Telecommunications in 2015 - It’s a brand new game Rob Van Den Dam 20 Oct. 2011

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The industry playing fields transform: New rules, new Games - 4 Industry scenario’s - Smarter Consumers, Industries and CSPs

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  • Thanks Rob , This is a very good deck and covers very important scenarios.. thanks for sharing
    Manish Pathak
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Telecommunications in 2015 - It’s a brand new game Rob Van Den Dam 20 Oct. 2011

  1. 1. IBM Institute for Business Value Telecommunications in 2015 It‟s a brand new game Rob van den Dam Global Telecommunications Sector Leader IBV © 2011 IBM Corporation
  2. 2. IBM Institute for Business ValueAgenda  Introduction  It is a brand new game  Four industry scenarios for CSPs  Smarter consumers, industries, CSPs2 © 2011 IBM Corporation
  3. 3. IBM Institute for Business ValueTelecommunications is IBM‟s #1 research focus Telecom Research TSL Russia Mobile Web Labs (Moscow Satellite TSL) Services TSL China & Telecom Research Lab TSL Israel & (Beijing) TSL Europe Telecom Research Lab (La Gaude & (Haifa Satellite TSL) Japan Montpellier, France) (Tokyo Satellite TSL) TSL North America Telecom Research Lab (Austin, Texas) (New Delhi) TSL India ASEAN (Bangalore Satellite TSL) (Kuala Lumpur Satellite TSL) TSL LATAM (Sao Paulo, Centers of Institute for Brazil Satellite TSL) Worldclass Excellence Business Africa South Partner Value (Johannesburg, Satellite TSL) Ecosystem Telecommunications Solutions Lab (TSL) Telecommunications Research Lab3 © 2011 IBM Corporation
  4. 4. 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.4 © 2011 IBM Corporation
  5. 5. IBM Institute for Business ValuePrimary research includes Face-to-Face interviews with Executives from theTelecommunications industry and Consumer Surveys Customer Spending Customers’ Adoption of, Customer Sources of priorities for 2011 – Experience with, comms Information for communi- 2013 products and services cation products/ services Customers’ Attitudes Customer Advocacy Adjacent Market towards CSPs and Antagonism Opportunities Most recent Consumer Survey mid 2011 in 24 countries5 © 2011 IBM Corporation
  6. 6. IBM Institute for Business ValueCommunications Service Providers (CSPs) are experiencingsignificant change as the industry playing field transforms It is a brand new game Changes in the global hierarchy Shifts in the way consumers communicate Increasing power of the consumer6 © 2011 IBM Corporation
  7. 7. Changes in the global hierarchyIBM Institute for Business Value The global hierarchy is changing Mobile Cellular Subscriptions Total: Total: Total: 719 million 2.2 billion 5.4 billion 2000 2005 2010 France; 46 Mexico; Nigeria;84 UK; 68 Italy; 90 88 China; Italy; 71 Germany;107 China;Top 10 375 India; 75 Japan; 116 833Mobile markets Germany; 79 Brasil;195worldwide(M subs) Russia; Brasil; 86 217 Japan; 90 USA; 208 USA; 297 India; Russia; 126 688 © 2011 IBM Corporation7 Source: ITU statistics database; Global Wireless Matrix Q211, Merrill Lynch, IBM Institute for Business Value (IBV)
  8. 8. Changes in the global hierarchyIBM Institute for Business ValueThe communications industry is increasingly being driven by emergingcountries The Americas1. Mobile Revenue YoY growth 1Q11 160% Colombia Brazil – Western Europe: - 2.5% 140% Argentina – Japan: - 0.6% Mexico – North America: + 6.4% 120% US 100.2% – Emerging Asia: + 11.6% Canada June 2011 100% – Latin America: + 10.9% – Brazil: + 10.9% – Colombia: + 12.7% 80% – Argentina: + 19.6% 60% 40%2. The emergence of new GIANTS: 20% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 © 2011 IBM Corporation8 Source: Global Wireless Matrix Q211, Merrill Lynch, IBM; Institute for Business Value (IBV)
  9. 9. Changes in the global hierarchy IBM Institute for Business Value In the emerging markets consumer sentiment is generally higher than in mature ones Consumer Spending Changes 2011- 2014 Net Increase/ Decrease Net Increase/ Decrease Holidays Holiday/vacation 29% Utilities Utilities 2% Food && drinks Food drinks 27% Mobile Telephony Mobile Telepony -8% Clothing Clothing 27% Transportation Transportation -9% Going out Going out 25% Food&& drinks Food drinks -10% Mobile Telephony Mobile Telephony 20% Mobile Broadband Mobile broadband -12% Mobile Broadband Mobile Broadband 14% Pay television Pay television -17% Transportation Transportation 13% Fixed Telephony Fixed Telephony -17% Pay television Pay television 12% Clothing Clothing -19% Electrical Utilities Utilities 11% Elect. Appliances appliances -20% Electrical Elect. Appliances appliances 8% SportsSports -21% Sports Sports 1% Holidays Holiday/vacation -26% Fixed Teleph. -2% Fixed Telephony Going out -37% Going out © 2011 IBM Corporation9 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848 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?
