31Jul/140

Smart Grid: the smart metering market and beyond

NAKAJIMA_Soichi

Soichi NAKAJIMA, Senior Consultant

Just under 1.4 billion smart meters (electricity, gas and water combined) deployed worldwide in 2018

IDATE reviews the state of smart meter rollouts in various countries (Europe, USA and Japan), which form the first steps of eventual national scale smart grids. Whilst electricity meters are at the forefront of such rollouts, gas and water must also be considered. The drivers and barriers for this market are assessed, and forecasts are made for the number of smart meters to be deployed and the resulting cellular connectivity revenues, up to 2018. Finally, some future paths which may be explored for expansion into smart grids are examined.

IDATE forecasts that there will be a total of just under 1.4 billion smart meters (electricity, gas and water combined) deployed worldwide in 2018, up from roughly 500 million in 2013; a CAGR of 22.7%. Many countries now have regulation in place which targets close to 100% replacement of current ‘dumb’ meters to smart ones by 2020, and such regulations are the primary driver of smart meter rollouts.

The technological composition of communication for smart meters is divided into two main parts; the HAN (or last mile) and the WAN (or backhaul), and the approach differs from country to country. For example, the UK has specified Zigbee as the HAN technology and cellular as the WAN (with the exception of northern GB) for both electricity and gas, whereas in France the technologies specified for electricity and gas differ. In Germany, there are no specific regulations requiring replacing dumb meters with smart ones (just that new meters must be smart), and the technology is for utilities to choose. The main deciding factor for smart metering technology is thus regulation, and if not specified by regulation it is up to the utilities to decide. Whilst most countries have plans for smart electricity meters, there are fewer for gas and for water they are still rare.

There are various technologies which could be deployed for both HAN and WAN, and the main area of interest for telcos lies in providing cellular connectivity for the WAN, with their already-established networks covering large areas of the country. However, they face competition from other technologies such as PLC and RF mesh. Particularly in the USA, RF mesh had been a popular choice due to availability at low costs, whereas cellular proved expensive. However, such cellular prices have now come down significantly, from an ARPU typically over 5 EUR to now 0.5 EUR in some cases. Thus with the price now proving more attractive, telcos are increasingly becoming the WAN technology of choice, which can be expected to remain reliable for the foreseeable future. This is particularly important as the life expectancy of meters is long, in the region of ten years or more. Indeed, smart meter vendors, such as Elster and Silver Spring Networks have shifted their future connectivity plans to cellular as opposed to RF mesh. Finally, the migration to LTE allowing for higher throughput is also a positive factor in the long term when considering the smart grid.

Looking further ahead, smart meters are in fact the first steps of building a national electrical smart grid, on top of which various services and applications can be built upon. This involves various actors along the value chain, from meter vendors to network providers, system integrators and all the way up to the service providers. Here, telcos have the potential of providing ‘smart-grid-as-a-service’ to the utilities; a packaged, end-to-end smart grid solution, where the telco takes care of the overall integration and running of the solution. This is a particularly effective strategy for the medium- and smaller-sized utilities (such as municipalities and co-operative utilities), as they can outsource the large majority of resources and equipment which would simply be too expensive to provide by themselves. Such projects have already started in the USA, since 2013 with AT&T on the one hand and Verizon on the other. Telcos do however face competition from other market players, such as General Electric and Silver Spring Networks which also offer such integrated solutions.

It will also be interesting to monitor entities which offer both utility and connectivity services (such as the triple play of Internet, TV and phone). Such entities tend to be municipalities and regional providers, and do not combine these services. However, as smart metering becomes more standard, there is the potential of packaging these two services (utilities and connectivity) as one, to create advantages over their rivals.

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31Jul/140

A game-changing trio for the telecoms landscape

GASSOT Yves
Yves Gassot
CEO, IDATE

Increased competition, a forced rethink of pricing models and the devastating impact of the economic crisis have weakened Europe’s once thriving telecoms sector

Europe’s telecommunications sector has been the stage for a growing number of merger and acquisition deals in recent months. Deals that are clearly posing a conundrum for regulators and anti-trust authorities, resulting in especially long investigations, and controversial “remedies” for those deals that have been given the green light.

