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A Look into the Future of Telecom Future World Trends Summit
 

A Look into the Future of Telecom Future World Trends Summit

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The communications industry is undergoing a massive transformation and this will affect every person and business on the face of the planet. The shift to a more connected world gives CSPs a need to ...

The communications industry is undergoing a massive transformation and this will affect every person and business on the face of the planet. The shift to a more connected world gives CSPs a need to rethink their identities as CSPs. CSPs can turn new disruptive forces into opportunities, not least of which is the opportunity to become the ‘middleware’ of the smarter planet.

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    A Look into the Future of Telecom Future World Trends Summit A Look into the Future of Telecom Future World Trends Summit Presentation Transcript

    • IBM Institute for Business ValueA Look into the Future of TelecomRob van den DamGlobal Telecommunications Industry LeaderIBM Institute for Business Value © 2012 IBM Corporation
    • IBM Institute for Business ValueThe IBM Institute for Business Value creates fact basedthought leadership that help clients realize business value Future Value Realization CXO Agendas Studies Surveys 3 to 10 year industry outlook In-depth assessment of today’s Chief Officiers studies – CEO, with action oriented next steps critical issues, opportunities, etc CIO, CMO, CFO, CHRO, etc.2 © 2012 IBM Corporation
    • IBM Institute for Business ValueAgenda  A short Look Back  Disruptive Forces  Four Future Scenarios  Key Technology Trends  The Middleware for a Smarter Planet3 © 2012 IBM Corporation
    • IBM Institute for Business ValueOver the past decade global communications penetration - andmobile cellular telephony specifically - has been phenomenal Telecom Penetration 1999 - 2011 90% Mobile subscriptions Internet Users 80% Fixed Telephone lines Fixed BB Subscriptions 70% Mobile BB Subscriptions 60% 50% 40% 30% 1999: 2011: 20% Access to Mobile- 10% telephone cellular of any kind subscriptions 0% 1999 2001 2003 2005 2007 2009 2011 ± 15% ± 85%4 © 2012 IBM Corporation
    • IBM Institute for Business Value CSPs* in developing markets have proven they can grow and generate high levels of profit from low ARPU customers…. Mobile Cellular Subscriptions Telecom Penetration 140% 120% Developed 100% Developing 80% 2001 60% Total 719 40% million 20% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 Emerging Markets mobile ARPU and Total 6 EBITDA margin (2010) 10 65% 9,3 70% billion 60% 8,2 8,1 60% 8 54% 6,0 43% 46% 50% 6 5,0 40% 34% 4,5 33% 4 23% 30% 2,7 2,1 20% 2 10% 0 0% Bangladesh India Indonesia Pakistan Philippines Algeria Ukraine Peru ARPU (USD/ month) EBITDA margin© 2012 IBM Corporation5 *Communications Service Provider
    • IBM Institute for Business Value ….and they were even leading the way in adoption of the SMS- based data lifestyle applications Mobile messaging-based applications to deliver public information, advisory, mobile payment, money transfer and basic banking services to rural communities Indian operator Tata’s service China Mobile offers ‘Nong Xin M-Pesa allows users to ‘mKrishi’ allows farmers to send Tong’ for farmers to provide deposit, withdraw, and transfer queries and receive news, weather information and money easily with a mobile personalizes services details of farming-related device. It is a system of government policies (50 million microfinancing that is widely users) used in Kenya and Tanzania.6 © 2012 IBM Corporation
