Carrier Revenues 2012 Etis Nov 2008


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Scenarios for future telco revenues in 2012-2015,

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Carrier Revenues 2012 Etis Nov 2008

  1. 1. Telco Sources of Revenues 2012 ETIS November 14, Brussels Bernt S Ostergaard Washington DC / Paris 1
  2. 2. Identifying Future SP Revenue Sources attempt to make accurate forecasts, but to provide  No ʻviewsʼ to improve decision-making today  Identify decision elements and their interrelation – and possibly their speed of development  Serious forecasting takes much time and effort to ensure consistency in thinking. For that Iʼll refer to an in-depth study, SP2015 from Cisco  On that basis Iʼll assess Revenue Sources 2
  3. 3. Cisco Scenarios in Telco Developments 2008-2012   Consumers take up new Expanding services but are not willing   Consumers pay or Market to pay much for them. place a premium on a Everything free or cheap quality experience Mass Wireless   Best-effort quality   Co-opetition: SPs and (likely in Africa   Significant value OTTs collaborate and & Latin destruction in SP; Value America share growing pie New Order migrates to OTTs   Value migrates to trusted brands Futurama Fragmented Consolidation Evolution Competitiveness Service Provider renaissance Bloodbath Cyber Shock (likely in China) Bankruptcy Concentration Static Market Primary Scenarios Secondary Scenarios Source: Fernando Gil de Bernabe: The Cisco SP2015 study
  4. 4. Topics Elements: What defines the market for Telco  Decision services?  Interrelations Speed of Change  The  Scenario for 2012  The fight for advertising revenues 4
  5. 5. Decision Elements: The Power Quadrant macro-economic preferences  The  Customer conditions Technology adoption willingness   Bears & Bulls   Evolution of social relations   Competitive conditions   on national markets  Regulation  Technology Conditions for providing Basic technology moving     services and content everyone forward (LTE, HTTP) Competitive relationships and   dependencies between SPs 5
  6. 6. Interrelated Revenue Trends preferences  Customer Broadband mobility with services from strong consumer brands   Growing social reliance on telecoms   macro-economic conditions  The Softening of investment climate, focus on optimization   Shift from network core to the edge    Regulation More centralized EU-level regulation and level playing field   Infrastructure split between QoS and best-effort net-neutral Internet    Technology Focus on Collaboration services and any-content-to-any-device   Multiple wireless broadband technologies   6
  7. 7. Interrelations In Futurama & New Order Scenarios Futurama focus is on CapEx and OpEx reduction  The  The New Order presupposes significant technology improvements to support new services and increased revenues FTTH Home Network ULL eConsumer Better STB Resellers economics eGovernment Web 2.0 Regulation Increased eEconomy + Penetration Competition Attracts $ Usage Data - Market Enterprise& WSPs Center Share No New No New - Services Diff Services Revenue Quality IP Traffic Productivity suffers Squeeze - Video Complexity No NW Vendors Upgrades - OPEX Cut CapEx New Productivity -Legacy Cut Cost Revenue IT suffers Margin Capex Transform Managed IP NGN Services Change Biz SEF Mode to NGSP BW and Footprint IP Source: Cisco IBSG Disruption 7
  8. 8. Speed Of Change Main sources of Current  Future  revenue % - KPN  Drivers  DRIVERS: SBN: Social & Business MS   1. Fixed Line  25%  Networking 2. Wireless  45%  IPT, SBN, ES  IPT: Video & Mobile Data IP Traffic Growth BB, IPT,   3. Broadband  15%  TS: Technology shifts 4. IPTV  5%  TS, IPT, ES, Reg  MS: Managed Services And Business ICT 10%   5. VOIP  SBN, IPT, MS  EB: Emerging SP 6. Other (advertising, 1%  Reg, ES  Business Segments Reg: Regulation sponsoring etc.)  The World In 2010 Wholesale DSL to ULL, 30PetaBytes per then to FTTh; Cable month driven by web Upgrades; Digital TV on-the-go Second Wave of 46 ExaBytes per month; 42% Productivity enabled CAGR until 2012 by Web 2.0 246 Million New BB Competitive market WSP (OTTs), Households structures for Broadcasters, Media broadband diffusion 8
  9. 9. …And the Bigger Income Pie New Order vs. Futurama $ Trillion 4 3 2 Source: Ovum, IDC, Current Analysis, Canalys, Gartner, Jupiter, PWC, e-Marketer, Cisco IBSG analysis July 2006 9
  10. 10. Comms Spending by 2015 Will Have Significant Growth 1,200 2015 End-user Spend ($B) 1,000 IT Services 800 600 VAS Consumer Mobile Voice Fixed Data 400 Mobile Data VAS Business 200 Devices Services to OTTs Fixed Voice Traditional TV -20% -10% 0% 10% 20% 30% 40% 2005–2015 CAGR >50% Captured by SPs “Best Guess” Assumes the Following Probabilities: 10–50% Captured by SPs Europe: New Order 40%, Evolution 40%, Futurama 20%; <10% Captured by SPs 1 Includes xDSL, BWA, Legacy and Cable Note: Not Adjusted for Inflation 2 Includes IPT, CMTS, Security, WLAN, Traditional Optical Source: Ovum, IDC, Current Analysis, Canalys, Gartner, Jupiter, PWC, e-Marketer, Cisco IBSG analysis July 2006 10
  11. 11. Revenues Affected By New Delivery Chain SP’s Losing Direct Customer Contact Aggregation/ Network Content/Solution End-User Commerce Service Creation Device Enablers Delivery ? ? End User FMC opens SDP opportunities Current Thrust Emerging Source: Cisco IBSG
