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Frost & Sullivan 2013 Predictions for Telecommunications Services in Latin America
 

Frost & Sullivan 2013 Predictions for Telecommunications Services in Latin America

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The year 2012 saw significant milestones achieved in terms of 3G+ and FTTx networks expansion, 4G and IPTV rollouts, as well as M2M ecosystem development. 2013 will be a game-changing year as ...

The year 2012 saw significant milestones achieved in terms of 3G+ and FTTx networks expansion, 4G and IPTV rollouts, as well as M2M ecosystem development. 2013 will be a game-changing year as different telecommunications companies will position themselves in the market in order to assume leadership in these promising services.

This briefing will underline Frost & Sullivan’s key predictions for 2013, focusing on the implications of the competitive landscape as companies catch the wave of new fixed and mobile services and applications opportunities.

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  • Important cases (SMS): Oi Paggo VIVO/MasterCard JV VIVO/Paypal Oi Paggo: 460,000 registered users; 1,000,000 point-of-sales By the end of 2010, the number of cell phones had already surpassed the number of inhabitants in Brazil. With a penetration rate over 102 percent, Brazil has one of the largest penetration rates of cell phones in Latin America. Despite the large number of cell phones, the mobile payment market in the country is still incipient, with an extremely small number of transactions effectuated through cell phone devices and negligible number of users utilizing the mobile equipment as a means of payment. Nevertheless, due to the enormous potential of the mobile payment market in Brazil, all stakeholders involved in the means of payment landscape are currently focused on developing new mobile payment platforms and creating products utilizing cell phones as a means of payment. Currently, there is a clear lack of standard definition regarding mobile payment services in Brazil. To set up a clear taxonomy for this report, Frost & Sullivan defines mobile payment as the kind of payment that is initiated by the use of a mobile device to authenticate and authorize the transaction. There are three key participants in the mobile payment arena: financial institutions (FI) that include banks and other payment operators such as flags and acquirers; the mobile operators and new intermediary participants (mobile payment aggregators, security providers, and payment processing providers). In a country where only 51 percent of the population has a bank and/or a savings account, mobile payment is a strong means for the banks to establish a relationship with the unbanked population. Therefore, financial institutions still have to set up clear agreements with telecommunication operators in Brazil to create a mobile payment service. Currently, there are many conflicts between these two groups regarding taxes implied, revenue split, and the relationship with the end user. With just a few participants in this market, many stakeholders are already testing pilot mobile payment projects in Brazil and a further adoption of the concept is expected to increase in the short term. Although penetration of high-end devices with NFC will increase, and PoS terminals are being prepared for NFC, 2013 will not be the year for this technology in Latin America. However, we expect trials of the service. For 2013, most services will continue to be based on SMS/USSD, which have a higher potential user base. Offers of m-Wallet services will begin to flourish, pushed by regional competitors América Móvil and Telefónica, and followed by local competitors. Challenges for this market in Latin America are: consumer literacy, security concerns, high cost of mobile applications and low interoperability.
  • Mega Trends study: Latin American Companies are Now Turning to New Business Models that will Maximize the Value Added to Their Products and Services. Next-generation business models will redefine future business propositions and influence future technology and product development. These business models will not only reshape the landscape of the business environment, but they will also influence industry dynamics. Some of these evolving models are Value for Many, Personalization, Collaborative Thinking, and The Rise of Mobile Solutions.
  • Currently, in Latin America, IPTV is stronger in Chile and Colombia. In Argentina and Mexico the regulatory forbiddance for fixed telephony incumbents to offer IPTV restrains the market (although in Mexico smaller operators offer it, and in Argentina cooperatives are trailing the service). In Brazil, with the recent approval of a new regulatory framework for Pay TV services, allowing Telcos to provide IPTV services, we expect the highest growth rates for this service. A similar revision is being discussed in Venezuela, and CANTV has been trailing the service for some years, but we expect DTH to remain the proeminent alternative there. In Latin America as a whole, we expect IPTV to contribute to 4.0% of the total Pay TV subscribers in 2017, coming from 1.0% in 2011. In terms of BigData, we observe a growing quantity of video on demand titles (reaching more than 6000), catch-up TV programs, smart applications with music and video streaming, etc. To deal with this amount of information, some Pay TV operators are indicating to the customer daily suggestions based on popularity, and a few are now trying to personalize the indications to the customer, as Netflix does. Some are also using social networks integrated, so users can indicate to each other content from the Pay TV line up or on demand content, and also interact during the programming. Twitter has teamed up with Nielsen to develop a tweet-based TV rating. “Our TV partners have consistently asked for one common benchmark from which to measure the engagement of their programming,” wrote Twitter’s head of media, Chloe Sladden. “This new metric is intended to answer that request.”