    • IBM Institute for Business ValueThen came the era of mobile internet, data, a mass of applications, andthe ability to also send images/video from everyone to everywhere Mobile internet subscriptions Q3 2011 Mobile data 50% 40% Data 30% 20% Developed Developing Voice 10% 0% 2007 2008 2009 2010 2011 Smartphones/Tablets App Stores In 2011 sold: Nbr applications: - 490 Mio Smartphones (63% 10/11 growth) - iPhone Apps > 500K - 210 Mio Notebooks - Android Apps > 600K (7.5% 10/11 growth) - Window Phone > 100K - 63 Mio Tablets (274% 10/11growth)7 © 2012 IBM Corporation
    • IBM Institute for Business ValueThe communications ecosystem continues to evolve “T-Mobile “Vodafone’s “BYOD: The inmates Announces Q4 Australian of the asylum have 2011 Results, Loss operation put on control” of over 700,000 the market” (Apr 17, 2012) Customers” (March 16, 2012) (February 23, 2012) “Nokia rating cut to “DoCoMo mulls “NEC to buy one level above increasing stake in Convergys junk” Indian mobile business support (April 16, 2012) network” ops…” (March 26, 2012) (March 22, 2012) “Vodafone buys “Smartphone sales “AOL sells patents “Millennials are Cable & Wireless forecast to hit 1B to Microsoft in leading the social in ‘major step up’ ” in 2014” $1.056 billion deal” media explosion” (April 24, 2012) (April 13, 2012) (April 9, 2012) (April 13, 2012)8 © 2012 IBM Corporation
    • IBM Institute for Business ValueDramatic forces are radically altering the telecommunications land-scape, confronting CSPs with both major challenges and opportunities Disruptive Over- Empowerment of the-Top (OTT) Consumer Competitors Rise of Social Active Government Media Involvement Explosion of Change in Global Mobile Data Hierarchy9 © 2012 IBM Corporation
    • IBM Institute for Business Value OTT providers – in particular the top 4 – are expanding their dominant position in the communications landscape Market Value Market Value of Market Top 25 Value of drivers = 1/2 Top 150 Telecom of Internet Providers traffic 70% of market cap The massive shift in value continues towards the OTTs as capital markets prize the direct customer relationship and value provided by OTTs, >>>>>>> reducing the CSP valuation back to utility status!10 © 2012 IBM Corporation
    • IBM Institute for Business ValueSocial Networking has become a key communication channelfor many people as alternative for traditional communication 100% South Africa 81% 7% 10% 16% 17% 22% India 68% 20% 80% 23% Greece 67% 24% Mexico 66% 30% 60% 35% UAE 64% Sweden 64% Emerging Brazil 63% 40% 72% 67% Russia 63% 59% 53% Portugal 60% 20% 43% China 60% South Korea 53% 0% Poland 51% Below 25 25-34 35-39 40-49 Above 50 Italy 49% 100% 12% 17% Canada 47% 27% 29% UK 46% 80% 22% 45% Spain 46% 26%Czech Republic 45% Mature 60% 29% US 44% Mature 29% Australia 42% markets 40% 30% Germany 41% France 40% 66% 57% Netherlands 36% Daily Access to 20% 44% 42% Belgium 34% SOCIAL NETWORKING 26% Japan 24% SITES 0%11 © 2012 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Below 25 Daily Weekly Occasionally Above 50 25-34 35-39 40-49
    • IBM Institute for Business ValueMobile data (really video) explodes, causing significant capexand opex pressures on CSPs Global Mobile Data Traffic, 2011–2016 (TB x 1000/ month) 10 8 0 4 10804 Mobile VoIP Middle East & Africa Mobile Gaming Central & Eastern Europe Mobile File Sharing 20% Latin America 6896 78% 6896 18% Mobile M2M North America CAGR Mobile Web/Data Western Europe 4 2 15 4215 23% Mobile Video Asia Pacific 2379 2 3 79 70.5 12 52 % 1252 40% 59 7 597 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2016 • Global mobile data grew 2.3-fold • Mobile data traffic will increase 18-fold • Mobile video traffic exceeded 50% • 2/3 of mobile data traffic will be video • Average smartphone usage tripled12 © 2012 IBM Corporation Source: Cisco Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2011–2016.
