Global Telecoms
Megatrends
BMI-T Breakfast Briefing
14th October 2014
Brian Neilson
brian@bmi-t.co.za
@brianbmit
Themes for today
State of the global market

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

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…
Global Telegraphy Network in 1891
Price trend example: fixed broadband services
Impact of
competition …
80% decline in 4
years
Developed
World
Developed
Source: ITU, 2013
Developing
Mobile traffic growth outstrips forecasts – by a mile
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.
http://www.itu.int/net/newsroom/wrc/2012/features/imt.aspx
Applications converge, but … most traffic is still fixed line!
Note difference in
scale!
What’s hot … and what’s not?
Social media
Search, video
OTT content
App stores
Advertising
Beyond
2014
Next generation
applications
Pervasive
devices & databases
?
Media consoles
VOD
Digital TV
Downloading …........ ‘Internet TV’
Streaming media
Significantly cheaper smartphones ... most phones are smart
Telcos as banks … M-payments
Banks as
telco players
?
Free WiFi
LTE, VDSL
Voice
over
WiFi
Wi-Fi Off-loading
Network
FTTH, capacity
management,
Triple play
‘Customer
stickiness’
Video explosion , Internet of things, Cloud
computing ...
Chilli index – market impact
Passé - lingering
?
Wearable technology
?
Ongoing price wars …… significantly cheaper data …
8
Social media
Search, video
OTT content
App stores
Advertising
Beyond
2014
Next generation
applications
Pervasive
devices & databases
?
Media consoles
VOD
Digital TV
Downloading …........ ‘Internet TV’
Streaming
Next industries
to bemedia
disrupted: education,
transport,
retail,cheaper
medicine
(Prof. Michiu
Significantly
smartphones
... most phones are smart
Telcos as banks … M-payments Kaku)
Banks as
telco players
?
Free WiFi
LTE, VDSL
Voice
over
WiFi
Wi-Fi Off-loading
Network
FTTH, capacity
management,
Triple play
‘Customer
stickiness’
Video explosion , Internet of things, Cloud
computing ...
Chilli index – market impact
Passé - lingering
?
Wearable technology
?
Ongoing price wars …… significantly cheaper data …
9
Globally connectivity will make up
only 8% of the total $1200bn M2M
market in 2022, traffic even less


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$39bn – for connectivity services
Most is devices & installation (2/3) and
the ‘service wrap’ (1/3)
Transmission is just the tip of the
iceberg – most of the revenue lies in
other layers of the value chain –
including the service delivery platform
Automotive the next big industry
M2M is still relatively small in the
local market
Source: Machina Research, 2012
M2M connectiity services revenue ($bn)
Global M2M connectivity revenue, 2022
40
35
30
25
20
15
10
5
0
Connectivity
Service
Connectivity Connectivity
services
enablement
support
platform
platform
Mobile
network
traffic
Are you ADD OCD OTT?


The ‘GoogleAmazonification of
everything
Telcos fight back – by
embracing OTT
A melange of TLAs
or
B2B
or
B2C?
B
2
B
2
C
Google Ad-words
Possibly with
Are you
SalesForce
YouTube
OTT
Social media …
Telco 2.0
Wi-Fi 2.0: Taking the market by stealth?
Wi-Fi offload solutions – fixed line strikes back
Reasons for carrier Wi-Fi and offload
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.
Source: Wireless Spectrum Needs Vs. Wi-Fi Offload Solutions, Dr. Hossein Eslambolchi, 2013
Public Wi-Fi models (hotspots and hotzones)
Basic
service
Public space
Commercial
space
Content /
advertising
/ Service
opportunity
Source: BMI-T, WiFi 2.0: Global and South African Market Impact - taking the market by stealth, 2014
Commercial
service
Carrier
extension
Differences by vertical
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)
http://www.huawei.com/minisite/gci/en/index.html?utm_campaign=GCI2014&utm_medium=HWsites&utm_source=de
What telcos are doing – Europe
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 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
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Source: A report for European Telecommunications Network Operators’ Association (ETNO), A.T. Kearney
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
Gartner Says Worldwide Public Cloud Services Market to
Total $131 Billion
SaaS
15%
IaaS
5%
Security
3%
PaaS
1%
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.
Advertising
48%
BPaaS
28%
Public Cloud $27bn (excl. advertising, BPaaS) Up 18% in
2013; IaaS up by 47%. BMI-T forecasts R4bn market in SA.
http://www.gartner.com/newsroom/id/2352816

Direct marketing using Big Data
Online Video – marketing and more
What is real? – user adoption
Does Cloud make Rain?
‘Five characteristics of cloud’:
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“Communications-as-a-Service” is
already widely adopted

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Shared, virtualized infrastructure
Self-service access
Elastic resource pools
Consumable output
User-based usage tracking.
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
‘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

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Unified communication is an umbrella term for
many different elements.

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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
Telco evolution
Computing Trends are Driving Network Change
SDN … because today’s static
architecture is ill-suited to the dynamic
computing and storage needs
including:
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Changing traffic patterns
The “consumerization of IT” (and BYOD)
The rise of cloud services
“Big data” means more bandwidth
Challenges faced by network
designers:
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Complexity that leads to stasis
Inability to scale
Vendor dependence
www.opennetworking.org
Vertical focus

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 endcustomer’s business
requirements.

http://www.ciena.com/resources/white-papers/Monetizing-Networks-in-the-Cloud-Era.html?src=PR
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.
Summary
Convergence and disruption are impacting on all
businesses
Computing Trends are Driving Network Change

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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”


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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
32