I recently participated in two Comverse events, and once again the message was driven home to me about the enormous opportunities that lie ahead of the industry in the field of new telecoms applications.

The middleware and cloud applications that are now appearing at the edge of the network will of course, be further developed once high-speed broadband becomes available, but already they are having an enormous impact on the telecoms market. The new user experiences that can be obtainable through these applications will enrich fast broadband networks beyond recognition.

What we now have is, on the one hand, the Over-The-Top (OTT) applications that have conquered the world thanks to companies such as Google, Facebook, Amazon, Skype, Microsoft, Apple, Yahoo, YouTube and so on; and, on the other, the attempts by the telcos to develop these apps though their broadband and mobile portals.

By using the OTT route one can avoid many of the problems that the telco industry has been dealing with for decades. I remember as far back as the early 1990s, when both Telstra and Optus launched their impressive new billing reforms; but today, more than twenty years later, their billing and operational support systems (BSS/OSS) are as far from completion as they were in the 1990s. In fact it is likely that they are even further behind now, since many new applications have become available since that time—applications that are making those telco systems look like dinosaurs. In the mobile market we can also refer to decade old failed strategy of introducing IMS.

While fast broadband is the essential infrastructure of the digital economy the real action will take place on the layer above the infrastructure. This is where for many years I have envisaged the future of the telcos—facilitating the development of the digital economy, rather than concentrating on end-user products like telephone calls, mobile portals or broadband applications.

This is the world of value-added infrastructure, middleware and cloud services. However the old infrastructure with its legacy of BSS and OSS systems has failed to make the transition to the new Internet-based ICT infrastructure, let alone being able to facilitate Web 2.0 or Web 3.0 services.

In the meantime it is the new digital media companies that are building not national but international middleware networks. While telcos fail to service customer bases that consist of millions of users the digital media companies are able to serve hundreds of millions of customers.

Therefore NBNs could be a godsend, since this will, potentially at least, give telcos the opportunity to build a value-added layer on top of the infrastructure that will be capable of delivering Next Generation Network (NGN) service such as Web 3.0+ services.

However, while the digital media companies are progressing in this field on a monthly basis, telcos still measure their progress in years, so at present the gap is still growing, but not in favour of the telcos.

So the sooner the telcos start their transformation the better.

However, after well over a decade of calling for change time is now running out. They have now also lost the mobile portal battle against the apps market (that happened so fast they never knew what hit them). If the telcos miss this last opportunity it is indeed highly likely that they will be relegated to being basic infrastructure operators—and that market is also under threat as construction companies are better-positioned to do this job after most telcos went out of this business one or two decades ago.

On a more positive note, while customers might not like their dinosaur telcos they do, at the same time, trust them. They have built robust systems with enormous reliability and sound security based on proper standards and availability everywhere.

So the telcos could use this advantage to offer that same level of trust in an Internet world where it is becoming increasingly difficult to know who is trustworthy and who is not. I have made this argument for many years, trying to get the telcos to move. Again, the opportunity is still there—but for how long?

Banks are in a similar position, but they have far more valuable data they can use to help customers navigate the digital economy. So they could easily compete in this market as well. Customer knowledge is the key element of the digital economy.

However, more immediate competition is coming from the social media sites, which are quickly becoming the new powerhouses of the digital economy; also, they already have far more information about their customers and can use this to expand their services.

So it is two minutes to twelve for the telcos here as well.

Looking at some of those fantastic applications from Comverse we see a range of enriched voice and messaging services with superior user experience, complete with visualisation, personalisation, location, multi-channel applications and an openness to social networks, UGC-sites and RSS feeds.

I can see the digital media companies offering these communications applications immediately, but the telcos may not move so fast. This would hurt the telcos right at the very core of their communications business and I can now quite easily see these products being offered by companies other than the telcos.

Some of the mobile companies are better-positioned than the fixed operators; however if we look at the mobile portals market versus the applications market we see that the mobile operators also have largely failed to make the transition to the new open web-based world.

Perhaps the telcos should start looking more at OTT services themselves. There are great applications with unified communication applications in relation to social sites, location-based activities, etc. If the telcos were smart they could offer voice free and allow customers to choose from a whole range of value-added voice services and to make incremental changes to the applications they really value.

Over and again I have argued that, rather than concentrating on their retail customers, the telcos should supply their middleware and cloud services to the content and services providers. They should be the key providers to the organisations that are going to drive the digital economy.