    • IBM Institute for Business ValueConsumers now have unprecedented power to build & demolishbrand strength as they blog, text and comment via Social Media 12/29/11 Press Release: What happens when being disconnected? “Starting January 15, a new $2 payment Most/ convenience fee will be instituted for Always sometimes Never customers who make single bill Attempt to payments online or by telephone” redial/reconnect 48% 44% 7% Avoid providers with 81%Within 24 hours, more than 100,000 whom friends had bad 25% 56% 19% Avoidpeople had signed a online petition: experiences ProvidersGreetings, with poor Tell friends about my 16% 61% 23% experienceI am disappointed to learn that Verizon Wireless poor experienceplans to institute a new $2 fee for paying billsonline…. Your company should not assume thatit can do anything to your customers and Contact customer 9% 51% 41% 77% service Tell friends/that we will allow it to happen… family bout Switch providers, - 10% 56% 45% their poor e.g. use a different SIM experience 12/30/11 Press Release: “Verizon Wireless has decided it will not institute My provider proactively 5% 31% 65% the fee for online or telephone single payments contact me that was announced earlier this week. The company made the decision in response to Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237 customer feedback about the plan…”13 © 2012 IBM Corporation
    • IBM Institute for Business ValueActive government involvement means increasingregulations 2010 70% of Telecom CEOs Global anticipate heavier CEO Study regulations ahead Small government, light Big government, heavier 16% 14% 70% regulation regulation Move or return to unrestrained Greater government involvement, market with limited state more regulation and government ownership or regulatory reform as a stakeholder in strategic businesses EU “put broadband under “The EU’s long-term an existing set of rules vision is to reduce governing telephone mobile terminating services rather than its rates in member states current status as a to levels comparable to lightly regulated fixed termination. EU information service” roaming regulations …”14 © 2012 IBM Corporation
    • IBM Institute for Business ValueThe global hierarchy is changing as we see a shift of economicpower from mature to emerging markets Expected Consumer Spending Mature Expected Consumer Spending Mature Net Increase/Decrease markets Net Increase/Decrease Utilities Utilities 40% Utilities Utilities 4% Food & drinks Food & drinks 30% Food &&drinks Food drinks -3% Transportation Transportation 22% Transportation Transportation -6% Mobile Telephony Mobile Telephony 21% Mobile Mobile Broadband broadband -10% Clothing Clothing 16% MobileTelepony Mobile Telephony -14% Holiday/vacation Holidays 7% PayPay television television -16% Mobile Broadband Mobile Broadband 6% Sports Sports -18% Pay television Pay television 6% Fixed Telephony Fixed Telephony -19% Elect. AppliancesElectrical appliances 3% Clothing Clothing -19% Fixed Telephony. Fixed Telephony 2% Holidays Holiday/vacation -23% Electrical Going out -7% Going out Elect.Appliances -24% appliances Sports -10% Sports Going out out Going -32% Q4 2011 Mobile Operators Q4 2011 Mobile Operators Service Revenue Growth YoY: 9.7% Service Revenue Growth YoY: 0.6% Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237 © 2012 IBM Corporation Question: Compared to previous years, are you likely to spend less, the same or more on the following products / services in the next 2-3 years?
    • IBM Institute for Business ValueCSPs are confronted with a number of uncertainties whose contrastingoutcomes signal distinctly different scenarios for the future Addressable Competition/ Market Growth Integration Structure The Future of Open vs. closed Voice ? devices ? Silo vs. unified Premium Network sharing vs. communications ? Connectivity ? Outsourcing ? OTT vs. Network Service Pricing Vertical vs. Horizontal optimized content ? Model ? Integration ? M2M Expansion into communications ? User vs. 3rd Party / Adjacent Verticals ? ad funded ? Ultra-fast BB Availability ? Regulation ?16 © 2012 IBM CorporationSource: IBM Institute for Business Value (IBV) and IDATE Analysis
    • IBM Institute for Business ValueGiving the ongoing uncertainties, IBM undertook scenario envisioning,that enables the industry to assess alternative contrasting futures What are the trends: Revenue and - Certainties (high degree of consensus) - Uncertainties (multiple outcomes) Profitability outlook for each scenario Future Scenario C 2008 Survivor Consolidation Market Shakeout Clashof Giants Generative Bazaar Scenario D Scenario A Present Scenario B Critical Success Major economic, competitive and Attributes: technological events that - Scenario-specific trigger a particular scenario - Cross-scenario17 © 2012 IBM Corporation
    • IBM Institute for Business ValueMapping the extremes of the possible outcomes related to theuncertainties reveals four contrasting scenarios Telco 2015 SCENARIOS •• Disaggregation of Carrier collaboration • Carrier Assets Co-op of and alliances infrastructure •• Involvement Vertical End-to-end Govern- GENERATIVE Expanding CLASH OF providers ment, Municipalities Market solutions GIANTS BAZAR •• Fragmentation Open & Affordable • Mega Carriers connectivity to •• Driven by Brands in Emerging Carriers any person/object Mature markets Addressable market • Reduce Spending Consumers SURVIVAL • MARKET ARPU Erosion Declining / Stagnant CONSOLIDATION • SHAKEOUT Investor Loss of Confidence • Cash Crisis Concentrated / Vertical Fragmented / Horizontal Dominant Industry / integration model18 © 2012 IBM Corporation
