The telecommunications industry has experienced more change in the last decade than in its entire history, according to a new study by IBM.. In 1999, only 15 percent of the world’s population had access to a telephone; by 2009, nearly 70 percent had mobile phone subscriptions. This decade has also brought steep declines in public switched telephone network (PSTN) voice revenues, an explosion of over-the-top (OTT) communication services, phenomenal growth in mobile communications, global industry consolidation and even ground-breaking telco decisions to outsource their networks.
Fueled by recent rapid adoption in developing countries, mobile communications have propped up the industry’s top line. But now with these markets saturating, communications revenue growth as a whole is beginning to stall, and content and connectivity revenues have not risen quickly enough to compensate. Although increases in mobile Internet usage offers a glimmer of hope, the telecom industry faces some serious questions: Where will future growth come from? How will the industry evolve?
IBM research suggests that several trends are clear, each with a high probability of a specific outcome. However, IBM has also identified 12 key unknowns that will have a major impact on the future of the industry. These variables generally fall into two main categories: potential areas of growth and the prevailing competitive structure of the industry. Mapping the extremes of the possible outcomes related to these uncertainties reveals different scenarios for what the industry might look like five years from now.
Survivor Consolidation: Reduced consumer spending leads to revenue stagnation or decline. Developed market operators have not significantly changed their voice communications/closed connectivity service portfolio and failed to expand horizontally or into new verticals. Investors’ loss of confidence in the telecommunications sector produces a cash crisis and elicits industry consolidation.
Market Shakeout: Under prolonged economic downturn, investors force carriers to disaggregate assets into separate businesses with different return profiles, and retail brands emerge to aggregate and package services from disaggregated units. The market is further fragmented by government, municipality and alternative provider (e.g., local housing associations or utility) initiatives that extend ultra-fast broadband to gray areas, while private infrastructure investments are limited to densely populated areas. Operators look for growth through horizontal expansion and premium connectivity services sold to application and content providers as well as businesses and consumers.
Clash of Giants: Carriers consolidate, cooperate and create alliances to compete with OTT providers and device/network manufacturers that are extending their communications footprints. Mega carriers expand their markets through selective verticals (e.g., smart grids and e-health) for which they provide packaged end-to-end connectivity solutions. Telcos develop a portfolio of premium network services and better integrated digital content capabilities to deliver new experiences.
Generative Bazaar: Barriers between OTT and network providers blur as regulation, technology and competition drive open access. Infrastructure providers integrate horizontally to form a limited number of network co-operatives that provide pervasive affordable and unrestricted open connectivity to any person, device or object, including a rapidly expanding class of innovative asset-light service providers.
It started with a phone anchored to your car or your briefcase: "walking-around" communications that freed you from searching for a pay phone in order to talk outdoors.
Now personal communication technology has morphed into movies on your phone, an office wherever you go, social networks and streaming media as constant companions.
Industries and municipalities are also coming up with new ways to improve lives using broadband. Simply put, healthcare, education, utilities and other vital services will never be the same, thanks to creative thinking and high-speed data transfer.
On a smarter planet, almost anything can become digitally aware, instrumented and interconnected. We have the connections, processors, analytics and capabilities powerful enough for trillions of devices to talk to each other and improve the way the world works.
The infrastructure's need to grow up and the telcos' need to keep up come at great struggle when you consider that worldwide consumer broadband connections are predicted to increase 7.9% from 367.6 million in 2008 to 498.8 million in 2012.
Realizing the potential of smarter communication technology will require the infusion of new capabilities and models into our systems to make it easier for devices to transmit and interpret data, provide more secure connections, and protect identities. And new ways for traditional telcos to stay strong and relevant—for example, through moving into adjacent markets (telemediacy) such as healthcare and transportation, and maintaining the backbone for two-way smart utility meters, to name two.
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