  10. 10. Changes in the global hierarchy IBM Institute for Business ValueFor spending on communication services, CSPs in emerging Communications spendingcountries face better times than those in mature markets USA Mobile 1 Mobile Mobile telephony Telephony 20% 1 Mobile Telephony Telephony -8% Mobile 2 Mobile Mobile broadband Broadband 14% 2 Mobile Broadband broadband -12% 3 Pay television Pay television 12% 3 Pay television television Pay -17% Brazil 4 Fixed Telephony Fixed telephony 4 Fixed TelephonyFixed telephony -17% Canada 1 Mobile Telephony Mobile telephony 22% Mobile 1 Mobile Telephony telephony -4% 2 Fixed Telephony Fixed telephony 10% Mobile Mobile Broadband 2 broadband -6% 3 Mobile Broadband Mobile broadband 9% 3 Fixed Fixed Telephony telephony -16% Mexico 4 Pay television television Pay 9% 4 Pay television Pay television -18% © 2011 IBM Corporation10 Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848 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?
  11. 11. Shifts in the way consumers communicateIBM Institute for Business ValuePeople are increasingly communicating over-the-top: email, IM, Chat,Internet Video streaming, Social Networks, VoIP Brazil Daily Mexico Daily Usage Usage Email/IM/Chat 82% Email/IM/Chat 85% Mobile Telephony 75% Mobile Telephony 80% Fixed Voice 69% Fixed Voice 72% Social Networking 59% Social Networking 64% Video Streaming 53% ABOVE 25s Video Streaming 38% VoIP 33% VoIP 24% Email/IM/Chat 84% Email/IM/Chat 92% Mobile Telephony 79% Mobile Telephony 78% Social Networking 76% Social Networking 74% Fixed Voice 59% Video Streaming 61% Video Streaming 54% UNDER 25s Fixed Voice 49% VoIP 20% VoIP 29%11 © 2011 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey, Global N= 12848; S06 How often do you use the following communications services?
