CEO, IDATE DigiWorld
How to keep up with the fast-paced changes in our industries without being buried by the avalanche of news which, every day, urges us to read about some new important disruption? On a more practical level, how to gain access to vital data, benchmarks and preliminary independent analysis to begin planning a project or considering a market?
Thanks to its teams of highly qualified consultants and analysts, IDATE DigiWorld is able to deliver a complete set of telecoms, Internet and media market watch services.
I hope you’ll allow me to use this month’s editorial to highlight how invaluable these services can be, taking as examples three reports on timely and crucial topics that were published by our teams this summer:
• How much importance should be given to pioneer user experiences and the first LTE plans for fixed services? This report that was just published by Carole Manero ("LTE for fixed access: the next big thing ?") takes a look at the factors that make for a more credible solution after the failures of LMDS and WiMAX… but also taking into account Google’s recent announcement that it could be scaling back spending on Google Fiber projects in the US, to focus instead on wireless solutions, and the news that AT&T and Verizon do not have the national carrier status when it comes to deploying LTE or even 5G fixed wireless products, based on early trials.
• Sport: live TV’s last bastion? Florence Le Borgne seeks to answer this question in her report entitled, ("Sport content: TV vs. OTT") – analysing the impact of skyrocketing TV rights resulting from competition between TV networks, competition from VoD and the Internet giants’ growing ambitions.
• Should we expect an end to telecom market consolidation in Europe? In his report ("Telecom consolidation in Europe: toward new challenges?"), Christoph Pennings takes a look back at in-market mergers and acquisitions of recent years, and explores the paradigm shift created by (notably fixed-mobile) convergence deals, but also policy changes coming out of Brussels.
I could just as easily have cited several reports that are currently in the final production stages, on IoT, Industry 4.0, the new generation of LEO satellites, blockchain, FTTH rollouts around the globe… For more information about these upcoming reports, and our complete catalogue, visit the IDATE DigiWorld website, or contact our head of sales (email@example.com) or the consultants listed earlier.
PS: -"Yves Stourdzé, explorateur et éclaireur des mondes à venir": Some of you may have noted that IDATE’s headquarters are located on "allée Yves Stourdzé". Yves, an academic who was appointed Director of CESTA (Centre for the Study of Advanced Systems and Technologies), was among those who believed in IDATE’s development and supported us in our early days. Following a symposium in Paris on his work, held at the Ministry of Research, I urge those of you who are French speakers to acquire the book entitled: "Yves Stourdzé, explorateur et éclaireur des mondes à venir" – providing insights into the man and analysis of his work, through contributions from 25 personalities. This same publisher (Sens & Tonka, www.sens-tonka.net) will also be soon releasing a new edition of the main works of Yves Stourdzé.
Florence Le Borgne
Head of the TV & Digital Content Practice, IDATE DigiWorld Contact
As the number of TV channels has exploded over the past several years, acquiring premium content has been one of the key strategies used by TV networks to distinguish themselves.
At the heart of this coveted selection of content, sport has enjoyed a spectacular increase in the amount that broadcasters are willing to pay to carry it. If this is especially true of major league sports and events, secondary ones are also capitalising on the boon, thanks to new generalist and sport channels providing new outlets.
In recent months we have also seen top Internet players display a growing interest in acquiring the rights to live streaming sporting events both nationally and internationally, either by acquiring the rights directly or by forging partnerships with rights owners. Whether to increase their user base or to a secure the loyalty of existing users, YouTube, Yahoo!, Twitter, Facebook and Amazon all plan on establishing themselves as key partners in distributing and monetising sport.
This newfound competition only exacerbates the one that already exists between heavyweight telcos, some of whose content policies focus purely on sport (Cf. Proximus) and some which include sport amongst a wider array of content (Cf. Altice/SFR). The amounts spent by these companies have often enabled them to increase their IPTV customer numbers and/or their ARPU, but have also contributed to an unprecedented spike in the price of sports rights, which makes it harder and harder to break even, especially in a universe populated by a growing number of rivals.