Despite which, virtually all of the parties have by now reached the conclusion that consolidation is inexorable, if not desirable. The sector’s main players have never fully recovered from the aftermath of the Internet bubble and the debt levels that ensued. The increased competition ushered in by new entrants, pricing models that have been destabilised by the arrival of Internet companies offering rival (voice, messaging and video) products, the devastating impact that the economic crisis has had on the countries of southern Europe since 2008… together have weakened Europe’s once thriving telecoms sector. In concrete terms, this has meant a 12.5% drop in revenue for the top five European markets over the past five years, a dramatic decrease in EBITDA (earnings before interest, tax, depreciation and amortisation) and, quite naturally under these conditions, in lower per capita spending on new generation access networks (fibre, LTE) than in the United States.

So consolidation appears to be a natural response to the situation, a way to put an end to the price wars and stabilise margins. Infrastructure sharing schemes may precede or be part of this consolidation, but unlikely to take its place. If these schemes can provide an interesting means of reducing costs, they can also allow price wars to drag on. Unfortunately, most of these consolidation deals are taking place inside national markets.

Once the dust from these mergers has settled, European telcos’ margins improved, and the harmonisation of regulation progressed as Mr Junker has said he hopes it will, it is not hard to imagine that the next stage of market consolidation will be cross-border and beyond. We need to remember that one of the arguments put forth when opening the telecommunications sector up to competition was the ability to create a single European market, and to enable the emergence of a handful of pan-European carriers. The stakes here are high: even if the synergies to be had from a cross-border merger are less obvious, size alone will no doubt have an impact on operators’ efficiency and their ability to invest and innovate. We should also emphasise that the creation of a large handful of telcos operating in most EU markets – replacing today’s one hundred or so national telcos, but also competing against a number of operators that target a very particular clientele – will in no way reduce the choice available to consumers. So we should probably just accept the fact of having fewer national operators, and in turn enjoy more meaningful competition – in a vaster, European-scale marketplace – which extends beyond merely price points.

Indeed, the real challenge for operators is not to engage in a game of industrial Monopoly and to grow and grow just for the sake of it. Instead, they need to ready themselves as best they can to handle three difficult and dramatic changes. The first is one that must force telcos to continue to improve their productivity and agility, to be able to respond to a fast-changing environment. Even if price wars are currently a trap, it is nevertheless also true that the telecom sector is among those most able to pass digital-driven productivity gains onto consumers, and to generate the means to sustain needed investments. The second change is an accelerate rate of convergence between fixed and mobile infrastructures, spurred by the advent of superfast access. The mobile Internet of tomorrow will be fibre networks’ biggest client. The third game changer is a major one. Namely the increasing influence of software and data on the sector, which will require operators to control quality of service parameters and customer relations in real time.

If the effervescence of the digital ecosystem is today characterised above all by innovative over-the-top (OTT) start-ups, the telecoms sector should not be viewed as the last dinosaur standing, or something akin to CDs being made obsolete by streaming. Regardless of how the future plays out, money will still need to be spent on the networks and the access link in the Internet value chain, with a solid profit outlook in the offing. Something that Europe, which today has no major global Internet platform to its name, would be unwise to overlook.

A paper published in the french newspaper Les Echos.fr 30 july 2014.

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10Jul/140

Fixed and mobile ultra-fast network rankings

CHAILLOU_Valérie Valérie CHAILLOU Head of Research, Telecoms Business Unit, IDATE

IDATE reveals global and European rankings

To mark the start of the 8th annual Assises du Très Haut Débit symposium, IDATE is releasing its ranking of countries that lead the way in ultra-fast fixed and mobile broadband subscriber numbers, in Europe and worldwide. An analysis and data culled directly from IDATE’s freshly updated FTTx and LTE global market watch, which examines hundreds of countries and operators.