  12. 12. Shifts in the way consumers communicateIBM Institute for Business ValueThe trend is towards many-to-many communications, increasingly takenplace over the mobile, augmented with videos, photos & other contentMany toMany Gated Communities Shared Social Space Mobile Social Networking / Telco Communication Pattern Walled Gardens The AppStore Traditional Open and Free USA Communications +56% Mobile Social Fixed Voice E-Mail Networking is the fastest Dec ‘09 Dec ‘10 Mobile growing SMS Voice Shift Mobile Content 1:1/1:N category Provider Communication Environment Open Controlled Internet © 2011 IBM Corporation12 Source: IBV report: “The changing face of communications”. May 2010
  13. 13. Shifts in the way consumers communicateIBM Institute for Business Value In Colombia, Social Networking is ranked as top category by share of minutes with one-third of web time spent on social networking sites… COLOMBIA Social Network sites Monthly hours spent on Instant Messengers Photo Sites Reach Reach (Dec 2010) Social Networks (June 11) Reach (Dec 2010) (Dec 2010) WW 71% WW 35% WW 53% WW 5,4 Israel 11,8 Asia Pacific 19% Asia Pacific 29% Asia Pacific 48% Russia 10,6 Europe 84% Europe 41% Europe 67% Argentina 10,0North-America 90% Turkey 9,3 North-America 29% North-America 75% Chile 8,7Latin America 88% Latin America 68% Latin America 66% Philippines 8,4 Colombia 89% Colombia 8,4 Colombia 65% Colombia 80% IM Usage in Latin America is the highest in the world With 89.5% reach, Colombia ranked as 5th most highly penetrated Facebook market Colombians lead Latin America region in Online Dating © 2011 IBM Corporation 13 Source: Comscore: A rise of Social Networking in latin America, Sept 2011, Comscore: Digital Year in review: Latin America. March 2011
  14. 14. IBM Institute for Business Value…and many activities are moving to the mobile Mobile Fixed Mobile Location Internet Internet Internet At home 56% 74% At work place 32% 35% Fixed On the street 6% 18% Internet Internet café 37% 5% At friend 3% 4% At college 12% 10% Take photos or videos Download or listen to music Upload or download photos and / or videos Download or watch videos/television/ movies Check e-mail Which of the Use messenger following Go to personal page (Facebook, Twitter, activities you etc.) Use online services your bank usually do Online shopping with the Consult / seek information on vehicular traffic phone? © 2011 IBM Corporation Source: CINTEL, InteracTIC: Panorama mercado del sector TIC en Colombia, 2010
  15. 15. Shifts in the way consumers communicateIBM Institute for Business ValueIndustry transformation is increasingly evoked by new market entrantscompeting with traditional telecom providers over the open Internet 76% of CSP‟s identify OTT comms providers as their greatest competitive threat OTT Comms providers (e.g. 76% Google, Facebook, Microsoft) Cable/satellite providers 34% Mobile Device Manufacturers 29% Over-the-top aggregator 26% IT application 24% „Next-gen” Messaging System “It’s not email, it’s everything” WiMAX operators 16% Entrants from new industries (e.g. Banking) 16% Acquisition Skype “Together we will create the future NEPs 9% of real-time communications” Consumer Electronics 5% Buys Motorola Mobility ($12.5bn) Electric utility providers 3 Google MVNO launches in Spain15 © 2011 IBM Corporation 2009 IBM Institute for Business Value Telecom Industry Executive Survey N=61
  16. 16. Increasing power of the consumerIBM Institute for Business ValueThe new consumer reality has created an impulse economy,characterised by immediacy, frivolity, and transience ALWAYS ON NO TIME! I AM LOYAL TO ME! FREE I HAVE NO LIMITS I AM TRANSPARENT CONNECTED http://www.flickr.com/photos/trashd/110237362516 © 2011 IBM Corporation
  17. 17. Increasing power of the consumerIBM Institute for Business ValueInternet Search, Friends/Family, and Social Media havebecome the preferred sources of information Q19 What are your preferred sources of information when you are looking for communications products and services? 76% Internet Search 70% 70% 65% Recommendations/ advice 64% 62% 53% Social Media 51% 48% 35%Websites communication providers 45% 37% 30% Traditional advertising 31% 43% 29% Emails/ promotional offers 22% 18% Emerging 17% Brazil Retail stores 19% 14% Countries Mexico Shopping portals/ auctions 17% 10% 17% 0% 20% 40% 60% 80%0% 20% 40% 60% 80%17 © 2011 IBM Corporation Source: 2011 IBM Global Telecom Consumer Survey