    • IBM Institute for Business ValueThe study further identifies scenario-specific critical success attributesand cross-scenario ones Telco 2015 SCENARIOS CLASH OF Common Critical GENERATIVE Expanding GIANTS Success Attributes BAZAR Cost-effective ultra-fast broadband strategy Network /customer insights to optimize experience & cost Agile, flexible, reconfigurable Addressable market processes & infrastructure Cost containment Culture of innovation and collaboration Declining / Stagnant SURVIVAL MARKET CONSOLIDATION SHAKEOUT Concentrated / Vertical Fragmented / Horizontal Dominant Industry / integration model19 © 2012 IBM Corporation
    • IBM Institute for Business ValueAdvances in network technology, analytics, cloud computing, socialcollaboration tools and security help CSPs to prepare for the future Cost-effective ultra-fast broadband strategy Network /customer insights to optimize experience & cost Agile, flexible, reconfigurable processes & infrastructure Cost containment Culture of innovation and collaboration Faster/Smarter Advanced Cloud Social Security Networks Analytics Security Networks Analytics Computing Collaboration Technology  Ultra-fast  Big data  Maturation/past  Collaboration  Threats the hype with partners, (malware,  Low Capex  Embedded employees, cybercrime,  Wireless  Predictive  Private/Public/ consumers etc) optimization Hybrid  Unstructured  Product/Service  Disaster  Sensory-based  Efficiency recovery  Intelligent improvement innovation (support M2M) decision-making  Social Tools  Fraud control  Intelligent site  New cloud  Customer services/models  Consumer  Trusted identity operations experience  Value creation sentiment  Data protection  Self-organizing  Etc  Etc.  Etc..  Etc.  Etc.20 © 2012 IBM Corporation
    • Faster/Smarter NetworksIBM Institute for Business Value NetworksThe industry has decided in favor or FTTx and LTE for ultra-broadbandaccess, in combination with WiFi mobile offload and femtocells Million Which of the following access technologies are subscribers going to be critically important to the success of 200 Rest of the World FTTx your business over the next 5 -10 years? Asia/Pacific 150 Europa Critical to Success Neither Not Critical to Success North America 100 FTTx 71% 27% 2% 50 4G/ LTE 67% 33% 0 3G 44% 48% 7% 2009 2010 2011 2012 2013 2014 2015 500 Million MEA WiFi xDSL 43% 48% 9% subscribers 400 Latan CATV 27% 39% 34% 300 Asia/Pacific WiFi Mobile 2G 20% 42% 38% 200 CEE Data Offload 100 Western Europe WiMAX 8% 38% 54% North America 0 0% 20% 40% 60% 80% 100% 2012 2015 Telco 2015 Telecom Industry Survey N=61 (IBV Survey) Idate Yearbook 2012 © 2012 IBM Corporation
    • Faster/Smarter NetworksIBM Institute for Business Value NetworksGovernments can become a major catalyst for bringing communicationinfrastructure to the population and to spur economic growth A nationwide ultra high speed fiber access infrastructure and a complementary pervasive wireless network in Singapore to • support the needs of the users and to allow them to thrive in the global environment • spur innovation in the various vertical sector economies • enhance Singapores global competitiveness The Australian government setup a National Broadband Network as a ‘game changer’ for consumers and international competitiveness: - Fiber with speeds > 100 Mbps with 90% coverage - NGN Wireless with speeds > 12 Mbps The Vive Digital Plan, including a national fiber optic infrastructure, in Columbia to bring technology in the life of every Colombian to: • reduce poverty • generate employment • improve international competitiveness • achieve prosperity for all22 © 2012 IBM Corporation
    • AdvancedIBM Institute for Business Value Analytics AnalyticsAdvanced analytics will help CSPs to gain customer insight from theBig Data in their network, social media and other customer information Data Network & Data Ingestion Improved Customer Experience Transformation Customer Insight Transactional Data Transactional Data Social Media Social Historical Media Data Referential Referential Data Data Sets Historical Data23 © 2012 IBM Corporation
    • Advanced IBM Institute for Business Value Analytics Analytics Advanced analytics holds enormous potential to create personal experiences that adapt to subtle changes in user-defined context Draw Insight Translate Insight Acces to data from data into DecisionsTelecom Industry CEOs identify customer Watson can sift through an equivalent ofinsights as the most critical investment about 1 million books or roughly 200area (Global CEO Study 2012) million pages of data, and analyze this information and provide precise answers Customers 83% in less than 3 seconds Sales 67% Operations 55%Markets and competitors 47% Supply chain 40% Human resources 39% Risk management 32% Financials 25% In which areas do you plan to improve your ability to draw 24 meaningful and executable insights from available information?” © 2012 IBM Corporation