As the price of sport content drives up programming costs, traditional TV channels are being forced to adapt:
• Veteran general-interest channels are choosing to cut back on their acquisitions and concentrate on a few flagship events, and to use these major events to showcase their technological savvy and their ability to innovate.
• New TV channels are not looking to compete head on, but opting instead for the rights to events that are exploited very little or not at all elsewhere, which enables them to build a reputation at a price that is in line with their budget.
• The equation is becoming increasingly challenging for the major specialist channels, which are forced to up their bids for the major sporting events that are essential to their brand image, but are also the victims of growing competition and of cord-cutting. Their subscriber numbers are shrinking while programme acquisition costs are rising exponentially. If online distribution (Cf. Sky) and the search for partners to distribute a complete sport package (Cf. Canal+/beIN Sports) are some possible solutions in the current climate, one of the main challenges is to negotiate lower rights acquisition prices.
If OTT will probably take hold over time as a credible solution for broadcasting sporting events live, there continues to be a plethora of technical issues surrounding the distribution of video streams with higher than average quality. For now, OTT distribution can only compete economically with broadcasting (in MPEG-4) when streaming to several thousand users. So it is still an interesting option for supplying bonus content, but not as a replacement solution, especially when it comes to major sporting events.
What is being built today is essentially a bridge between broadcasting and OTT in terms of:
• countries covered;
• available content;
• the ability to show a wider variety of sports;
• enhancing the viewing experience.
A lot of (digital) ink has been spilled since Verizon announced that it would be taking control of Yahoo! (except for its patents and shares in Alibaba and Yahoo Japan), including stories tracing the company’s history, and history of missed opportunities.
The most interesting question in all of these commentaries is the following: Will being part of Verizon equal revival for Yahoo!, even though major overhauls in strategy and management over the past decade did not manage to narrow the ever widening gap that separated it from Google and Facebook in the online advertising market?
Some of the explanations being put forth for the deal include the technologies and content resulting from the acquisition of AOL last year, along with several other deals, agreements signed with studios and sports federations, as well as the launch of the Go90 mobile video service. The additional technical expertise and content will probably allow the newly expanded conglomerate to increase its market share by a few points, but not much higher than 4% to 5% for the online advertising market, which still puts it very far behind the combined 50% share enjoyed by Google and Facebook (and around 70% when looking at the mobile Internet alone). But the future Verizon does have other assets, not least the telcos’ roughly 115 million mobile customers and 20 million wireline subscribers.
Can telcos turn the tide on decreasing revenue with new business models?
Taking a look at another challenge that does not pertain so much to the future of Yahoo! but rather the future of telcos in general. Here is the question: can telcos turn the tide on the growing trend of shrinking revenue with new, more content and advertising-centric business models? Even if Verizon is one of the world’s most successful telecommunications businesses, with remarkably healthy margins, its revenue appears to be on a downwards trajectory due to competition (T-Mobile), a sudden slump in the replacement rate and dwindling subsidies for smartphones, along with cable’s supremacy in the consumer fixed market in the US.
The oft-cited competition from OTT services and players is a questionable argument when we see that the mobile sector in the United States continued to grow up to 2015, well beyond the time when the GAFA quartet took control. While it is true that Netflix, Amazon and Hulu may have a negative impact (cord cutting) on fixed service revenue, the impact is limited given the TV revenue earned by a telco such as Verizon. On the other hand, the creativity and popularity of OTT services, and especially video services, is translating into heavier use of fixed and mobile broadband services, demand for faster connections and a massive increase in traffic. Fundamentally, these are opportunities for telcos to generate additional revenue, even if it does require continual spending on their networks.
When contemplating the delicate equation of how to monetise 4G and fibre access, telcos can seek out complementary solutions in content or by monetising their relationship with customers through advertising and data markets in general. We can substantiate this hypothesis by pointing to the Verizon acquisitions listed earlier, but also the much larger deal orchestrated by AT&T last year when it took control of the country’ second biggest pay-TV provider, DirecTV. But if we stick to only these two operators, it could be said (and rightly so) that few other M&A deals are available to them, since antitrust authorities are against any further consolidation in the mobile market.
What assets can telcos leverage to become key content market players?
