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Global Telecoms Megatrends
BMI-T Breakfast Briefing 14th October 2014
Brian Neilson
[email protected] @brianbmit
Themes for today
State of the global market Telecoms – mature and yet growing What’s hot and what’s not (Chilli
chart) TLAs (like OTT) Telecom company strategies
Industry convergence Vertical sectors, disruption and
enablement Does Cloud make Rain? – user
adoption Telco evolution
The network is part of the fabric of IT…
Price trend example: fixed broadband services
Source: ITU, 2013
Developing
World
Developed
Impact of competition … 80% decline in
4 years
Developing
World
Developed
Mobile traffic growth outstrips forecasts – by a mile
http://www.itu.int/net/newsroom/wrc/2012/features/imt.aspx
ITU: Assessment of the global mobile broadband deployments and forecasts for IMT
Actual data traffic in 2010 was more than 5 times greater than some of the estimates prepared for a previous report.
Not only that, but in 2011 some operators even experienced a higher level of actual traffic than a previous report forecast for 2020.
V
ideo e
xplo
sion , Inte
rnet
of
thin
gs,
C
loud c
om
puti
ng ...
Significantly cheaper smartphones ... most phones are smart
Banks as telco players
Passé - lingering 2014 Beyond
Downloading …........ ‘Internet TV’
Ongoing price wars …… significantly cheaper data …
OTT content App stores
Digital TV
Media consoles VOD
?
?
Streaming media
Wearable technology
Social media Search, video
Advertising
Wi-Fi Off-loading
LTE, VDSLFree WiFi Network capacity management,‘Customer stickiness’
Next generation applications
?
Pervasive devices & databases
Telcos as banks … M-payments
FTTH, Triple play
Ch
illi in
dex –
mark
et
imp
act
Voice over WiFi
??
V
ideo e
xplo
sion , Inte
rnet
of
thin
gs,
C
loud c
om
puti
ng ...
Significantly cheaper smartphones ... most phones are smart
Banks as telco players
Passé - lingering 2014 Beyond
Downloading …........ ‘Internet TV’
Ongoing price wars …… significantly cheaper data …
OTT content App stores
Digital TV
Media consoles VOD
?
?
Streaming media
Wearable technology
Social media Search, video
Advertising
Wi-Fi Off-loading
LTE, VDSLFree WiFi Network capacity management,‘Customer stickiness’
Next generation applications
?
Pervasive devices & databases
Telcos as banks … M-payments
FTTH, Triple play
Ch
illi in
dex –
mark
et
imp
act
Voice over WiFi
??
Next industries to be disrupted: education, transport, retail, medicine (Prof. Michiu Kaku)
Globally connectivity will make up only 8% of the total $1200bn M2M market in 2022, traffic even less
$39bn – for connectivity services Most is devices & installation (2/3) and the
‘service wrap’ (1/3) Transmission is just the tip of the iceberg –
most of the revenue lies in other layers of the value chain – including the service delivery platform
Automotive the next big industry M2M is still relatively small in the local
market
Global M2M connectivity revenue, 2022
0
5
10
15
20
25
30
35
40
M2M
connecti
ity s
erv
ices r
evenue
($bn)
Source: Machina Research, 2012
A melange of TLAs
Are you
B2B
or
B2C?
or
BBC
2
2OTT
Poss
ibly
wit
h
SalesForce
Google Ad-words
YouTube
Social media …
Private Wi-Fi (user owned APs)
• Already being exploited for the Wi-Fi offload
Public Wi-Fi (HotSpots)
• Opportunity for the carriers to partner to provide the service.
Carrier class Wi-Fi (carrier APs)
• Open for the carrier to leverage with the goal to improve customer experience, to lower the capital unit cost, and to improve ARPU.
Wi-Fi offload solutions – fixed line strikes back
Source: Wireless Spectrum Needs Vs. Wi-Fi Offload Solutions, Dr. Hossein Eslambolchi, 2013
Reasons for carrier Wi-Fi and offload
Basic service
Public space
Commercial
space
Content / advertisin
g / Service
opportunity
Commercial
service
Carrier extensio
n
Public Wi-Fi models (hotspots and hotzones)
Source: BMI-T, WiFi 2.0: Global and South African Market Impact - taking the market by stealth, 2014
Differences by vertical
http://www.huawei.com/minisite/gci/en/index.html?utm_campaign=GCI2014&utm_medium=HWsites&utm_source=de
Industry Competitiveness Index
Huawei surveyed over 1,000 executives from 10 industries as to their ICT investment plans and the benefits they have seen
Some industries are innovating more rapidly than others
While some are in danger of being the next ones to experience serious disruption … Education, transportation, retail,
medicine (Prof. Michiu Kaku)
Vertical focus One of the things all operators
need to do Fill niches with tailor-made
connectivity solutions Operators are still the best in town
at connectivity They are also leading players in
Data Center-based services
What telcos are doing – Europe
What else Operational transformation Value-based pricing New services
“Telcos are well placed to expand into cloud and act as the primary sales channel”
Source: A report for European Telecommunications Network Operators’ Association (ETNO), A.T. Kearney
Revenue growth for telcos (is there any?)
