http://propakistani.pk/2014/02/17/2014-a-watershed
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Posted On: 05/29/2014 10:24:08 PM
http://propakistani.pk/2014/02/17/2014-a-wate...-industry/
global telecom industry is looking at an eventful 2014 where the trends of recent years are expected to converge and culminate into a perfect storm. This is a Darwinian year that will distinguish between winners and losers, ruthlessly and unequivocally.
We believe that the players who will define the next wave of industry growth will require scale and capabilities that are substantially different from those that ensured success during the last growth cycle. Not incrementally different, but substantially different. The year ahead will be characterized by unprecedented levels of consumer choice, ubiquity, and interactivity. To make it in this more dynamic and fluid environment, operators need new skills.
Before looking at the key trends that will define 2014, it is pertinent to take stock of what shaped 2013 from a telco perspective. Impacted by the global economic downturn of 2009 onwards, the industry’s growth naturally slowed and this has continued throughout 2013. As a clear sign of the maturing global telecom, the industry’s growth rate is gradually aligning to overall GDP growth rates. With the exception of Africa, which is still growing at 7%, most other regions have a moderate growth rate of around 3%. America is only at 1% and Europe is actually shrinking in core market value.
The competitive scene is also very happening, with mushrooming OTT players and blurring boundaries between competitors and collaborators. Whatsapp is estimated to exchange more than 1 Billion messages every day. As a result, some operators witnessed a 50% Drop in SMS revenues. This cannibalization is also supported by the 10% growth in the adoption of smartphones, which is estimated to cause a loss of $1.2 bn globally in voice and messaging revenues.
Faced with unprecedented competition, telecom operators focused on cutting costs and increasing operational efficiency to protect profitability. As infrastructure is becoming a commodity compared to the differentiation happening at the service level, operators engaged in aggressive network and tower sharing schemes both to optimize their costs and monetize the excess capacity available on their infrastructure.
Airtel took it one step further by fully outsourcing their network to TDC, while BT outsourced its IT infrastructure. Finally, some operators like Orange and T-Mobile identified mutual benefits in joint procurement and combined their purchasing power for non-core procurement. The increase in caution has also led to a significant slowdown in mergers and acquisitions, with operators choosing to focus on domestic markets, reversing the expansionary trend of recent years.
However, while telecom operators may have found the recipe to align their cost structures to a lower economy, they have clearly struggled to make breakthrough innovations, and are pretty much the only players in the ICT value chain with no major innovation to take credit for. On the other hand, the other players managed to introduce evolutions and revolutions in terms of products and business models. For example, internet players have evolved beyond the model of unilateral content provider to offer products and services that directly compete with those of telecom operators. VoIP and other communication tools offered by the likes of Skype, Google and Facebook directly cannibalize voice and SMS revenues of telecom operators.
Device manufacturers have also had their fair share of innovation, with the introduction of smart devices and disruptive ecosystems built around them. Samsung, Google, and Apple, which are consistently ranked among the most innovative companies globally, not only outperform operators in terms of the percentage of sales they devote to R&D and innovation, they also far outstrip them in the number of patents they have received. Patent ownership in the mobile communications space has become critically important, judging by the increasing number of patent lawsuits, and has been a primary factor in the main acquisitions of recent years.
Finally, network, high-tech and IT vendors are also participating in the innovation process. The introduction of new products such as traffic control systems and small cells creates opportunities for innovative business models. Cloud computing and M2M solutions are also at the heart of innovative services provided to enterprises.
Going forward, operators will need to carefully observe three key trends radically changing the dynamics of the market, which will dictate the strategy they need to adopt if they want to survive in this new environment.
global telecom industry is looking at an eventful 2014 where the trends of recent years are expected to converge and culminate into a perfect storm. This is a Darwinian year that will distinguish between winners and losers, ruthlessly and unequivocally.
We believe that the players who will define the next wave of industry growth will require scale and capabilities that are substantially different from those that ensured success during the last growth cycle. Not incrementally different, but substantially different. The year ahead will be characterized by unprecedented levels of consumer choice, ubiquity, and interactivity. To make it in this more dynamic and fluid environment, operators need new skills.
Before looking at the key trends that will define 2014, it is pertinent to take stock of what shaped 2013 from a telco perspective. Impacted by the global economic downturn of 2009 onwards, the industry’s growth naturally slowed and this has continued throughout 2013. As a clear sign of the maturing global telecom, the industry’s growth rate is gradually aligning to overall GDP growth rates. With the exception of Africa, which is still growing at 7%, most other regions have a moderate growth rate of around 3%. America is only at 1% and Europe is actually shrinking in core market value.
The competitive scene is also very happening, with mushrooming OTT players and blurring boundaries between competitors and collaborators. Whatsapp is estimated to exchange more than 1 Billion messages every day. As a result, some operators witnessed a 50% Drop in SMS revenues. This cannibalization is also supported by the 10% growth in the adoption of smartphones, which is estimated to cause a loss of $1.2 bn globally in voice and messaging revenues.
Faced with unprecedented competition, telecom operators focused on cutting costs and increasing operational efficiency to protect profitability. As infrastructure is becoming a commodity compared to the differentiation happening at the service level, operators engaged in aggressive network and tower sharing schemes both to optimize their costs and monetize the excess capacity available on their infrastructure.
Airtel took it one step further by fully outsourcing their network to TDC, while BT outsourced its IT infrastructure. Finally, some operators like Orange and T-Mobile identified mutual benefits in joint procurement and combined their purchasing power for non-core procurement. The increase in caution has also led to a significant slowdown in mergers and acquisitions, with operators choosing to focus on domestic markets, reversing the expansionary trend of recent years.
However, while telecom operators may have found the recipe to align their cost structures to a lower economy, they have clearly struggled to make breakthrough innovations, and are pretty much the only players in the ICT value chain with no major innovation to take credit for. On the other hand, the other players managed to introduce evolutions and revolutions in terms of products and business models. For example, internet players have evolved beyond the model of unilateral content provider to offer products and services that directly compete with those of telecom operators. VoIP and other communication tools offered by the likes of Skype, Google and Facebook directly cannibalize voice and SMS revenues of telecom operators.
Device manufacturers have also had their fair share of innovation, with the introduction of smart devices and disruptive ecosystems built around them. Samsung, Google, and Apple, which are consistently ranked among the most innovative companies globally, not only outperform operators in terms of the percentage of sales they devote to R&D and innovation, they also far outstrip them in the number of patents they have received. Patent ownership in the mobile communications space has become critically important, judging by the increasing number of patent lawsuits, and has been a primary factor in the main acquisitions of recent years.
Finally, network, high-tech and IT vendors are also participating in the innovation process. The introduction of new products such as traffic control systems and small cells creates opportunities for innovative business models. Cloud computing and M2M solutions are also at the heart of innovative services provided to enterprises.
Going forward, operators will need to carefully observe three key trends radically changing the dynamics of the market, which will dictate the strategy they need to adopt if they want to survive in this new environment.
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