The first thing that usually comes to mind is telcos’ role as pipes, in other words the suppliers of the technical infrastructure that carries programmes to consumers’ homes. This argument needs to be put in perspective, however, at a time when there is real competition over access and net neutrality rules are being put into place. Still, telcos do have credible assets in two areas.
• First, if they are massive enterprises with tens of millions of customers, they can hold their own against veteran TV networks when bidding for TV rights and exclusivity deals, thanks to their ability to amortise their spending both through their subscribers but also through marketing if they enjoy an image boost and increased market share for their core business. Here it is nonetheless worth mentioning that, in terms of economies of scale, the most powerful pure OTT players have an almost global footprint, which gives them a clear edge over telcos.
• The second argument in favour of telcos is their relationship with their subscribers, their sales network (and especially their shops), the quality of the ecosystem they provide through user interfaces and network boxes, and of course the information they have that provides them with detailed knowledge of their customers. By way of illustration, we could say that even if Netflix does not need to be listed in telcos’ interface to exist in a national market, it can certainly help. On this second point, telcos have a clear advantage over broadcasters or pay-TV providers that have no return path that would enable them to target customers. It is less of an advantage compared to OTT companies that have managed to develop a model that generates relevant consumer data. Telcos still need to prove their ability to be serious rivals for Google and Facebook in the online advertising market. But it also remains to be proven that telcos’ ability to monetise their data requires investments in content.
To sum up, even if telcos want to complete the tiering and differentiation strategies used to monetise their access products with substantial revenue from content and advertising, they need to be very big (which could also be seen as an argument in favour of cross-market consolidation deals) to stand up to the growing globalisation of the rights market, and find ways to monetise their customer data without losing their customers’ trust.
CEO, IDATE DigiWorld
A recent report from IDATE DigiWorld underscores the extent to which European markets as a whole lag behind the superfast access targets set by the Digital Agenda, including: 50% of Internet households subscribing to a connection of more than 100 Mbps in 2020.
At the 10th annual Assises du Très Haut Debit (Superfast broadband symposium) hosted by Aromates and IDATE DigiWorld in Paris on 6 July, we delivered a sneak peak of our coverage figures for Europe at the end of 2015, drawing on our own FTTx databases, the latest data collected from regulators and operators, along with our freshly released market report, “The Digital Agenda for Europe: a snapshot”.
Clearly, the situation varies dramatically from country to country, and the objectives set by Europe will be hard for some countries to achieve without a major policy push. The most advanced countries benefit from a strong cable footprint and an incumbent carrier that has made less ambitious technical choices than extensive FTTH rollouts. Belgium, for instance, combines vast a and dense cable system that has been upgraded to the latest Docsis technologies (>100Mps) and the top carrier’s choice to upgrade its legacy copper network to VDSL (>30Mps).
On the whole, the largest countries in Europe are less likely to achieve all of the Digital Agenda objectives. In France, for instance, the combination of giving top priority to achieving extensive FTTH rollouts, the relatively limited cable coverage (40% of households) and the very gradual deployments in the country’s more rural areas based on public-private partnerships – which will eventually coverage 40% of access lines – have put the country among the lowest ranked in terms of availability of superfast access lines and average connection speeds. The situation is better in the UK and Germany where BT and DT were quick to deploy VDSL (>30 Mbps) access products, in response to aggressive competition from cablecos. Meanwhile Spain, which has combined investments in FTTH and cable, also tops France in the rankings. Only Italy, whose incumbent dragged its heels on significant spending on FTTH and was unable to capitalise on a cable system, is faring less well than France.
The IDATE DigiWorld report reveals that, once ultrafast access networks are in place, customers are eager to sign up. We have therefore noted a much higher NGA take-up rate in those areas where ultrafast access (100 Mbps and faster) is available. This means that we can count on a virtuous cycle of differentiation that encourages market players to invest in faster networks, not with a view to continually increasing the price of access plans, but rather to enable solutions that meet a growing array of needs.
