Telecoms in 2020: executive summary
This is the second of two reports that present the combined thinking of the Ovum telecoms research group on the subject of what the telecoms industry will look like in the year 2020. This report summarises the key findings and conclusions of our individual practice reports, which map out developments in specific areas, ranging from consumer, enterprise and wholesale telecoms through to network infrastructure and regulation.
Executive summary
In a nutshell
Ovum view
Scope
Structure of this report
Drivers of change
Five key drivers of change
Consumer trends
Consumer segmentation
SMART versus LEAN
Two new major categories of players
A converged model over time
Smart enablers are an early step on both paths
The rise and rise of broadband
Broadband as the fourth utility
Tiering of broadband offerings will become increasingly common
The development of broadband networks underpins quality of experience
The decade of video
Video will dominate the next ten years
Video will migrate to IP networks
Advertising will continue to fund much consumption of content
The decline of voice
Content and advertising
The content ecosystem in 2020
SMART players gun for content and a seamless user experience
Revenues: expanding content ‘currencies’ and business models
Defining trends
More specialist devices are on the way
Brace yourself for the consumer of the future
Search and discovery will take centre stage
New wave of interactivity will impact applications and the device user interface
Fully immersive environments are still a long way off
Not everything will be in the cloud
Building online trust will become critical
Devices and platforms
Evolved web access will become ubiquitous across devices
Pervasive web will drive innovation into the cloud
Focus will shift away from solving device-side problems of application development
OEMs will refocus on creating unique user experiences
Vertical integration of devices, software and services makes sense in the short term…
… and will continue to deliver benefits through 2015 and beyond
Horizontal service integration will predominate by 2020
Horizontally integrating cloud assets will be key in the longer term
Managed developer platforms and platform-as-a-service (PaaS)
Devices and platforms: industry structure and player positioning
Embracing MDP realities will be the key to SMARTness
Brand power will still dictate MDP success
Enterprise trends
Customer segmentation
Enterprise end users are consumers
The enterprise CIO is in control
A world of IP-enabled applications
Ubiquitous IP connectivity
Communications functionality delivered through software, not hardware
Richer, more integrated communications
On-demand, cloud and virtual computing transform pricing
The network as a service hub
Complexity requires management
Telcos must focus on management capabilities
Revenue shift
Wholesale trends
The increasing importance of wholesale
Growth in the number and size of wholesale services
Increasing variety among wholesale players
Greatly increased demand for bandwidth and storage
This doesn’t necessarily make it a pleasant market
Change required by wholesalers
Improved targeting of wholesale services
Greater focus on efficiency and return on investment
Consolidation of commodity service providers
The rise of ‘intelligent plumbing’ – LEAN operators
Telco revenue trends
Composition of telco revenues will change by 2020
Telco operations and strategy
A change in structure and business orientation required
Greater operational efficiency to maintain margins
Dealing with the changing business model
Consolidation will reduce the number of network operators
Emerging markets
Economic growth a key change driver
Customer segmentation
Consumers in the same groups as in mature markets
Business segmentation
Explosion of data traffic; voice still cash cow
SMART vendor role emerging
Wireless-led networks
Network infrastructure
Telcos will pass on the pressure they feel to vendors
A move to full-service vendors and specialised vendors
A shift to software, but hardware still matters
Meeting the ‘multi-terabit challenge’ will require significant industry R&D and cooperation on standards
The network demarcation point is very likely to move into the connected home and office
Increasingly intelligent networks
Recommendations for vendors
Components
Need for new enablers of performance improvements
Innovation required to move hotspot components onto different curves; cannot rely on Moore’s Law
Multiple hotspots span core and access networks
Industry structure generally in good shape but needs to slim down in FTTx
Regulation
Continued regulation of termination rates
Increased symmetry between rates
Long-term move to capacity-based charging and bill and keep
Slower progress in emerging markets
Universal service expansion
Universal service obligations will increasingly include broadband
Government encouragement for network sharing
Net neutrality regulations introduced
The US will lead the way
Transparency will be the key principle
Market analysis evolving
More analysis based on sub-national geographic markets
Spectrum policy
Deployment of digital dividend spectrum
Deployment of unlicensed spectrum
Coordinated approaches
In a nutshell
Ovum view
Scope
Structure of this report
Drivers of change