  • Wi-Fi hotspots: in 2012 the largest provider in Latin America was Oi, with 17.700 hotspots in Brazil, and roaming agreements worldwide. In 2013 we can expect the expansion of hotspots by all main carriers in the region, and integration of Wi-Fi in fixed and mobile broadband service plans. 4G rollouts: 2012 was the year of 3G+ expansion, and 3G mass offering. 2013 will be the year of 4G rollouts. Microcells are likely to be deployed in all main urban centers to enhance customer experience, especially on 2.5/2.6GHz deployments. These small cells have reduced coverage, but provide higher bandwidth/QoS.
  • Promotion such as Live TIM promotion in Sao Paulo, charging R$50 (US$25) for 50Mbps until 2014
  • In 2012 M2M accounted for 10.2 million connections in Latin America, mainly in the enterprise segment. 2013 is expected to see this number grow at a double-digit rate, increasing the relevance of M2M in total connections.
  • O Brasil representou 54.2 % dos mercados de MSS da regiao no ano passado, e continuara representando mais de metade dos mercados de MSS da regiao em 2015 Existe ainda um enorme potencial de crescimento, especificamente empresas de médio porte. Um impulsionador bastante relavente será a organização de eventos extremamanete importantes, como a Copa do Mundo em 2014 e Olimpiadas em 2016. O mercado brasileiro de MSS é o mais fragmentado da regiao, com forte atuação de mais de 20 empresas.
  • Ask for a Growth Partnership proposal: It’s for discussion purposes only and will give you a clearer idea of how we work with our partners to accelerate growth. Our MindXchange events are career-focused. Please check out the programs which line up with your career or industry. As a Growth Partner you are free to attend any event Frost & Sullivan holds worldwide. All our events are focused on growth strategies by industry and career. Everybody on the Growth Team must attend the annual GIL event…. This year in the Bay Area? We will be having Industry think tanks, career round tables, and CEO panel discussions. Its totally unique and very value packed. See the video clip…. Register your team to the CSG. Start to build some teamwork and consensus on how your company can get on the growth track, be best in class in terms of growth innovation and leadership… Register for the industry and career based newsletters which support you. These keep you exposed to a fantastic flow of ideas, information and best practices which will change your life. If your company is truly struggling with the recession, schedule some time to talk to us about your strategic options. We can help coach you through the recession and prepare you for accelerated growth. If raising capital is a concern our Financial Services team can help you with your financing strategy. If you like what we have covered but, don’t know what to do next. Lets set up some time for a Growth Strategy Dialog,,,, These sessions provide a clearer diagnostic of your situation and can give some fast insights into the next steps. We can do this in person or over the phone. There is no charge for the first session.
  • Ask for a Growth Partnership proposal: It’s for discussion purposes only and will give you a clearer idea of how we work with our partners to accelerate growth. Our MindXchange events are career-focused. Please check out the programs which line up with your career or industry. As a Growth Partner you are free to attend any event Frost & Sullivan holds worldwide. All our events are focused on growth strategies by industry and career. Everybody on the Growth Team must attend the annual GIL event…. This year in the Bay Area? We will be having Industry think tanks, career round tables, and CEO panel discussions. Its totally unique and very value packed. See the video clip…. Register your team to the CSG. Start to build some teamwork and consensus on how your company can get on the growth track, be best in class in terms of growth innovation and leadership… Register for the industry and career based newsletters which support you. These keep you exposed to a fantastic flow of ideas, information and best practices which will change your life. If your company is truly struggling with the recession, schedule some time to talk to us about your strategic options. We can help coach you through the recession and prepare you for accelerated growth. If raising capital is a concern our Financial Services team can help you with your financing strategy. If you like what we have covered but, don’t know what to do next. Lets set up some time for a Growth Strategy Dialog,,,, These sessions provide a clearer diagnostic of your situation and can give some fast insights into the next steps. We can do this in person or over the phone. There is no charge for the first session.