When considering these future scenarios we must not, however, underestimate the complexity of the regulator’s task which, up until now, has been defined by European copper LLU rules. The fact of replacing ADSL with VDSL (with Vectoring/Bonding and G.fast) and FTTH would seem to give the incumbent a natural advantage, setting up a duopoly with cable. But this is too simplified a view since we also need to take into account (particularly when looking at the regulatory situation in France) the potential for duplicating superfast infrastructures in very high-density areas, how it is in operators’ interest to pool their investments in medium-density areas, and the role of public-private partnerships in sparsely populated areas, not to mention the promise of superfast mobile.
Hope you all have a great summer!
Delve deeper into our analyses of superfast access in Europe by ordering our latest reports:
And don’t miss other recent releases from IDATE DigiWorld:
In its roadmap for the Digital Agenda, Europe has set out three main coverage and take-up targets for Internet access.
The first is 100% broadband coverage for European households by 2013, taking into account the use of fixed, mobile and satellite solutions. The second is 100% superfast coverage (i.e. 30 Mbps and up) in most Europe countries, although some are still far from having achieved this. The third is calculated in terms of take-up: 50% of homes passed must have access to a more than 100 Mbps connection.
At the 10th annual Assises du Très Haut Debit (Superfast broadband symposium) held in Paris on 6 July, market research firm IDATE Digiworld gave a sneak peak of its coverage figures for Europe at the end of 2015, and presented a benchmark of the rate of progress in each European country.
‘For the first time, and drawing on our own databases as well as information collected from regulators and telcos, we are able to estimate ultrafast access (i.e. above 100 Mbps) rollouts, shipments and sales in Europe,’ reports Dominique Meunier, head of IDATE DigiWorld’s Telecoms division.
European superfast and ultrafast rankings: 30 and 100 Mbps NGA coverage (December 2015)
Source: IDATE DigiWorld, FTTx World Market (June 2016)
The situation varies dramatically from country to country, to say the least, and the objectives set by Europe will be hard for some countries to achieve without a major policy push.
The most advanced countries benefit from favourable geographical features, a strong cable footprint and less ambitious technical choices. Belgium, for instance, combines vast and dense cable systems that have been upgraded to the latest Docsis technologies (>100Mps) and the top carrier’s choice to upgrade its legacy copper network to VDSL (>30Mps). Another example is Lithuania which has opted for a massive investment in a new fibre network, doing away with its obsolete copper system.
On the whole, the largest countries in Europe are on track to achieve the Digital Agenda objectives. France, however, has set itself ambitious targets for fibre rollouts, its cable networks have a relatively small footprint and the planned investments from government bodies, which were to cover over 50% of total rollout costs, have resulted in only very gradual deployments. Lagging behind the other major countries of Europe, such the UK and Germany which were quick to roll out VDSL (>30 Mbps) access products and boast widespread cable coverage, and even Spain (cable +FTTH), France is ahead only of Italy and will need to accelerate the pace of FTTH access line shipments to make up for lost time.
Lastly, the report reveals that, once ultrafast access networks are in place, customers are eager to sign up. We have therefore noted a much higher take-up rate in those areas where ultrafast access is widely available.
Discover the perspectives, key trends, and scenarios about the THD market for the next decade through our dedicated report
CEO IDATE DigiWorld,
The next stage in the digital revolution will be the big leap forward in major manufacturing sectors, now being pressured to make the digital transition by a combination of game changers: IoT, big data and artificial intelligence.
IDATE DigiWorld has just published the latest edition of its DigiWorld Yearbook. Three public events are held every year, in Brussels, London and Paris, to coincide with its release. Under the banner of “DigiWorld Future,” these events attracted more than 800 industry professionals this year, and allowed both our own teams and a host of industry luminaries to discuss market trends and our predictions for the internet, telecom and TV markets in 2025.
Looking at market trends, our belief is that in the coming years we will need to move beyond the uncertainties over the smartphone market’s loss of momentum, the disappointments over the poor performance of pioneer wearable tech, and over how long it is taking for a mass market to develop around virtual reality. Of course they are all signs of the time, just like economists’ concerns that perhaps Moore’s Law no longer applies and that productivity gains have been decreasing since 2006.
