What does the future have in store for the telecoms industry?
The telecoms sector is undergoing a series of fundamental transitions, including challenges such as OTT and new revenue streams such as the IoT and M2M market. In particular, there is a battle to be fought between telecoms and internet companies over how much of the value chain they will control.
Based on these trends, which will likely transform the sector in the next ten years, IDATE’s DigiWorld Yearbook, released this week, suggests three possible 2025 scenarios. As Didier Pouillot, author of the report, suggests, the 2025 endpoint will likely be somewhere between these scenarios. But either way, the case for telecoms to act now is clear.
This scenario would see operators being forced to sell connectivity wholesale to internet companies, which have taken control of distribution under a smart cloud or dump device model. The report predicts that this would result in telecoms investment decreasing with internet companies increasing their control of the market. This scenario would see telecom services decline 2 percent year-on-year, with telecoms providers becoming little more than "dumb pipe".
2. ‘Enhanced connectivity’
In this situation, operators transform their systems through investment into effective intermediation platforms, which are attractive to small and mid-size internet companies. They would be able to bill both end users and content providers for connectivity. However, the transformation is insufficient to fully allow the telcos to compete with application and service providers at the end of the value chain to directly provide digital applications and services to end-users. IDATE predicts a modest 2 percent year-on-year annual growth rate in this scenario.
3. ‘Digital mall’
This third scenario would be optimum for telecom operators, which could see an average 5 percent annual growth rate. The operators would be taking on direct delivery of most digital applications and services from both themselves and third parties, capitalising on their large customer bases. The telcos would invest directly in new services such as video and music and compete against internet platforms, internet start-ups and integrators in the enterprise market.