Growing disparities in fixed ultra-fast broadband

At the end of 2013, ultra-fast broadband (UFB) access – i.e. with a throughput equal to or above 30 Mbps – represented 29% of all broadband connections worldwide. This marks real progress as the percentage stood at 22% just one year ago. FTTH/B is still the mostly widely deployed technology, accounting for 60% of UFB subscribers around the globe, followed by cablecos’ FTTx/D3.0 systems, which account for 29% of users, and VDSL for 11%. In terms of subscriber numbers, all UFB architectures combined, the United States is by far the global leader with 62.5 million subscribers at the end of 2013, compared to 42.4 million for China and 27 million for Japan. France is in eighth place with more than 2 million subscribers. Of course this ranking changes depending on the indicators that are taken into consideration, such UFB subscribers’ share of a country’s total broadband customer base. Here South Korea tops the ranks, ahead of the United States, Japan and China, with 66% – versus 64% for Japan, 60% for the United States and 22% for China. As to the technologies deployed, the US is the undisputed VDSL market leader with some 11 million subscribers, well ahead of the UK and its 2.1 million subscribers. The United States is also the world’s biggest FTTx/D3.0 market, with 42 million subscribers, again ahead of the UK which is home to 3.1 million subscribers, followed by Spain where competition between FTTH/B and FTTx/D3.0 is fierce.

Accelerate 4G rollouts

Meanwhile, LTE also continues to make tremendous strides. IDATE counts close to 212 million LTE subscribers around the world at the end of 2013, of which 190 million are located in just 10 countries. The revenue generated by these subscriptions tripled in 2013, to reach €68 billion or 6% of global mobile telephony revenue. The United States is the biggest LTE market with more than 100 million subscribers, or three times more than the number two market, Japan. France is in sixth place in terms of user numbers. There are several reasons for these huge disparities: telcos in the United States have far outspent their European counterparts on LTE rollouts (virtually double the Capex per capita), while in Japan and South Korea LTE is part of a strong ongoing industrial policy. Here, it is worth remembering that South Korea covered its entire population with LTE in just one year.

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5Jul/140

Mobile and online payment : NFC transactions estimated at 53,6 billion in 2018

Julien Gaudemer

Julien GAUDEMER, Consultant at IDATE

 

The volume of NFC transactions is estimated by IDATE at 4.6 billion EUR in 2014 to reach 53.8 billion in 2018

In its latest report, IDATE provides an overview of the mobile and online payment market. It provides the main figures for each market segment (in-store payment, carrier billing, remote online payment). The latest market trends are analyzed, as well as the position and evolution of the main players (especially Telcos and internet Players).

Mobile payment markets are still nascent for the most part, the technical aspects are mature and plenty of commercial offers exist. However, the majority of online and mobile payments are still made by debit or credit card while in-store payments are still made by cash, cheque or payment card.

• IDATE estimates that e-commerce is a 1,145 billion EUR market generating 34.8 billion transactions (according to CapGemini) in 2014. M-commerce has generated 115 billion EUR in revenues, through 29 billion transactions including about 13% of alternative payment systems (other than payment cards).

• Regarding in-store payment with NFC mobile solutions, IDATE estimates that 278 million NFC-enabled mobile phones will be used in 2014, and 28 million users are likely to use their NFC phone to make mobile payments. The volume of NFC transactions is estimated by IDATE at 4.6 billion EUR in 2014 to reach 53.8 billion in 2018. All these figures have to be compared with the few hundred trillion USD of global payment transactions per year. If the figures show differences between these markets, other stakes need to be taken into consideration to better understand the overall market payment ecosystem.

• Regarding carrier billing systems, this market is estimated by IDATE to reach 18 billion EUR in 2014, with about 30% of direct online carrier billing.

From the user point of view, the mobile wallet battle focuses on ease of application and added value compared to payment by debit card. Most mobile wallets currently available are no easier to use than a debit card, and do not have the critical mass to be used at a large scale.

Julien Gaudemer, Project leader of this report, says “The main added value is the other services included in the wallet: loyalty programmes and offers management.” However, some players try to reduce the overall payment process in-store: Apple initially developed iBeacon technology for in-door geolocation but it could be used to automatically pay for goods when leaving the store. Alternatively, PayPal has developed payment during ordering (e.g. for the Mc Donalds application) to avoid the in-store payment step.