We nevertheless believe that an extraordinary potential surrounds the game changers born of the combination of the Internet of Things (IoT), big data and artificial intelligence – and no doubt 3D printing as well. The tremendous work being done in these arenas by companies such as Michelin and Engie, which were outlined at our DigiWorld Future event, will undoubtedly have an impact in terms of productivity and transforming value chains – not least in furthering the servicisation trend in customer relations. We are clearly at a pivotal moment in time: when innovation is flourishing but positive outcomes are still some way down the road. It will still take some time for the pieces of the technical puzzle to come together (whether the still complex issues surrounding network standardisation or IoT management platforms) and for the required human expertise and appropriate business models to be put into place.
Scenarios for the future
Recognising market trends is also a way for us to identify the core variables of future market scenarios, not to predict this or that players’ strategy, but rather to build a solid foundation for a structured exploration of the different (and deliberately opposite) possible futures.
We have chosen two main avenues when mapping out our scenarios for the internet’s possible futures. The first avenue distinguishes the scenarios according to whether or not they rely heavily on processing and utilising personal data – something that will ultimately be influenced by internet users’ willingness to share their data, and on regulatory restrictions.
The second allows us to define scenarios with respect to standardisation and competition levels. In very basic terms, we could imagine on the one hand an extreme decomposition of market functionalities thanks to a vast selection of available open source software and API (the dream of geeks everywhere) and, on the other, a push to integrate the latest innovations into the massive platforms run by the Internet giants (Google, Amazon, Facebook and Apple), reaping the benefits of economies of scale and network economies.
Naturally, for those wanting to delve further into these projections, the wisest course of action would be to get a copy of the 2016 DigiWorld Yearbook, where you will also find our teams’ insights into the different markets that make up the DigiWorld, along with valuable data and analysis of the events that have shaped the past 12 months.
As always, we welcome any comments and suggestions you might have for the 2017 and all future editions of our DigiWorld Yearbook!
 But also a host of other manufacturers (GE, Audi, Airbus…) along with the major service (hotels) and finance (banking and insurance) industries, mass media, telecoms, etc.
Senior Expert, IDATE DigiWorld
The connected continent: reality check
Nicolas Moreno points out : “In May 2010, the European Commission unveiled the objectives of the Digital Agenda for Europe (DAE). The Digital Agenda is one of the key elements in the European growth strategy for the coming years (Europe 2020) with a target of a 30Mbps coverage for all households in EU-28, of which the half subscribing to a >100Mbps offer.
We conducted a study benchmarking national broadband plans in 7 countries – France, Germany, the UK, Spain, Italy, Sweden, Portugal – in order to provide metrics on the national BB plan advancement. It appears that Portugal and the UK are leading the game regarding the DAE objectives with France and Italy lagging behind.
The disparate coverage levels in the seven countries being studied cannot be attributed to any single factor, but rather to a combination of demographics, technological choices and the strength of private investment.”
National broadband plans – where do we stand regarding DAE
At this stage, as not all national schemes have reached completion, it is impossible to pinpoint a set of best practices, not least because each country’s situation is so different at the study’s outset. Each has established a public policy (objectives, technologies) based on its own situation and features, which makes it very hard to extrapolate to other situations.
Current status compared to DAE objectives
Source: IDATE DigiWorld, National FTTH public policies in Europe, June 2016
The implementation of national plans was accompanied by basic legal measures aimed at facilitating UFB rollouts nationwide. These actions were either included directly in the national plan or ratified in parallel, in response to the different laws.
Summary of regulatory measures introduced in the countries being studied
* As part of symmetric regulation in large cities
Source: IDATE DigiWorld, National FTTH public policies in Europe, June 2016
The programmes also have the common feature of making use of three different sources of financing: European, State and local, with the exception of Portugal where only European and national funding are being used. They do, however, differ in how they apply their support models:
• Direct investments: public design-build-operate (DBO) model, i.e. public authorities assuming all three roles, although there may be public-private partnership (PPP) elements as well;
• Indirect investments: a public network managed by a private entity, i.e. outsourced or operated as a concession;
• Support for local initiatives: high-speed network rollout on the community’s initiative;
• Private operator subsidy: a private sector operator given public funding for its rollout, also referred to as shortfall financing or private DBO.