  18. 18. Increasing power of the consumerIBM Institute for Business ValueAs consumers encounter new products, services and experiences onvirtually a daily basis, they fell less loyalty towards specific brands Telecommunications Global (24 countries) average of advocacy levels in Telecommunications industry 18% 22% 60% Advocates Apathetics Antagonists Comparison of advocacy levels in Retail and Telecommunications industry Mexico Brazil US UK Germany Canada Italy France Retail 52% 51% 39% 34% 33% 32% 25% 26% Telecom 24% 17% 20% 20% 16% 13% 17% 21%18 © 2011 IBM CorporationSource: 2011 IBM Global Telecom Consumer Survey & 2010 IBM Global Retails Survey
  19. 19. IBM Institute for Business ValueVast majority of the CSP CEOs therefore sense the new environmentas more volatile, complex, structurally different and uncertain Changes in the global hierarchy Shifts in the way consumers communicate The New Economic Environment Increasing power of the consumer 13 19% 68% More volatile Deeper/faster cycles, more risk 12 23% 65% More uncertain Less predictable 25% 29% 46% More complex Multi-faceted, interconnected 35% 28% 36% Structurally different Sustained change Not at all/to a limited extent To some extent To a large/very large extent Source: Q7 To what extent is the new economic environment different? Volatile n=1514; Uncertain n=1521; Complex n=1522 ; Structurally different19 n=1523; Telco n=73 © 2011 IBM Corporation
  20. 20. IBM Institute for Business Value The telecom industry has undergone significiant structural changes over the last decade How will it evolve over the coming years?20 © 2011 IBM Corporation
  21. 21. 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 Profitability - Certainties (high degree of consensus) outlook for each scenario - Uncertainties (multiple outcomes) Future 2008 Survivor Consolidation Market Shakeout Clashof Giants Generative Bazaar Scenario C Scenario D Scenario A Present Scenario B Major economic, competitive Critical Success Attributes: and technological events that - Scenario-specific trigger a particular scenario - Cross-scenario21 © 2011 IBM Corporation
  22. 22. IBM Institute for Business ValueIBM analyzed the forces shaping the future of the telecommunicationsindustry into 2015… services  PSTN decline accelerates  VOIP (incl. mobile VOIP) grow usage  Ubiquitous and seamless access USAGE/  High digital content consumption SERVICES  Communication remains fragmented INDUSTRY FORCES SHAPING STRUCTURE AND FUTURE OF ACCESS  Broadband pervasive as TV REGULATION TELECOM  Mobile broadband favors LTE  New infrastructure  Ultra low-cost devices grow competition from  One in three devices is government, municipality smartphone, MID, or Netbook  Net Neutrality remains  Mobile and fixed termination converge  Pure plays disappear BUSINESS MODEL  Voice monetized as a feature of connectivity  Green Telecom revenues  3rd – party revenues  Cost structures changes22 © 2011 IBM Corporation
  23. 23. IBM Institute for Business Value….and potentially high-impact variables (13) that can have 2, 3 or 4alternative outcomes…… Telco 2015 SCENARIOS Addressable Market/ Industry / Growth Areas Integration Model Demand for Voice Open versus closed communications devices Expanding SCENARIO 3 SCENARIO 4 Premium Silo vs. unified Network sharing vs. /Enriched communications Outsourcing Connectivity Machine-to- OTT vs. Network Vertical vs. Addressable machine (M2M) optimized content Horizontal Integration communications market Service Pricing User vs. 3rd Party New Verticals Model / ad funded Declining/ Ultra-fast Stagnant SCENARIO 1 SCENARIO 2 Broadband Regulatory Availability Uncertainty Concentrated/ Fragmented/ Vertical Horizontal 13 high-impact uncertainties that can Dominant Industry / have 2, 3 or 4 alternative outcomes integration model23 © 2011 IBM Corporation
  24. 24. IBM Institute for Business Value…and developed most likely scenarios, within the sphere of possiblefutures, for the telecommunications industry in 2015 Telco 2015 SCENARIOS • • Disaggregation of Carrier collaboration Carrier Assets and alliances • • Involvement Govern- End-to-end Vertical Expanding CLASH OF GENERATIVE ment, Municipalities Market solutions GIANTS • BAZAR Fragmentation • Mega Carriers • • Emerging Brands in Driven by Carriers 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 model24 © 2011 IBM Corporation
  25. 25. IBM Institute for Business ValueThe Generative Bazaar is characterized by pervasive and openintelligent access for any person, object and device Two-sided BusinessStimulate a Modelrange of new and Deployexciting next gen Services ultra-fastby OPEN INNOVATIONsuch as telemedicine and broadbandimmersive learningapplications. Shift to a more connected world: Connecting anything and everything © 2011 IBM Corporation25