Mobile wallet applications can now manage various payment cards, loyalty programmes and offer coupon storage to make them more attractive than traditional payment systems. These features allow service providers to get users’ purchasing habit data in order to provide targeted advertising and offers. In addition, players that are already involved in the advertising market (like Google) are able to increase advertising prices due to a better targeting technique

Internet giants and new mobile payment players are trying to change the traditional payment ecosystem to gain more revenue. The payment market itself does not bring as much in revenues globally, which is why they are especially trying to bypass all intermediaries between themselves and the user’s money. For instance, Paypal wants to avoid payment systems (like Mastercard and Visa), banks and telcos. Google uses its mobile operating system Android to provide an integrated payment system (using NFC) and a mobile wallet, avoiding telcos and other related intermediaries (like Trusted Service Management services). From the merchants’ perspective, payment service providers need to convince them to adopt their solution: transaction commissions and interchange fees are therefore the key stake as, if they are too high, merchants will not use them. Besides, the recent development of the virtual currency “BitCoin” has been seen as an innovation for some observers but as a threat for the financial sector by others. Many small players have developed new services around the new currency to convert it into traditional currencies or use it on a mobile device or in-store.

 

Worldwide forecasts of NFC-enabled-phone-installed-base-inMillion-500px

 

 

 

 

 

 

 

 

 

 

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5Jul/140

SDN and NFV for telcos: disrupting network

tiana ramahandry
Tiana RAMAHANDRY, Consultant

Software-defined networking (SDN) market is estimated at €816 million in 2014 projected to reach nearly 7 billion by 2019

 

IDATE publishes a status report on Software-defined networking/Network functions virtualization standardisation efforts, which explores telco and equipment suppliers’ positioning on future network architecture concepts. This analyses the strategies and degree of involvement of the ecosystem’s various stakeholders. It also provides SDN/NFV market figures.

SDN  and NFV  associated with cloud computing at the core of telcos’ and equipment suppliers’ strategies

SDN (software-defined networking) and NFV (network functions virtualisation) are seen as the main upcoming technological disruptions in networking architectures. They allow a network to be more programmable, open and scalable.

Entire ecosystem invested in standardisation

The telecoms and IT industry is involved in the standardisation initiatives taking place around SDN and in the work being done by ETSI on NFV.
Traditional equipment manufacturers, and especially the top suppliers of switches and routers – Cisco,
Juniper, Alcatel-Lucent, Huawei – are the players most actively involved in this area.
The top telecom carriers are more interested in NFV, and are involved both in standardisation efforts and in conducting proofs of concept.

Virtualisation in telco networks making progress, but more slowly than in datacentres

The first available SDN equipment was designed for datacentres, and was thus installed by companies operating in that field and cloud service providers. Pioneer SDN and NFV products for telco networks are now available as well. The carriers that are the frontrunners in this area – including AT&T, Deutsche Telekom, NTT and Telefónica – have all announced plans for a large-scale transition to a new networking architecture.

The global SDN and NFV market in 2014 is estimated at €816 million. 
Telcos still account for only a sliver of the market: 5% in 2014. But as more and more carriers make the transition, this share is forecast to grow to 19% by 2019 .

The SDN and NFV market (million EUR)

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Source: IDATE, SDN and NFV for telcos, June 2014

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25Jun/140

[ITW] Yves GUILLEMOT, Co-Founder and CEO Ubisoft, Paris, France

Published in COMMUNICATIONS & STRATEGIES No. 94, 2nd Quarter 2014

Video game business models and monetization

Yves-guillemot-Ubisoft

Interview with Yves GUILLEMOT Co-Founder and CEO UBISOFT

 

Conducted by Philippe CHANTEPIE
French Ministry of Culture and Communication;
Associate researcher, Innovation & Regulation Chair, Paris

 