The biggest budgets for national programmes today are in countries where UFB coverage needs are at their highest: 45% and 44% of households eligible for a 30 Mbps plan in France and Italy, respectively. Because of their demographic situation, Sweden and Portugal did not require a large budget to build out coverage and, in some countries (France, Germany, Spain, Sweden), rollout initiatives from local authorities preceded national programmes.
These national plans are vital but in themselves not enough to achieve complete superfast coverage, or nationwide ultra-fast 100 Mbps coverage down the road. That is the reason why search for complementary private investment is one of the cornerstones of all national plans.
The degree of public action varies from country to country, depending on their current situation. The government’s role in creating incentives for private financing is just as important as its role in helping to fund rollouts in those parts of the country ignored by private operators that deem them unprofitable.
Provide you with in-depth knowledge of each examined national broadband plan (technologies deployed, governance monitoring system, detailed data, cross-country analysis grid…) through our new report.
Lead IoT expert at IDATE DigiWorld
We can already observe the integration of IoT technologies in industry assets – which is commonly called smart factory – and emerging use cases, reducing costs and increasing productivity strikingly.
In our latest study we propose an analysis of the heterogeneous industrial landscape on three major axes: Infrastructure (Industry assets), Offering (innovative products accompanied by related services) and Relation with customers.
Industrial Internet is gaining momentum, but still needs several years for larger adoption and especially for an establishment of common standards – today several technologies and concepts coexist and only the fittest will survive when market maturity is reached.
The industrial infrastructure of industrial assets will be optimised through the development of the smart factory concept by implementing new manufacturing practices that take advantage of ICT innovations. This aims to go beyond the introduction of new technologies in the production process. The core principle is the increase in connections and integration of the different ICT-enabled components in a single networked system. The developments of the smart factory result in gains in production costs as defects are eliminated and automation reduces the intensity of human resources in production tasks. Value thus shifts to research and development and design tasks on the one hand, and to after-sales services on the other hand. These shifts impact players, enabling the development of smaller-scale units focusing on the design and engineering of products on the one hand, and the emergence of platforms and ecosystems on the other. Adoption is still limited as we are but in the early years of the smart factory. Major industries now adopting the smart factory encompass aeronautics, automotive and consumer electronics. Energy and transportation are also deploying IoT solutions along their distribution network architecture.
The Industrial Internet (IIoT) is also considered as a way to improve the appeal of core products by providing more services associated with machines rather than expecting new revenues. As a consequence, vertical players are tending to lower their expectations for data monetisation, focusing essentially on using data for process optimisation mainly, bringing more value to their core products. This is even more true for very expensive machines (aircraft, heavy equipment). However, some industries like automotive still aim to generate additional recurring service-based revenues over time through additional interactions (rather than standalone product sales with renewal several years later). They are pushing their subscription-based services, even though the real adoption is still under interrogation (even for premium manufacturers).
In addition, servicisation is also used to increase customer loyalty, where the traditional product purchase (transaction relationship) is being transformed into a recurrent relationship between suppliers and clients. Moreover, new innovative and disruptive pricing models will be introduced, with the example of tyre manufacturers which sell services (on a per-km basis through Tyre-As-A-Service) for professional fleet managers.
Data will play an important and central role in the future as many players aim to leverage the data collected from the connected objects, chiefly for business reasons. There are still questions around the real monetisation of the data as it is based on the ownership of the data itself and its related control. Early initiatives show data use for internal use, circumventing data privacy issues. To build data-managing platforms, the biggest industry players are tending to develop their own digital solutions. For smaller players, data will likely be exploited by third parties, as they lack the appropriate technical expertise and capacity to combine with other data.
The market of the Industrial Internet will be driven by the enabling technologies (LPWA and big data chiefly) which provide disruptive features. Moreover, different national and international initiatives such as Industry 4.0 or the Industrial Internet Consortium (IIC) support the development of these new technologies led by the automation and engineering industry giants.