Five key drivers of change
Consumer trends
Consumer segmentation
SMART versus LEAN
Two new major categories of players
A converged model over time
Smart enablers are an early step on both paths
The rise and rise of broadband
Broadband as the fourth utility
Tiering of broadband offerings will become increasingly common
The development of broadband networks underpins quality of experience
The decade of video
Video will dominate the next ten years
Video will migrate to IP networks
Advertising will continue to fund much consumption of content
The decline of voice
Content and advertising
The content ecosystem in 2020
SMART players gun for content and a seamless user experience
Revenues: expanding content ‘currencies’ and business models
Defining trends
More specialist devices are on the way
Brace yourself for the consumer of the future
Search and discovery will take centre stage
New wave of interactivity will impact applications and the device user interface
Fully immersive environments are still a long way off
Not everything will be in the cloud
Building online trust will become critical
Devices and platforms
Evolved web access will become ubiquitous across devices
Pervasive web will drive innovation into the cloud
Focus will shift away from solving device-side problems of application development
OEMs will refocus on creating unique user experiences
Vertical integration of devices, software and services makes sense in the short term…
… and will continue to deliver benefits through 2015 and beyond
Horizontal service integration will predominate by 2020
Horizontally integrating cloud assets will be key in the longer term
Managed developer platforms and platform-as-a-service (PaaS)
Devices and platforms: industry structure and player positioning
Embracing MDP realities will be the key to SMARTness
Brand power will still dictate MDP success
Enterprise trends
Customer segmentation
Enterprise end users are consumers
The enterprise CIO is in control
A world of IP-enabled applications
Ubiquitous IP connectivity
Communications functionality delivered through software, not hardware
Richer, more integrated communications
On-demand, cloud and virtual computing transform pricing
The network as a service hub
Complexity requires management
Telcos must focus on management capabilities
Revenue shift
Wholesale trends
The increasing importance of wholesale
Growth in the number and size of wholesale services
Increasing variety among wholesale players
Greatly increased demand for bandwidth and storage
This doesn’t necessarily make it a pleasant market
Change required by wholesalers
Improved targeting of wholesale services
Greater focus on efficiency and return on investment
Consolidation of commodity service providers
The rise of ‘intelligent plumbing’ – LEAN operators
Telco revenue trends
Composition of telco revenues will change by 2020
Telco operations and strategy
A change in structure and business orientation required
Greater operational efficiency to maintain margins
Dealing with the changing business model
Consolidation will reduce the number of network operators
Emerging markets
Economic growth a key change driver
Customer segmentation
Consumers in the same groups as in mature markets
Business segmentation
Explosion of data traffic; voice still cash cow
SMART vendor role emerging
Wireless-led networks
Network infrastructure
Telcos will pass on the pressure they feel to vendors
A move to full-service vendors and specialised vendors
A shift to software, but hardware still matters
Meeting the ‘multi-terabit challenge’ will require significant industry R&D and cooperation on standards
The network demarcation point is very likely to move into the connected home and office
Increasingly intelligent networks
Recommendations for vendors
Components
Need for new enablers of performance improvements
Innovation required to move hotspot components onto different curves; cannot rely on Moore’s Law
Multiple hotspots span core and access networks
Industry structure generally in good shape but needs to slim down in FTTx
Regulation
Continued regulation of termination rates
Increased symmetry between rates
Long-term move to capacity-based charging and bill and keep
Slower progress in emerging markets
Universal service expansion
Universal service obligations will increasingly include broadband
Government encouragement for network sharing
Net neutrality regulations introduced
The US will lead the way
Transparency will be the key principle
Market analysis evolving
More analysis based on sub-national geographic markets
Spectrum policy
Deployment of digital dividend spectrum
Deployment of unlicensed spectrum
Coordinated approaches
LIST OF TABLES
Table 1: Telco revenue splits in 2010 and 2020
Table 1: Telco revenue splits in 2010 and 2020
LIST OF FIGURES
Figure 1: Overview of Ovum reports on Telecoms in 2020
Figure 2: Drivers of change from 2010 to 2020
Figure 3: Enterprise categories 2020
Figure 4: The soft network
Figure 5: Domain responsibility for the 2020 telco
Figure 6: The changing telco business model
Figure 1: Overview of Ovum reports on Telecoms in 2020
Figure 2: Drivers of change from 2010 to 2020
Figure 3: Enterprise categories 2020
Figure 4: The soft network
Figure 5: Domain responsibility for the 2020 telco
Figure 6: The changing telco business model