C&S:  We have entered the 8th generation of consoles. Do you consider it likely that this will upset the market positions of publishers and console manufacturers?
Yves Guillemot:  This new generation of consoles brings many changes, incorporating all the innovations from parallel markets and multiplying their potential through technological power. These platforms reach an unparalleled high level of performance, immersion and opportunities which allow us to create even more powerful game experiences. Each generation of consoles has large implications for publishers who need to invest heavily to maximize power and be able to seize the great opportunities that arise.
On the other hand, the strong growth in mobile and PC markets, driven by social games, permanently connected and free access, is a challenge for traditional industry players, with new economic and editorial models that differ from more traditional games. These models started being introduced at the end of the previous generation of consoles. New platforms like the Playstation 4 or Xbox One have fully integrated these developments and allow us to put the player at the center - before, during and after the game experience - and to give him/her an increasingly active role in changing content.

C&S: Casual gaming has grown rapidly and has already started occupying a predominant position. Do you think it is likely that this will continue to increase?
Y.G.: Casual gaming is not a new phenomenon. In 2006 the Nintendo Wii had taken a big step towards attracting video games and a new audience, part of which is now plays more traditional games. The rise of social networks, mobile games and online greatly amplified this phenomenon and globalised the supply and the audience to which it is intended. The video game market today encompasses nearly 2.5 billion players, compared to 500 million previously. This is a pool of significant growth for our industry. For example, one of our flagship brands Just Dance is a dance game first released on the Wii, which has sold 49 million copies since 2009. It was particularly popular during the Christmas season.

C&S: We are witnessing significant changes in revenue models. Are these new models mature enough and able to renew the game console segment?

Y.G.: These new models are growing dynamically and also continue to evolve. Some examples or experiences have shown us the difficulty of maintaining high market shares and good consistent results. Without a miracle, renewal is necessary to adapt to a changing marketplace. Ubisoft deploys and uses these models, while consolidating and diversifying a portfolio of original brands for which we control the entire creative and commercial process. Beyond the video game, our goal is to increase the visibility and attractiveness of our franchises by being increasingly present on new media such as television, with the Raving Rabbids TV series, and soon the cinema with the adaptation of franchises like Assassin's Creed or Splinter Cell. The Raving Rabbids Futuroscope theme park attraction, open for several months, is also a success.

C&S: Do you consider that the development of competition in the video game industry will lead to transform the production system of game publishing and how?

Y.G.: In recent years, production of video games has become considerably more professional. Our industry is constantly evolving: our businesses, the technologies we use, as well as the habits and customs of the consumers, such as being permanently connected with their phones. These changes are revolutionizing the way we design our games. We must constantly renew and adapt to propose the most innovative and immersive creative experiences. For example, a game like Watch Dogs allows our players via mobile applications connected to the game console, to play anywhere and anytime; it also allows their friends who do not have game consoles to help them progress in the game. Our mission is to provide our players ever stronger and enriching experiences while finding technical solutions allowing us to reduce our costs and therefore our risk. To remain agile and ready to face these challenges, we actively invest in R & D in France and abroad.

C&S: Which factors do you think are the most disruptive of the game economy factors present or future: free to play, an actor like Steam, etc.?

Y.G.: The free-to-play model was born in Asia to circumvent the problems of piracy of the PC game business model. This model has experienced significant growth in recent years in Western markets. By removing entry barriers, it allows players to experience games and be free to invite their friends and invest if they like the content. This model has now gone beyond the sphere of casual games in which it was previously embedded to move towards more traditional experiences and platforms such as consoles. Ubisoft has been present in this segment for some years with games like Settlers Online, Howrse, and more recently with Trials Frontier, and The Mighty Quest for Epic Loot.

C&S: The Montreal studio set-up seems to be a supporting model of this industry. What elements of this support do you consider are the most strategic to strengthen the ecosystem of this sector?

Y.G.: Canada, but also other territories around the world, has been able to highlight craft, creativity and innovation as a driver of economic development. These territories were able to discern the many benefits that the digital creation industry and jobs with high added value could bring. In addition to the direct incentives, education is also specialized in these areas to form a diverse pool of talents. Two key factors in this success that are important in the eyes of the gaming industry are the unique efforts and the simplicity of public procedures.