However, in addition to doubts around data monetisation, the market is also facing such barriers as security and reliability concerns, interoperability issues and potential societal impact on workforce training and employment. Furthermore, this is leading industrial giants to have their own data-oriented department and they are required to acquire new skills and expertise around data – a process which also takes time.
Get more insights on infrastructure, products and services, customer relationship related to Industrial Internet as well as an analysis of the value chain, possible monetization of data and general drivers and hurdles.
The independent telecoms, internet and digital media analysts at IDATE DigiWorld have announced a number of trends to look out for over the next decade in its annual DigiWorld Yearbook report, out this month.
These include cheaper smartphones, dwindling sales of tablets, the increasing use of IoT technologies, Artificial Intelligence (AI) and Virtual Reality (VR), and sustained growth in the digital economy. The European think-tank expects to see a continued rise in cyber-attacks and trust issues surrounding digital companies, which will lead to enhanced security protocols as consumers embrace the Internet of Things (IoT), especially to help protect their connected cars or smart homes. Improved connection speeds, especially for Europe, and better reliability for mobile and household internet services are also on the cards, with a gradual move from 4G to 5G and fibre-optic broadband (FTTH).
In its research, IDATE DigiWorld looks at how further consolidation in the telecoms industry could be replaced in future by more cross-industry mergers between networks, technology, television, media, transportation and industry: for instance, companies like Google and Apple making further in-roads into the automotive industry; or major telco and tech companies buying more into television and streaming services.
With sustained growth in online services, the industry experts at IDATE DigiWorld expect a gradual shift away from owning to using: for example, people sharing cars via an app; or streaming music and video-on-demand films, rather than buying CD’s, DVD’s or downloads. The move towards more on-demand, subscription services is likely to be driven by the increasing use of ad-blocking software which, in turn, could make the abundance of free internet services (like YouTube) a thing of the past.
“A wide range of services are sold for a minimal per-unit cost and consumed en masse, which helps to build a gigantic digital services market for telecoms and internet, estimated at more than €2,900 billion in 2025, or almost 7% annual growth,” said the report.
The two-hundred-page report also considers how Bitcoins, blockchains, mobile payments and crowdfunding will impact the future of banking and finance, arguing that further development in internet services will help ‘cut out the middleman’ in other industries too, like travel and retail. Other considerations include Big Data and how EU legislation is coping with data privacy and protection, as well as how, in future, more access to personal data might affect people’s insurance premiums or requests for loans.
“We’re riding a wave of innovation that’s never been seen before, especially in the business sector with the continuing migration to the Cloud and the prospects that the Internet of Things, Big Data and Artificial Intelligence might bring. However, at the same time, this throws up a number of potential issues, such as how the Public Cloud is now in the hands of tech giants like Amazon, Google and Microsoft,” said François Barrault, President of IDATE DigiWorld.
Despite a context of relative saturation, as shown by recent stagnation in smartphone sales, IDATE DigiWorld predicts modest growth returns for Western telcos and digital media companies during the years ahead; but bigger gains in China, India and Africa, where further global consolidation is expected both at the European and worldwide level. In television, Asia/Paciﬁc will become the world’s largest market during the next decade, while growth in the main European markets will be weak, and possibly even negative.
“European markets are also still very much weighed down by a very tough competitive and regulatory climate for telecom carriers whose revenue has been on a downward slide since the late 2000s,” said Yves Gassot, CEO of IDATE DigiWorld. “Internet services continue to enjoy double-digit yearly growth of nearly 15%. The segment is expected to represent close to 10% of the entire digi-world in 2016, a ﬁgure that will only increase in the near future: in just two years from now, internet services will be out-earning television and video services, which will nevertheless continue to grow by 3% to 4% a year.”
The DigiWorld Yearbook 2016 has been compiled using its own datasets, market reports and 2025 prospective analysis with the support of many leading players in telecoms, IT, internet, TV and digital media, with more than 50 members that include Accenture, AT&T, BT, Google, Gemalto, Huawei, IBM, Microsoft, Orange, Tata and Samsung.