Frost & Sullivan 2013 Predictions for Telecommunications Services in Latin America Frost & Sullivan 2013 Predictions for Telecommunications Services in Latin America Presentation Transcript

  • 2013 Predictions for Telecommunications Services in Latin America Regulatory, technology and competitive trends that will impact the market in 2013 Renato Pasquini, Telecommunications Team Leader for Frost & Sullivans ICT Practice January 8, 2013© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • Today’s Presenter Renato Pasquini, Telecom Team Leader Frost & Sullivan Renato Pasquini joined F&S in 2011 and is responsible for the management of Frost & Sullivan’s Telecom practice in Latin America. Renato coordinates regional market intelligence studies and strategic consulting projects, assisting global and regional telecom service providers. Particular expertise in:  Competitive strategy  Financial, strategic and regulatory analysis  Qualitative and quantitative market research 2
  • Occasion for the Analyst Briefing• The year 2012 saw significant milestones achieved in telecommunications services markets, both in network deployment and new service launches.• 2013 will be a game-changing year as different telecommunications operators look to position themselves as market leaders in these promising services.• This briefing will underline Frost & Sullivans key predictions for 2013, focusing on the implications of the competitive landscape as companies catch the wave of new fixed and mobile services and applications opportunities. 3
  • Poll Question 1 Which of the followingservices do you believe will shine through in 2013? 1. Mobile banking & payment services 2. Advanced mobile value-added services and applications 3. Machine-to-machine (M2M) 4. IPTV services 5. Ultra broadband services 4
  • Poll Question 2What is the main barrier forthe adoption of these newservices in Latin America? 1. Regulation / Legislation / Tax burden 2. Socieconomic profile 3. Low competition levels 4. Underdeveloped ecossystem 5. User illiteracy / ignorance 5
  • 2013 Predictions
  • Prediction #1: Mobile Payment will Gain Traction2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Trend for 2013: Not the year of NFC yet! SMS solutions likely to increase adoption, and mobile wallet to flourish ••Low penetration of high-end devices limit the potential for NFC Low penetration of high-end devices limit the potential for NFC for now, although some PoS terminals are already compatible. for now, although some PoS terminals are already compatible. ••However, NFC trials are expected in 2013, such as during the However, NFC trials are expected in 2013, such as during the FIFA Confederations Cup in Brazil. FIFA Confederations Cup in Brazil. ••For 2013, most services will continue to be based on For 2013, most services will continue to be based on SMS/USSD, compatible with most devices. SMS/USSD, compatible with most devices. ••m-Wallet services will be launched, pushed by regional m-Wallet services will be launched, pushed by regional competitors. competitors. Mobile payment transactions still represent a small fraction of credit card transactions, 7.2 million on 9.7 billion in 2012 in Brazil. But from 2013 on it is expected a relevant growth in m-payment transactions. Source: Frost & Sullivan analysis 7
  • Prediction #2: New Business Models for the Middle Class Will be Developed 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. Advanced2013 LATAM Telecom Payment Business Internet Heterogeneous Broadband adding VASTrends Models Convergence Networks value New Business Models Mega Trend Collaborative The Rise of Mobile Personalization and Value for Many Thinking Solutions Individualization Trend for 2013: Launch (or expansion) of affordable services for the middle class Free + Premium = Freemium Source: Frost & Sullivan analysis 8
  • Prediction #3: TV/Internet Convergence Will Bring Personalization2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Trend for 2013: from linear programming to on demand content and interactive applications ••Social TV Social TV ••Second Screen Second Screen ••TV Everywhere TV Everywhere ••Niche video on-demand subscriptions Niche video on-demand subscriptions ••Cloud Services / /Catch-up TV Cloud Services Catch-up TV ••Multiroom Multiroom ••Telecom apps (i.e. email, phone, videoconference) Telecom apps (i.e. email, phone, videoconference) ••Interactive apps (i.e. shopping, pizza delivery, etc.) Interactive apps (i.e. shopping, pizza delivery, etc.) ••Personalized content suggestions (analytics) Personalized content suggestions (analytics) Leading Pay TV services providers, backed by broadband offers, will expand advanced Cable TV and IPTV services with innovative services and applications for clients. Source: Frost & Sullivan analysis 9