Revenue growth vs traffic growth
Different drivers Telcos have to be
intimately involved in applications – either directly or indirectly – in both consumer and B2B markets
Cloud services will comprise up to 5% of telco revenues
Source: A report for European Telecommunications Network Operators’ Association (ETNO), A.T. Kearney
Gartner Says Worldwide Public Cloud Services Market to Total $131 Billion
http://www.gartner.com/newsroom/id/2352816
Strong demand is anticipated for all types of cloud services offerings.
5 global players gravitating to: Amazon, Rackspace, VMWare, Google, Microsoft
Comms-aaS still the largest SaaS market
CRM moves to cloud. IaaS fastest growing globally, and
where many start their journey in SA.Public Cloud $27bn (excl. advertising, BPaaS) Up 18% in 2013; IaaS up by 47%. BMI-T forecasts R4bn market in SA.
Adver-tising48%
BPaaS28%
SaaS15%
IaaS 6%
Security3%
PaaS1%
‘Five characteristics of cloud’: Shared, virtualized infrastructure Self-service access Elastic resource pools Consumable output User-based usage tracking.
“Communications-as-a-Service” is already widely adopted
Managed firewalls, email and web content filtering, virus and spam detection, fax-to-email …
Offer enhanced security
CRM, best typified by Salesforce and MS Dynamics
Does Cloud make Rain?
‘Hybrid cloud’ approach suits larger companies:
First implement applications in a private cloud environment, getting familiar with the architecture
Then gradually or selectively implement some elements in the public cloud environment – not a case of “all or nothing”.
Over time you may elect to expand the range of applications or implement a hybrid solution, which allows bursting into public cloud when the situation demands.
What else … out of the Data Centre?
Datacentres become ecosystems: Cloud datacentres will “become much like a breathing and living organism with different states”.
UC&C in South Africa According to BMI-T’s research into
cloud computing most of the revenues from Cloud locally are in Comms-aaS – hosted Exchange, email & web filtering, fax etc.
It depends what you count Unified communication is an umbrella term for
many different elements. Video conferencing and messaging are strong
performers but most of the attention still focusses around voice.
Including Comms-aaS … R500m (and growing)
Counting the UC revenues of Microsoft, Cisco and PBX vendors … another few hundred million.
Audio & Videoconferencing … a further R100m
You could also count SIP trunks … R1.5bn
So at almost R2.5bn … this is real
27
SDN … because today’s static architecture is ill-suited to the dynamic computing and storage needs including:
Changing traffic patterns The “consumerization of IT” (and BYOD) The rise of cloud services “Big data” means more bandwidth
Challenges faced by network designers: Complexity that leads to stasis Inability to scale Vendor dependence
Computing Trends are Driving Network Change
www.opennetworking.org
To win in the highly competitive and rapidly evolving connectivity market, service providers must differentiate their portfolios with richer Service Level Agreements (SLAs) that address today’s and tomorrow’s requirements.
Service providers must also adopt go-to-market techniques that tailor IT and connectivity services to specific enterprise verticals, shifting the emphasis from the network to the end-customer’s business requirements.
Vertical focus
Value proposition in the higher education vertical might speak to collaborative multi-site research, or community cloud, and the corresponding Data Centre Connect managed service.
Likewise, a bundled service in the financial sector would speak to the need for ultra-low-latency connectivity between trading locations.
http://www.ciena.com/resources/white-papers/Monetizing-Networks-in-the-Cloud-Era.html?src=PR
Convergence and disruption are impacting on all businesses
Computing Trends are Driving Network Change Dynamic nature of IT requires a fresh look at the
network … and a fresh approach to using telecoms services
Vertical solutions (and value chains) are a key part of operator strategies
Telcos need to be involved in content and applications, one way or another
Cloud is one of the “Next Big Things” Telcos are well positioned to deliver Cloud services They need to embrace OTT and partner / enable
The value chain of “Next Big Things” consists of much more than connectivity
Case in point: M2M and the Internet of Things
Summary