize on the full benefits of end-to-end IP, media companies require full call control and wireless network access, which can only be achieved through outright ownership. Wireless network-owning media companies will be Verizon Wireless' and Cingular Wireless' biggest competitors. The RBOCs will be forced to create their own multi-service operations in response.

What are the implications of this new world? First, RBOCs and their wireless companies must realize that converged market success will come from control of the home — a natural strength of the cable companies and their media parents. Second, a new business model will need to center on deepening the customer relationship to deliver a higher, more consistent revenue stream per customer. Third, satellite providers and Wi-Fi players will be marginalized, and power and margin will shift to the bundle segment. Fourth, media companies will need to focus narrowly on direct distribution of varied, deep media and telecom services to core users and widely distribute content successfully.

The tectonic plates of media and telecom are shifting, a change that will create new companies. For service providers, it could mean the industry's finest hour, with low churn and high media and telecom revenues accelerated by new IP-enabled services.