As Tele2 combines with Com Hem and T-Mobile takes over UPC Austria, Stuart Thomson looks at the relative merits of different interpretations of convergence. Anders NilssonThe importance of convergence in European service providers’ strategies and as a rationale for M&A appears to be gathering steam.This week saw Swedish mobile player Tele2 and Com Hem agree to merge their operations into a single integrated mobile and fixed-line player to take on Telia in the Swedish domestic market.That deal followed closely on last week’s Liberty Global’s sale of its Austrian cable unit to T-Mobile to create a combined fixed-mobile player to compete with Telekom Austria.Last week’s DTVE Week in View focused on the prospects for a convergence-centric tie-up between Liberty Global and Vodafone in Europe, a more challenging combination to realise in practice, but one that continues to be the object of much speculation. Fixed-mobile convergence would of course lie at the heart of any move to pair these companies up.The case for combining fixed and mobile into a single offering appears to be increasingly compelling, with Liberty Global president and CEO Mike Fries’ vision of at least two major convergent players confronting each other in each country coming closer to reality.Fries portrays Liberty and Vodafone’s JV in the Netherlands, VodafoneZiggo, as something of a poster child for convergence, with synergies being realised and the ‘converged’ base of customers that take both fixed and mobile services increasing.Fries has also highlighted T-Mobile’s very aggressive assumptions about the synergies it believes can be realised from its acquisition of UPC Austria, a relatively small player in the Austrian market compared with its main rival.Convergence has been a major driver of service provider growth in markets such as France, Spain and Portugal – although competition between providers of bundled offerings has also highlighted one of the main dangers of convergence: a price war between operators that ‘destroys value’ when fixed and mobile operators expand into each other’s territory with the objective of capturing market share by any means necessary. For consumers, of course, low-cost bundled offerings are the main attraction of convergence.A longer-term view could be that the never-ending growth in data consumption across all devices will drive uptake of unified communication services spanning data, voice and entertainment delivered over multiple networks, with new applications fuelling demand for converged services. This deeper convergence is also taking place in the enterprise market, with the Internet of Things shaping up as a promising market for converged communication providers.Of course there in another big ‘convergence’ play to be weighed up by telecom players: that between communication services and media. Most big fixed-line providers believe video and entertainment are an essential part of the mix, but not all have gone down the route of investing directly in their own exclusive content.AT&T’s planned acquisition of Time Warner in the US is the blockbuster example of telecom-media convergence taken to the next level, but in Europe, Telefónica and Altice have both gone big on content investment. And of course let’s not forget BT’s quest to rival Sky as a purveyor of premium sports.Liberty Global, Vodafone and Orange, by contrast, have focused mostly on aggregating content rather than making it. They know that video is a key part of the converged offering, but they believe primarily in being distributors. Liberty Global has made content investments, including in premium sports – in a small, strictly localized way – but it has shown no inclination to bid for English Premier League rights.The approaches of the operators that go big on media are distinct, and they are at different stages of development, but it is clear that going down the content route does carry risks for telecom players.Acquiring premium rights carries the risk of cost inflation through competition – BT has taken a step back recently by striking a deal with Sky – while investing in a wider content play may not secure sufficient growth in a base of loyal subscribers to justify the expense. One of the key elements of Altice’s planned reorganisation of its European business – announced this week along with separation of its US operation from the parent company – is to split its content activities off into a separate Altice Pay TV unit. This is move that seems designed to assuage investor concerns about the impact of Altice’s investment in premium content on the underlying network business. Altice said that the move would enable investors to better assess Altice France’s performance against its competitors.There is more than one convergence story. But on balance the one with a stronger guarantee of a happy ending seems more likely to be the pure-play communications one – combining fixed and mobile assets – rather than welding together communications and content.