  26. 26. IBM Institute for Business ValueThe Colombian government has become a major catalyst for bringingcommunication infrastructure to the population Vive Digital Plan: Bring technology in the life of every Colombian to: • Reduce poverty • Generate employment • Improve International Competitiveness • Achieve prosperity for all Establish a technological leap by: • The massification of the Internet • National Fiber Optic Project aimed to bring fiber optic to 400 municipalities across the country in 2014 • Expect to expand internet penetration to over 90 percent of Colombian population • Targeting 8.8 million broadband connections by 2014 • Increase of Internet centers for public access • Broadband access to public institutions • Development of the national digital ecosystem26 © 2011 IBM Corporation
  27. 27. IBM Institute for Business ValueIBM‟s IBV study identified 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 Agile, flexible, reconfigurable processes & infrastructure Addressable market Culture of innovation and collaboration Network /customer insights to optimize experience & cost Cost containment Declining / Stagnant SURVIVAL MARKET CONSOLIDATION SHAKEOUT Concentrated / Vertical Fragmented / Horizontal Dominant Industry / integration model27 © 2011 IBM Corporation
  28. 28. IBM Institute for Business ValueOur world is changing and becoming smarter It is becoming increasingly INSTRUMENTED By 2010, 30 billion RFID tags will be embedded into our world and across entire ecosystems It is becoming more INTERCONNECTED An estimated 2 billion people will be on the Web by 2011 …. and a trillion connected objects – cars, appliances, camera, roadways, pipelines – comprising the “Internet of Things” Systems are becoming more INTELLIGENT Every day, 15 petabytes of new information are being generated. This is 8x more than the information in all U.S. libraries28 © 2011 IBM Corporation
  29. 29. IBM Institute for Business ValueThe consumer is becoming smarter Instrumented Interconnected Intelligent They have They use multiple They have clearly instantaneous access to technologies to defined expectations information about interact with other of what they want from communication consumers and with their provider now and products, services, communication in the future provider and other providers consumers’ experiences through technology29 © 2011 IBM Corporation
  30. 30. IBM Institute for Business ValueSmarter CSPs can profit from the Big Data from their network andother customer information to enhance the customer experience Data Deliver Customer Data Ingestion Transformation Experience Transactional Data Transactional Data Historical Data Referential Data Referential Data Sets Historical Data Network/Customer insight to deliver a distinctive customer experience which goes beyond satisfaction and creates an emotional engagement with their CSP30 © 2011 IBM Corporation
  31. 31. IBM Institute for Business Value Industries are becoming smarter, and Communications Service Providers can play a crucial role on enabling smarter industries Smarter energy Smarter Smarter Smarter Smarter solutions and utilities government healthcare transportation for retail Smarter banking Smarter insurance Smarter Smarter Smarter telecommunications chemical and electronics petroleum31 © 2011 IBM Corporation
  32. 32. IBM Institute for Business ValueTo respond to these challenges and strengthen critical successattributes, CSPs must think and act differently – become smarter TELECOM INDUSTRY Cloud Customer experience Adjacent Industries Smart Analytics Smarter Smarter Smarter Smarter Smarter energy and governm healthca transporta solutions utilities ent re tion for retail Smarter Smarter Smarter banking insurance telecommun Smarter Smarter ications chemical and electronics petroleum New Business Models © 2011 IBM Corporation32
  33. 33. IBM Institute for Business ValueUltimately, the opportunity is for telecommunications to become “themiddleware for the smarter planet” LOGISTICS GOVERNMENT MEDIA & ENTERTAINMENT RETAIL L IT G R M I C H F E CONSUMER ELECTRONICS ENERGY & UTILITIES HEALTHCARE M FINANCIAL MANUFACTURING33 © 2011 IBM Corporation
  34. 34. IBM Institute for Business Value Muchas Gracias Rob van den Dam Global Telecom Industry Lead IBM Institute for Business Valuewww.ibm.com/iibv rob_vandendam@nl.ibm.com34 © 2011 IBM Corporation

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