This report starts by looking ahead into 2006, providing some of the more obvious predictions, but, perhaps more importantly; it then looks at the longer-term, underlying trends that are driving these developments. By highlighting and briefly analysing these trends companies can strategically position themselves for the ongoing telecoms boom that we expect to continue for at least the next three years, and most probably four years. The report covers the Internet economy, the ongoing developments in video-based broadband, and the new business models and industry structures that are required. NGNs and VoIP, mobility, wireless broadband, content and mobile data are discussed.
Short-term developments
We are always a bit cautious when making predictions, as we have seen far too many forecasts by colleague researchers that have been a long way off the mark.
At BuddeComm we prefer scenario forecasting and/or pattern identification. We use scenario forecasting in some of our hard data predictions, but this report will concentrate on spotting the trends and sorting them into patterns. This will help you to make your own ‘predictions’ for your own scenarios.
There are a number of short-term observations and predictions which are reasonable easy to make, so let’s deal with them first:
- Traditional voice calls will decline by a further 10%, but this will be compensated for by other revenues from the PSTN
- Based on current price offers broadband will reach 250 million subscribers by the end of the New Year,
- Mobile growth in developed mobile markets will continue at a rate of around 5%; however in the developed world 25% is estimated for the New Year
- Mobile prices caps will become more competitive, and this will lead to a small increase in mobile substitution (people giving up their fixed phone)
- Mobile data/content will add another $1billion to its business in 2006, an indicator of the wireless broadband potential of WiMAX
- WiMAX will start to make an impact towards the end of 2006 and will be giving the mobile companies a run for their money
- Incumbents are going to launch their first activities in the WiMAX market before the end of 2006
- WiMAX demand will be driven by the IT devices industry
- Incumbents will continue to play games with the regulator, and will be successful in frustrating issues such as mobile roaming, mobile termination rates, LLU and operational separation.
- Consumer Authorities will get more complaints in 2006 than they received in 2005 – so much for the telco’s promises of good customer service
- VoIP will slowly become slightly more prominent in triple play models – or perhaps initially double play models – over broadband
- The first glimpses of IPTV can be seen from 2006 onwards; this, however, will be driven by end-users not by entertainment providers
- More Governments will come up with firmer plans to force media reforms. The various media barons have been put on notice.
- Government subsidies are going to further empower alternative infrastructure players in the municipality and utilities markets.
My New Year’s wish for our industries is that we build on our highly innovative people and companies and assist them in increasing their entrepreneurial talents.
I also would like to see more of our people and companies broaden their views. The Internet economy is global, not local, and most of us still lack a global drive. Our future is bright and we have huge untapped potential right in front of us.
Medium-term developments
- From now on it will not be the regulators that will lead the way in the telecoms and broadcasting industries – it will be the Internet economy, led by companies such as Google, eBay, Skype, Amazon, Yahoo, MSN, News Limited.
- By the end of 2006 close to 2 million companies will rely on e-revenues for more than 50% of their revenue.
- The Internet economy will bypass telco and broadcast bottlenecks through Ethernet VPNs, All Area Networks (AANs) and Dedicated Internets linked to neutral data centres, and some will be wirelessly extended to end-users.
- Video communications will be as big as the change from radio to TV – there will be 60 million video-based broadband users by the end of 2006 (2MB/s plus services).
- Tele-presence allows us to redefine space, time and knowledge – over 1 million tele-presence websites by the end of 2006 (for family, friends and communities, as well as for virtual office purposes).
- Senior management will become involved in tele-presence and blogs, and will drive the Internet economy from the front line, bypassing IT hierarchies.
- Newspapers need to become video-based; broadcasters need to become interactive; and telcos need to deliver an NGN that will grow from DSL to FttH.
- IPTV has nothing to do with TV and everything with niche video markets.
Home media centres are still two years away.
- The mobile market needs to transform itself from voice optimised to broadband (data) optimised – changeover timeframe 2008-2010.
- Broadband mobility is still a largely untapped market, which will grow to well over a trillion dollar by 2015.
- Industry players will first have to deconstruct and then reconstruct, through new mergers and acquisitions aligned along the lines of infrastructure, content and distribution/packaging/marketing.
- The Chinese economy will continue to dominate what happens with the global economy and this will also be reflected in our telecoms industry.
My prediction: a golden future ahead of us
For the first time in my 25 years of involvement in this industry I am not afraid of the incumbent’s ability to prevent all of these exciting new developments. If they don’t come to the party it will be them who get hurt. This is not to say that we should not stay vigilant. The incumbents will try to do everything to be the bottleneck to the Internet economy and it is very important that governments realise this.
There are now sufficient alternatives to bypass the incumbent, and, while they will continue to frustrate and delay our moves towards the Internet economy, they will be unable to halt the final result. In the meantime, the others who are working towards the Internet economy will become stronger by the day, and the incumbents will become weaker.
However, what this disruptive behaviour does achieve is to delay our economic growth in the Internet economy, which in turn delays the social benefits that the converged market will bring to its customers. This is contrary to the will of the people, who, through their government, have set clear rules and regulations under which incumbents are obliged to make its multi-billion dollar annual profits.
Do I like this? No. I would like to see a strong innovative telcos leading us towards the Internet economy. I have been, and still am, advocating that we should give the incumbents infrastructure provider government money for the various economically unviable infrastructure projects, provided they use them to build open networks. Driven by technological advances, these open networks will happen anyway.
So, telcos, why not cooperate, rather than persevere with your rearguard battle, which you are losing?
Paul Budde
This is the 250th posting of Buziaulane, which was started on May 1st, 2005.
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