 

Biography

Yves Guillemot founded Ubisoft in 1986 with his four brothers, and was named CEO of the company in 1988.  Starting off by importing and translating video games from England, Yves and his brothers immediately used the distribution business to fund the creation of games, starting with Zombie in 1990 for Atari ST.  Yves has overseen the phenomenal growth of Ubisoft into an internationally renowned and respected creator of quality video games with 29 studios, distribution in 55 countries and with more than 9,200 employees around the globe. For the 2013-2014 fiscal year it generated sales of 1.007 billion euros.
Born in Brittany of France's west coast, Yves grew up in a family of entrepreneurs.  All five Guillemot brothers worked summers in the family agriculture supply business.  Later, Yves attended business school in Paris, formalizing his education in the creation and sustenance of an enterprise. Yves is married and enjoys playing video games with his three children.

Published in  COMMUNICATIONS & STRATEGIES No. 94, 2nd Quarter 2014

For more information about our activities: www.comstrat.org

Contact
COMMUNICATIONS & STRATEGIES
Sophie NIGON
Managing Editor
s.nigon@idate.org

25Jun/140

How digital technologies impact live performance?

Gilles Fontaine
Gilles FONTAINE

Deputy Managing Director
Director of TV & Digital Content Business Unit

 

It is no secret that the shift to digital has had a huge impact on the music sector: the multiplication of distribution channels, the shift from owning albums to listening on the fly, along with piracy have resulted in a significant drop in revenue for the sector, the arrival of new unlimited music services and, more generally, the core revenue stream shifting from the sale of recorded music to exploiting all of the rights attached to an artist.

The role of live performance has also changed. While it has always been a special event, providing a venue for fans to meet the bands as well as being a promotional vehicle, concerts had long been a by-product of records. Today, they have become not only essential revenue streams, but also an essential means for music lovers to discover artists, and for artists to develop their careers. In addition to the their growing weight in music industry economics, the live concert market is also being affected by the internet: the use of social media to promote an event, online ticket sales, the importance of metadata in creating and maintaining ties with fans, new forms of interaction during concerts, etc.
Among these many developments, digital technologies open up new opportunities in the realm of recording and broadcasting concerts. As with recorded music, video, news and now books as well, the rise of digital and the web is steadily creating new ways to distribute recordings of live concerts, which had long been the sole dominion of a handful of TV channels, and so confined to only the most popular artists. The proliferation of online distribution channels is already driving up demand. At the same time, on the supply side of the equation, new, cheaper recording and distribution solutions continue to lower the barriers to entry. So more and more players are getting in the game. They are coming from new sectors of the digital ecosystem: pure player concert sites, internet giants, telecom and consumer electronics industry players… but very few live event organisers.

It is within this new environment that IDATE was commissioned by musical, concert and variety show union, PRODISS, to provide an analysis of what impact digital technologies are having on live performance.

> The report and its summary (in French) are available online at: www.proscenium.fr/thinktank/

25Jun/140

300 series produced in the US for the 2013-2014 season

Gilles Fontaine
Gilles FONTAINE

Deputy Managing Director
Director of TV & Digital Content Business Unit

Original production in the US had long been the fiefdom of the top TV networks and a limited group of premium cable pay-TVs. Today, however, all cable channels are developing an original production policy, operating alongside their reruns of series produced by the big networks.

Some of the most popular series in the United States have been produced not by these heavyweights, or by HBO: Mad Men, Breaking Bad and The Walking Dead (AMC), The Americans (FX), Rectify and Top of The Lake (Sundance).

This new strategy has been especially profitable for AMC which originally aired only reruns: in 10 years, its earnings from cablecos has gone from $0.22 to $0.35 a month per subscriber.

 

Series produced by American networks for the 2013-2014 series

25Jun/140

Online piracy: a turnaround in Europe?

Alexandre JOLINAlexandre JOLIN

Consultant at IDATE

 

IDATE estimates that industry losses due to the various forms of illegal video consumption – namely P2P, downloads and streaming – totalled €6.3 billion in Europe in 2013, which translates into 37.8% increase from 2010 to 2013.