  • Prediction #4: Small Cells / Heterogeneous Mobile Networks to Enhance User Experience2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks valueTrend for 2013: micro cells and Wi-Fi Wi-Fi: Wi-Fi: •Operator Wi-Fi hotspot network expansion, both •Operator Wi-Fi hotspot network expansion, both indoors and outdoors indoors and outdoors •Wi-Fi bundled in fixed and mobile service plans •Wi-Fi bundled in fixed and mobile service plans •Automatic authentication via SIMCard or mobile app •Automatic authentication via SIMCard or mobile app 3G/4G: 3G/4G: •Small cells on pole attachments and other shared •Small cells on pole attachments and other shared infrastructures. infrastructures. •Indoor cells on buildings, shopping malls, stadiums •Indoor cells on buildings, shopping malls, stadiums •Digital dividend* (700 MHz–800Mhz) •Digital dividend* (700 MHz–800Mhz) The FIFA Confederations Cup in Brazil, to be held in State capitals, will test the limits of the 4G and Wi-Fi infrastructures, and provide insights on how to enhance user experience. *Spectrum released by the switchover from analog to digital TV broadcasting Source: Frost & Sullivan analysis 10
  • Prediction #5: Ultra Broadband to Improve Cost-Benefit and see Increased Demand2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Trend for 2013: Telcos react to HFC and VDSL with FTTH offerings; concern on cannibalization ••Further bandwidth growth on FTTH, from the current Further bandwidth growth on FTTH, from the current maxium speed of 200Mbps. maxium speed of 200Mbps. ••Price reduction, due to HFC and VDSL competition, and Price reduction, due to HFC and VDSL competition, and economies of scope and scale. economies of scope and scale. ••Value proposition to highlight IPTV and over-the-top Value proposition to highlight IPTV and over-the-top services and applications with Full HD, 3D, HD audio. services and applications with Full HD, 3D, HD audio. ••SMB as another target segment. SMB as another target segment. ••Concern of FTTH generating cannibalization on Concern of FTTH generating cannibalization on Dedicated IP. Dedicated IP. Ultra broadband connections are likely to be tied to operator’s own service bundles that make use of this bandwidth, such as IPTV and over-the-top services, to justify the price and accelerate return on investment. Source: Frost & Sullivan analysis 11
  • Prediction #6: M2M to Enhance Value and Spread Into Different Verticals2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Trend for 2013: No one size fits all for the enterprise segment; initial M2M adoption in the consumer segment Enterprise segment: Enterprise segment: •Development of managed services and VAS (reporting & monitoring, •Development of managed services and VAS (reporting & monitoring, security, e-portal, etc.) to increase ARPU. security, e-portal, etc.) to increase ARPU. •Focus on verticalized solutions developed to serve different client •Focus on verticalized solutions developed to serve different client profiles. profiles. Consumer segment: Consumer segment: •Development of consumer M2M applications, and partnerships with •Development of consumer M2M applications, and partnerships with manufacturers, will allow the first uses of connected cars, connected manufacturers, will allow the first uses of connected cars, connected home appliances and personal wellbeing/healthcare and navigation home appliances and personal wellbeing/healthcare and navigation devices. devices. Regulation and legislation will be key to foster M2M adoption. However, the M2M ecosystem will become increasingly more complex and the success of M2M will depend on the ability to establish good business models and partner with the right stakeholders. Source: Frost & Sullivan analysis 12
