Technology -> Infrastructure
Released: 23rd October 2013
London, 23 October 2013 – Changes at work in the telecom and television sectors are explored in new key IDATEreports and at the upcoming DigiWorld Summit 2013 (19 to 21 November 2013). IDATE continues to publish its series of outlook reports devoted to the issues and challenges that the TV, telecom and internet industries will be tackling over the next 10 years. “Digital gold mines”, the theme of this year’s summit, will endeavour to shake off some of the gloom of today’s environment and discuss instead the likely sources of future prosperity in the digital economy.
Future Telecom: 2025
A European market that will not regain its 2010 levels… in 2020!
For several decades, the telecommunications sector has been in the throes of profound upheavals. What started with the overwhelming popularity of mobiles and later the internet, has led to today’s environment: the era of IP everywhere, cloud computing and big data. This created an environment with no shortage of challenges for telcos hoping to continue to grow.
Telecommunications companies face:
In Europe, these challenges are further exacerbated by the grim economic climate, which is testing the limits of the telecom sector’s traditional resilience. Very stiff competition only underscores how fragmented the European market is.
Consumers are spending more and more time on their phones and computers, using increasingly bandwidth-hungry applications (enhanced content, a lot of video, using multiple devices at once, etc.). But any extra money spent on digital pastimes is tending to be on hardware, as customers are leaning more and more towards low-cost plans for their connection needs.
According to Didier Pouillot, the head of IDATE Telecom Strategies Business Unit, in charge of this report, “…this explosion in consumption and the traffic it generates can also prove an opportunity for telcos, if they can find the right way to monetize it. For them, this is the biggest challenge that lies ahead.”
What is next?
IDATE has defined three different scenarios for the market’s future development, factoring in six key parameters from both the supply and demand side of the equation.
The three telecom Services market scenarios, 2008-2025 (EU-5, million EUR)
The other two scenarios describe more “extreme” situations, and help sketch out the perimeters of what the future might hold:
Worth noting in the “doldrums” scenario is that the market in 2025 will have shrunk by 24% compared to 2010, while under the "renaissance" scenario it will have grown by 28% – up by 40% compared to 2013, which translates into an average annual growth rate of close to 3%.
Growth of Telecoms service revenue - fixed and mobile (EU-5, million EUR)
Need for new operator models
If telcos can, and have begun working on monetizing access – e.g. via tiered pricing and device sharing – they can also engage in a two-sided strategy, and position themselves as preferred intermediaries between content and application providers (residential, business, M2M) and their customers. The most ambitious approaches to vertical integration are no doubt the purview of only the world’s largest telcos, those able to deploy their model internationally.
A number of factors are pushing telcos towards more or less integrated strategies. There is a possibility of more radical changes to:
Four Trends Influencing Europe’s Telecoms:
When looking at the generic components that make up the business models, there are four trends that will influence the way Europe’s telecom service industry is organized in the future:
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