The main reason for this rise in online video piracy is the lack of attractive video on-demand (VoD) services in Europe, which is due in large part to:
• a very scattered offering, which is hard for users to navigate through;
• the fact that legacy pay-TV providers have captures the rights for the most premium content, and are taking a defensive approach to new distribution channels;
• very few online sales options;
• certain regulatory restrictions, such as the media chronology in France and Germany for feature films.

The VoD sector’s consolidation, and the inroads being made by American companies, especially in the subscription VoD segment, is expected to breathe some life into Europe’s video-on-demand market, and contribute indirectly to scaling back users’ reliance on piracy. IDATE estimates that industry losses due to piracy should decrease by 6.5% between 2014 and 2018.

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23Jun/140

World Telecom Services : overview and projections

POUILLOT-Didier

Didier Pouillot
Head of the Telecom Strategy Business Unit

Mobile growth still strong with 6.6 billion subscribers worldwide at the end of 2013 and forecast to reach more than 8 billion by the end of 2018

 

IDATE, partner analyst at the LTE World Summit 2014 (23 to 25 June 2014 in Amsterdam) reveals the findings of its World telecom services watch.

After the trough of 2009 and hesitant growth in 2010, the global market has been growing at a moderate pace since 2011. Growth in 2013 stood at 2.4% “we have observed that, by and large, telecom services are recovering more slowly than the economy as a whole,” reports Didier Pouillot, head of IDATE’s Telecom Players & Markets Business Unit.

Now in a recovery phase, telecom markets in advanced countries are proving somewhat resilient, whereas in fast-developing markets the underlying momentum is coming from volume. This phenomenon is telling of a mature industry now driven more by demographics than economics. In Africa/the Middle East, for instance, the drop in regional GDP in 2009 (-6%) and its rebound in 2010 (+16%) had very little impact on telecom services growth rates which remained very high both years: +8% and +9%, respectively.

Revenue from telecom services

According to IDATE, global telecom services revenue will increase from €1,186 billion in 2013 to €1,341 billion in 2018, representing an average annual growth of 2.5%.
• Revenue from mobile services will grow by 17% between 2013 and 2018 (+3% a year on average), reaching €826 billion in 2018.
• Revenue generated data transmission and Internet access will enjoy more substantial growth (+24% between 2013 and 2018, i.e. an average +4% per annum), to reach €338 billion in 2018.
• Fixed telephony revenue will continue its sharp decline: -15% between 2013 and 2018, i.e. dropping by an average 3% a year, down to €177 billion in 2018.

More mobiles, more users

According to IDATE, the number of mobile customers worldwide should top the 8 billion mark by the end of 2018 (+21% in 5 years).
• The number of fixed Internet subscribers will grow more slowly (+18% between 2013 and 2018, +3% a year on average). The one billion mark is not expected to be reached before 2020.
• Traditional landlines continue to loose ground as VoIP and mobiles gain.

The spread of broadband

According to IDATE, the number of fixed broadband subscribers is expected to reach 858 million worldwide by 2018, for a penetration rate of 12% of the global population. The number of LTE customers is shooting up, and LTE-Advanced users are expected to increase swiftly in early adopter countries.
IDATE forecasts more than 1.3 billion LTE subscriptions worldwide by the end of 2017, generating a total €400 billion in revenue
Two major factors will work in broadband’s favour:
• The success of bundled offers (fixed telephony, VoIP, TV, mobile telephony) and the appetite for video applications.
• Telcos’ investments in migrating their infrastructures to mobile or fixed broadband.

Scalability of operators

• European operators are still in trouble, with a growth momentum that is running out of steam, despite strong investment needs
• North American telcos are benefiting from a solid growth rate at home, especially in the mobile market.
• If several major telcos from emerging countries continue to enjoy swift growth rates of close to or above 10% (Bharti Airtel, China Mobile, China Telecom, China Unicom), a number of them saw their growth flatten and tumble to virtually nil in 2013 (America Móvil, MTN, Oi, Vimpelcom). But margins remain high: EBITDA margins of between 30% and 40%, and even higher in some cases. Several of these operators are widely engaged in international expansion strategies.

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