  • Prediction #7: Advanced VAS to diversify revenue streams2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Trend for 2013: Paradigm shift from “walk and talk” to “sit and play” ••Education Services (Foreign languages, Public contests, Education Services (Foreign languages, Public contests, University exams, other) University exams, other) ••Over-the-top Services (Video and Music streaming, Over-the-top Services (Video and Music streaming, Mobile TV) Mobile TV) ••Cloud Services (Storage, Apps, Content Streaming) Cloud Services (Storage, Apps, Content Streaming) ••Location Based Information Services Location Based Information Services ••Multi-player Gaming Multi-player Gaming ••Mobile Advertising / /Commerce Mobile Advertising Commerce Subscription services result in higher average period of active users, help reduce churn rates and increase ARPU, while mobile advertising and commerce result in a new revenue stream for operators. Source: Frost & Sullivan analysis 13
  • Prediction #7: Advanced VAS to diversify revenue streams (continued)2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value Annual Smart Devices Shipment in Brazil, 2011-2020 2011 – 9.9 Million 2011 – 9.9 Million 2020 – 46.6 Million 2020 – 46.6 Million 2011 2020 20.2 Million 2011 ––9.9 Million 2011 9.9 Million 97.1 Million 2020 ––35.9 Million 2020 35.9 Million 2011 – 0.4 Million 2011 – 0.4 Million 2020 – 14.6 Million 2020 – 14.6 Million The annual shipments of portable smart devices will increase 383.1% until 2020, compared to 2011, due to increased availability of devices, price reductions (including tax) and device financing. Source: Frost & Sullivan analysis 14
  • Prediction #7: Advanced VAS to diversify revenue streams (continued)2013 LATAM Telecom 1. Mobile 2. New 3. TV / 4. Small Cells / 5. Ultra 6. M2M 7. AdvancedTrends Payment Business Internet Heterogeneous Broadband adding VAS Models Convergence Networks value The technology transition to 3G is accelerating in the major Latin American countries, and by 2013 3G should represent 26.0% of total lines in Latin America, or 160.9 million. Source: Frost & Sullivan analysis 15
  • CONCLUSION: A continent burgeoning with opportunity in enablingconnectivity. However, there are still many challenges to beaddressed.1. Existing services will require important investments, how will companies guarantee an interesting ROI to maintain profitability?2. Will the consumer’s learning curve keep up to the speed of implementation of new technologies? How to educate users in that matter?3. How will companies maintain their core business whilst expanding, exploring and adapting to new realities and markets?4. How will governments address regulation issues with new technologies in a transparent and effective way? How will they stimulate the national industry?5. Social Media has changed from a communication platform to an strategic concern for corporations. How will companies best make use of it? Source: Frost & Sullivan analysis 16
  • Related F&S studies to be published in 2013First quarter of 2013: Latin American Mobile Banking and Payment Services Markets •Qualitative analysis and case studies in Latin America Latin American New Business Models for Telecom Services •Case studies in Latin America, aaligned with ICT Mega Trends Overview of Latin American Smartphone Market •Market sizing, forecasts (2012-2017), industry challenges, drivers & restraints, qualitative analysis Latin American Broadband Services Markets •Market sizing, forecasts (2012-2017), industry challenges, drivers & restraints, qualitative analysis. Latin American Mobile Services Markets Outlook •Market sizing, forecasts (2012-2017), regulatory issues, drivers & restraints, qualitative analysis. Note: The above list is not exhaustive. Source: Frost & Sullivan. 17
  • Related F&S studies to be published in 2013 (continued)Second quarter of 2013: Latin American Machine-to-Machine Service Markets •Market sizing, forecasts (2013-2018), regulatory issues, drivers & restraints, qualitative analysis. Latin American Pay TV Services Markets •Market sizing, forecasts (2013-2018), regulatory issues, drivers & restraints, qualitative analysis. Industry Hot Topics •A series of market insights of hot topics in the Telecom Services industry during 2013 Note: The above list is not exhaustive. The 2013 research titles are proposed titles. Source: Frost & Sullivan. 18
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  • For Additional InformationFrancesca Valente Renato PasquiniMarketing & Corporate Team Leader – Latin AmericaCommunications Executive ICT(54) 4777-5300 (55) 11-3065-8433francesca.valente@frost.com renato.pasquini@frost.comJose Roberto MavignierResearch Director – Latin America Luiz JunqueiraICT Sales Director – Latin America(55) 11-3065-8463 (55) 11-3065-8441joseroberto.mavignier@frost.com luiz.junqueira@frost.com 21