  12. 12. The Consumer Service Delivery Platform Key To Indirect Revenues Consumer Brand third party content Advertising server providers Commoditized This is the “smart pipe” SP 12
  13. 13. SP Business Services Are Moving Up the IP Delivery Stack System Integrators Outsourcers Business Business Consulting Transformation BPR /BPO Transformation Services SI Consulting ICT Outsourcing, ICT Managed Services Outsourcing & IT Outsourcing Managed IP Network outsourcing Services VoIP, Collab. Apps, Call centres, CRM, Apps mgmt Applications & Apps. management Messaging, Portals, Web Services Monitoring & managing Apps specific SLAs Operators IP Infrastructure IP processing, Directories, Security, Storage, Hosting Services Desktop, LAN, WAN, Wireless, Co-Lo Equipment manufacturers 13
  14. 14. Incumbent Service Examples Of Whatʼs To Come Competing for Advertiser Revenues   Telefonica's mobile ad platform   Vodafone   Building the SDP with partners   E.g. risk transfer to IBM:   14
  15. 15. Shifts In Future Revenue Sources Main sources of Current  Future  revenue Percentage  Drivers  DRIVERS: SBN: Social & Business MS   1. Fixed Line  25%  Networking 2. Wireless  45%  IPT, SBN, ES  IPT: Video & Mobile Data IP Traffic Growth BB, IPT,   3. Broadband  15%  TS: Technology shifts 4. IPTV  5%  TS, IPT, ES, Reg  MS: Managed Services And Business ICT 10%   5. VOIP  SBN, IPT, MS  EB: Emerging SP 6. Other (advertising, 1%  Reg, ES  Business Segments Reg: Regulation sponsoring etc.)  Main sources of 2012 incumbent carrier revenue New Order Futurama 1. Fixed Voice  5% 15% 2. Wireless  50% 45% 3. Wire Broadband  10% 25% 4. IPTV  15% 5% 5. VOIP  10% 5% 5% 6. Other (advertising etc.)  10% 15
  16. 16. Incumbent SP Survivor Profiles 2012 concentrated SPs  Large, 4-5 in Europe   –  Revenues from MNCs –  Massively scalable multiplay service provisioning independent of underlying infrastructure  SP Strong SDP and OSS/BSS integration   Sophisticated Contextual Advertising Delivery   Wireless and Wireline BB delivery capabilities   integrated in delivery chain  SP Sometimes taking the lead, but mostly just provisioning   Tightly integrated with major entertainment and broadcaster content   providers with global delivery capability  SP Global collaboration services   16
  17. 17. Challenger SP Survivor Profile 2012 Illiad Subscribers:   Ultra high speed delivery capability Q1 07: 2,1 mill     Q1 08: 3,1 mill   Strong end-to-end delivery capability   (400K FTTH households passed) Digital Home provisioning   Base subscription €29.99   Service Personalization capabilities   per month for both ADSL & FTTH Clearly identified customer segments   Discount, stripped down services option   Personal privacy focus   Green policy champion   Technical: Unbundled ADSL2+   FTTH in 80 cities   IPTV/MPEG-4   Financial: CapEx: €70/€400 apartment/house   CPE Cost: €300   Power line Connec,ons for HDTV    APRU / sub: Not disclosed   connec,ons in‐house   Source: Free A fiber-connected Freebox home 17
  18. 18. On-line Advertising – One Future SP Income Source Grabbing a share from  Like Microsoft 20 years ago, Google wants to shift users to a new platform - its own - for which it is blowing its trumpet very hard but not in response to any clear user demand. There have been plenty of service interruptions and hiccups among Internet based service providers, and Google is not about to offer any SLAs.  Google has made many sizeable enemies along the Internet supply chain, who would like to eat its lunch. Carriers are developing their own content services with context sensitive advertising servers that additionally have much more information regarding user habits than Google has.  Google is completely advertising revenue dependent. Any serious dislocation of this revenue stream will impact Google very hard.  Google is a prime target for privacy violations and copyright infringement suites. Googleʼs sharing of Internet user activities with its advertising partners like Facebook, Blockbuster and Fandango is facing courtroom challenges Source: Current Analysis Advisory September 30, 2008: The OTT Giants: Google – The Jack of All Trades, Master of On-line Advertising 18
  19. 19. The BIG Online Advertising Bomb €40bn in 2008 growing SPs have unique ability 18% p.a. in Europe To identify customer interests •  Identifiers: phone numbers, IP address, SIP number, id •  Devices: SIM, softSIM, STB •  Context: location, presence, time •  Interactions: browsing, domains, TV and movie behavior, purchases •  Personal Data: address, gender, name, profile, preferences •  Treasures: Pictures, videos, files, address book, calendar •  Credit: demographics, bad debt, average balance 19
  20. 20. Of course the future may change course or slow down…. Posted in Security, 1st October 2008 22:04 GMT Security experts say they have discovered a flaw in a core internet protocol that can be exploited to disrupt just about any device with a broadband connection, a finding that could have profound consequences for millions of people who depend on websites, mail servers, and network infrastructure. In which case Flexibility is a pretty good survival trait too 20
  21. 21. Competitive Intelligence levels the playing field… Competitive Response TM enables you to Win. Current Analysis is the only competitive research firm that provides solutions to improve your companyʼs Competitive Response TM For more information, please contact… Bernt Stubbe Østergaard Research Director +45 45 50 51 83  Bernt Stubbe Østergaard: 21