    • CloudIBM Institute for Business Value ComputingThe evolution in Cloud has now reached a tipping point where it cancreate and deliver business value for CSPs On the back of Cloud technologies CSPs will play a key role in value creation Performing current Deliver horizontal and Develop radically business more vertical Cloud-based different value efficiently and applications based on propositions, or create effectively new business models new customer needs E.g. Cloud Telephony E.g. Cloud-based eHealth systems E.g. Cloud TV Healthcare Community Online25 © 2012 IBM Corporation
    • CloudIBM Institute for Business Value ComputingCloud computing will increasingly be used in partnerships and in newand innovative ways to transform business models © 2012 IBM Corporation
    • SocialIBM Institute for Business Value CollaborationSocial Collaboration will increasingly involve employees, partnersand customers to develop innovative products and services Employees Partners Customers self-forming teams around becoming on-demand leading the conversations that fast moving opportunities extensions of the enterprise define brands Global CEO 73% Study 2012: Social Media to engage customers Today In 3 to 5 years 11% Social business enables the flow of new ideas for new products and services regardless of their location inside and outside the organization27 © 2012 IBM Corporation
    • SecurityIBM Institute for Business Value Security TechnologyAdvances in security technology must secure protection against threatsto personal, national and global security from cyber criminality Drivers for addressing security • Applications are migrating towards the Cloud • BYOD – employees want to use their own device • Growth in mobile • Need for secure virtualized environment • Increased threats, including malware, cybercrime, phishing • Business continuity and disaster recovery • Compliance with regulations (fraud / data privacy) • Identity theft • Brand damage “Cybersecurity is one of the most serious economic and national security challenges we face as a nation, but one that we as a government or as a country are not adequately prepared to encounter”28 © 2012 IBM Corporation
    • IBM Institute for Business ValueOur world is changing and becoming smarter It is becoming increasingly INSTRUMENTED Billions of camera phones, billions of RFID tags embedded into our world and across entire ecosystems It is becoming more INTERCONNECTED At the end of 2011 2.3 billion people were on the Web …. and a trillion connected objects – cars, appliances, camera, roadways, pipelines – will comprise the “Internet of Things” Systems are becoming more INTELLIGENT 90% of the world’s data was created in the past 2 years. 2.5 quintillion bytes of data created every day29 © 2012 IBM Corporation
    • IBM Institute for Business Value Industries are becoming smarter, and CSPs can play a crucial role in enabling smarter industries, ….. Smarter energy Smarter Smarter Smarter Smarter solutions and utilities government healthcare transportation for retail Smarter Smarter Smarter Smarter Smarter banking chemical and insurance education electronics petroleum30 © 2012 IBM Corporation
    • IBM Institute for Business Value ….in providing smarter services to consumers in mature Mature Mature markets, and….. markets Retail/Shopping Banking/Insurance Healthcare Vertical Market applications ranked as #1 by consumers surveyed in mature countries Nbr 1: Receive Mobile Nbr 1: Location-based Nbr 1: Reminders for coupons/Discounts (46%) insurance claims (48%) medications/appointments (55%) Public Services Travel & Transport Utilities Nbr 1: Find nearest Nbr 1: Time table for public Nbr 1: Receive notifications of public/government agencies transportation (46%) electric/gas/water service (37%) outages (46%) © 2012 IBM Corporation31 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Mature Countries N=8865;
    • IBM Institute for Business Value …. to consumers in emerging markets Retail/Shopping Banking/Insurance Healthcare consumers surveyed in EMERGING countries Vertical Market applications ranked as #1 by Nbr 1: Receive Mobile Nbr 1: Manage bank Nbr 1: Reminders for coupons/Discounts (40%) accounts through mobile medications/appointments (61%) device (50%) Public Services Travel & Transport Utilities Nbr 1: Pay for local services Nbr 1: Pay for public Nbr 1: Alert when monthly usage (e.g. car parking) (47%) transportation (56%) reaches pre-set threshold (60%) © 2012 IBM Corporation32 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 13237; Emerging Countries N=4372
    • IBM Institute for Business ValueThe opportunity for telecommunications is to become “the middlewarefor the smarter planet”. ….. LOGISTICS GOVERNMENT MEDIA & ENTERTAINMENT RETAIL L IT G R M I C E H F CONSUMER ELECTRONICS ENERGY & UTILITIES HEALTHCARE M FINANCIAL MANUFACTURING33 © 2012 IBM Corporation
    • IBM Institute for Business Value…and to stimulate economic development and prosperity, andimprove lifestyle for people in both mature and emerging countries34 © 2012 IBM Corporation
    • IBM Institute for Business Value Thank you Rob van den Dam Global Telecom Industry Leader IBM Institute for Business Valuewww.ibm.com/iibv rob_vandendam@nl.ibm.com35 © 2012 IBM Corporation