Consultant Senior, IDATE DigiWorld
IDATE has just released its latest market report on connected cars, which is part of its ongoing series on the Internet of Things and M2M. The report provides an opportunity to take stock of a major market whose rate of development appears to be accelerating, with a series of announcements, veteran industry leaders such as Mercedes talking about driverless cars, the rise of newcomers such as Tesla, and connected car projects coming out of China, as foreshadowed by the new joint-venture between Internet giant, Alibaba and one of China’s first car-makers, SAIC Motors.
This is a market that every stakeholder along the value chain is gearing up for.
The strategy of most manufacturers is to make their cars connected. The main driver here is based on the regulation related to safety issues in Europe and the underlying revenue opportunity for them. In the USA, the recent GM announcement to embed 4G modules in all new cars is seen as a key trigger for market take-off. For telcos, the revenue opportunity could be interesting as the connected car will generate traffic that telcos will charge for indirectly (through the automobile manufacturer).
All main M2M mobile carriers are involved in the connected car space, as the connected car represents one of the major markets in volume. In a context where their traditional mobile revenues are flat and even declining in some regions, providing mobile connectivity in cars is a key business opportunity for telcos. Beyond car-related applications in driver assistance, from the perspective of a telco, the car can be seen as an additional cellular device, with a potential high-consumption service profile with such usage as the mobile Internet, entertainment on demand and mobile hotspot features. The prime business model remains the traditional wholesale relationship (B2B2C), even though some telcos like AT&T try to address end users directly through B2C models (through a retail data plan) and the integration of an automotive into the mobile share plan.
For Internet players, the strategy here is clear: the automobile is an additional connected device just as smartphones, tablets and laptops and needs to be addressed. However, Apple and Google do not have really the same approach. Indeed, whereas Apple aims to introduce its technology to interface with its products, Google is promoting the embedment of its technology into the car as a regular device. Google also wants to collect data to provide the most accurate advertising as possible, such as a related point-of-interest, based mainly on location.
A market that is starting to take off
On the market side, according to IDATE, in 2020, 420 million automobiles will be connected, representing a 34% CAGR on the 74 million connected vehicles in 2014. Nevertheless, this growth is not homogeneous for each category of connected cars. The embedded systems will lead the market by 2020.
Asia will lead the connected car market in 2020. Europe benefits from a 39% CAGR by 2020, mainly thanks to eCall regulation, entering onto market by end-2018.
In 2020, connectivity revenue for connected cars will exceed 9 billion EUR. In value, North America will be the leading zone, mainly due to higher ARPU than anywhere else in the world both for telematics and infotainment offerings. This encompasses direct connectivity through embedded systems but also indirect revenue related to smartphone usage. The major issues to be raised here are on the real willingness of the user to pay for such services. To encourage users to subscribe, telcos and manufacturers are already contemplating different revenue models including share plans. All the same, adoption is likely to remain limited over the next five years.
Forecast for connected car evolution, by implementation technique
worldwide, 2020 (%, Million units)
The headlines are full of the self-driving vehicle, which is on everyone’s lips in the industry. Automation could be framed at six levels, ranging from zero autonomy to fully automated. The leading manufacturers are, at the first steps, mainly luxury car providers. The traditional car manufacturers are focused on the semi-autonomous route, but the ‘upstarts’ from the realm of the Internet, such as Google and Apple, are straightaway testing the waters of the fully autonomous car. Nevertheless, many issues need to be removed to see the self-driving car market take off. Currently, they are legal (on how to handle accident responsibility), cultural (seeing no real demand from end users) and economical (on who will fund the infrastructure).
Find out more information on "Content economics market" in our dedicated market report
Published in Communications & Strategies n°99
IDEI, Toulouse School of Economics
Conducted by Marc BOURREAU,
C&S: The concept of platform is sometimes used in a very broad way in the policy debates. How would you define platform/multi-sided markets? What is the difference between a one-sided and a multi-sided market?
Bruno JULLIEN: It is difficult to provide a formal definition of a platform in economics and there is no consensus on such a definition. As a start I would say that a platform is a bundle of services that are used by several economic agents in order to interact. In such situations, a side represents a particular type of users (say sellers on a B2C marketplace, or merchants dealing with a credit card). Each side's benefits depend what other sides are doing on the platform. Moreover the platform may treat the various sides in a differentiated manner. For instance some may get free services while others pay for the right to access the platform.