The findings of the report are being presented this year to various industry chief executives keen to share their outlooks on the 2025 digital economy, through a series of DigiWorld Future conferences: in Brussels, on the 25th May; in London, on the 2nd June; and in Paris, on the 14th June. The complete programme is available at www.digiworldfuture.com
DigiWorld Yearbook infographics
Buy the DigiWorld Yearbook 2016 Edition on our website !
Senior Consultant IDATE DigiWorld
Disappointing results for the mobile industry and satisfactory results for broadcasters and the satellite industry.
World Radio Conference-15 key outcomes
Spectrum is vital for many industries – allocations are decided at a WRC. At the most recent WRC, late in 2015, many hot topics were raised, including the allocation of new frequencies to International Mobile Telecommunications and to satellite services. Globally, WRC-15 led to some very important conclusions. In the end, it delivered disappointing results for the mobile industry and satisfactory results for broadcasters and the satellite industry.
Focus on item 1.2: the 700 MHz band, 96 MHz identified for IMT use in Region 1 and in few countries in Region 3
The 700 MHz frequencies are very valuable and often considered as golden spectrum because of its propagation characteristics. The 700 MHz band is of critical importance for players both in the MEA and in Europe. In Europe, broadcasting carries a considerable weight in the industry, something that is less clear in MEA. These differences required caution on the part of the authorities.
In Europe the band corresponds to the second digital dividend. In the USA, 700 MHz frequencies correspond to the first Digital Dividend in the USA (1997-2008). In Region 3 (Asia-Pacific), the 700 MHz band corresponds to the first Digital Dividend.
At present, the 700 MHz band is still being used by digital television services in Europe (despite the WRC-12 allocation to IMT use). In some countries it is used by mobile services. It is being freed up for mobile broadband in many parts of the world.
It has been a long journey to freeing up 700 MHz frequencies.
• In 2007, 108 MHz of spectrum (698-806 MHz) for mobile services in Region 3 were identified at WRC-07.
• In 2008, the USA auctioned 700 MHz spectrum.
• Four years later in 2012, WRC-12 agreed on allocation of 700 MHz to mobile services (except aeronautical mobile) as a co-primary use with broadcasting in Region 1.
• As a kick-start to 700 MHz freeing up, the EC mandated CEPT in 2013 to develop harmonised technical conditions for the 700 MHz band in Europe.
• In 2013 and 2014, some Middle Eastern, Asian and Latin American countries auctioned 700 MHz frequencies with spectrum to be freed up as from 2015.
• During the year 2015, the first 700 MHz spectrum auctions took place in Europe.
In June 2015, more than 5 billion EUR were collected in auctions covering multiple frequencies (700, 900, 1800 and 1500 MHz). Bids for 60 MHz of spectrum in 700 MHz frequencies’ auctions alone reached 1 billion EUR (12 eurocents per MHz per 10 years).
In France, 700 MHz auctions which ended in November 2015 raised almost 2.8 billion EUR for 60 MHz on sale (35 eurocents per MHZ per 10 years), almost three times the amount reached in Germany. Finland and Sweden expect to auction 700 MHz spectrum before 2017 (respectively in January and April). The UK will make the 700 MHz available for mobile services by early 2022 and earlier if possible. In other European countries, the future of the 700 MHz is being considered.
• During the year 2015, the first LTE-700 MHz commercial services were launched.
WRC-15 outcome for the 700 MHz band
The 700 MHz topic had raised an intense debate before the conference. Broadcasters tried to defend their positions while mobile operators wanted to attract additional spectrum.
As expected, the selection of the 700 MHz (694/698-790 MHz) band as an IMT band was decided at the WRC-15 within Region 1 and 16 countries in Region 3 (including Australia). Broadcasters succeeded in protecting their services with the WRC-15 promise of “full protection” for DTT services.
Harmonisation between regions in the world was at stake. Before the conference a number of band plan options had been considered, especially in Europe, while other countries aligned to the APT700 plan, a harmonised band plan for 698-806 MHz for Region 3 which was approved by ITU. The entire band, according to the APT plan, enables the use of 2x45 MHz for FDD operation. A TDD plan has also been defined.
Access the full report Key Outcomes from WRC-15 to get more background data, decisions on items and what will shape the WRC-19 and WRC-23.