From a theoretical perspective, a platform is not necessarily multi-sided. To be so requires two conditions. First the organization of the platform's services involves network externalities, i.e. participation and other actions of a user affect other users of the platform. Second the platform discriminates between different types of users. One criterion sometime used to determine whether an activity is multisided or not is whether the value of the service for each user depends on the whole structure of prices or not.
In a multi-sided platform the customers need to consider interactions with other economic agents to evaluate the value of the good or service and determine their behavior. The final value of the service for the customer is not fully controlled by the platform but results from agents' interactions. By contrast, in a one-sided market, firms choose the product or service characteristics and customers' value depends only on that choice.
The difficulty with the concept is two-fold. First it covers potentially a wide range of goods and services, so that the multi-sided externalities must be significant enough to be relevant. Second, all platforms are not necessarily multi-sided as this may depend on the business model of the platform. Consider for instance retailing: a chain store is typically not a multi-sided platform but Amazon marketplace is one. The chain store decides which products to carry at which prices and then consumers interact only with the store and don't care about suppliers. By contrast, online marketplaces let buyers and sellers jointly determine the products and prices.
The literature on multi-sided markets emerged in the early 2000's (and you were one of the first authors on the topic), but it is still vibrant. What do we learn from the recent research on platforms?
The early literature was mostly focused on price theory, explaining difference between pricing in multi-sided markets and one-sided markets by emphasizing the need to coordinate users and bring all sides on board. A main contribution has been the development of concept of opportunity cost where the cost of providing the service to a user is adjusted to account for the benefits (or costs) accruing to other users. This however needs to be put at work in practice, which is part of what the literature is aiming at. The recent literature developed along several lines. The first is the application of the concept to specific industries as it has been done for instance for the Internet, search engines, ads financed media or credit cards. For instance, in the case of media, the recent literature helps us understand the evolutions in terms of business models or the implications of mergers. Along the same dimension, the research is trying to develop new operational tools for competition policy where traditional results don't apply; there has been for instance work on bundling or econometric models for empirical work and policy evaluation.
At the theory level, what I retain mostly from recent work is the importance of participation patterns of the users (exclusivity, multiple vs single affiliation, switching) in shaping the competition between platforms.
On the other side of the coin, what do we still not know? What are the key questions where more research is still necessary?
While we have made significant progress in price theory and applications, there is a lot we don't know and a large scope for future research. For the theory I think that the main issue that we need to address is that our theories are mostly static. We need to better understand the dynamics of competition between platforms. What determines the emergence of a successful platform? What is the extent of barriers to entry? What are the respective roles of history and actual merit?
I expect also research to move away from price theory into design and organization, where most competition takes place. We need to understand when and how platform decides to interfere in transactions. A recent concrete example is the issue of MFN clauses for online booking systems (Most Favored Nation: this prevents registered hotels from offering lower prices on competing websites or direct sales).
For this we need more empirical work to guide research and applications. Currently we see many data originating from a single platform, so we may expect many studies of agents' behavior on a platform. But we will need also empirical work on platform competition.
For competition/regulation policy, we need more work to propose operational decision tools to competition authorities and regulators. Basic questions such as market definition or tests for predation are still not resolved for platforms. We have difficulties evaluating the optimal market structure, as more competition may not raise welfare and efficiency. This will require developing research at the frontier between law and economics.
There is a hot policy debate today in Europe on the regulation of platforms. What is your opinion on this question? What are the potential market failures in platform markets, which would justify a regulatory intervention?
The issue is not to identify market failures, which occur when there are externalities between users, network effects and market power as is usually the case with platforms. The main question is whether there is a scope for efficient ex ante regulatory intervention. In some cases, ex ante rules or principles are desirable, for instance for privacy issues. But in general I would be cautious and favor ex post intervention for several reasons. Platforms are very heterogeneous: platforms may propose very different activities, the same activities may be proposed by very different platforms, platforms may be more or less integrated vertically. This means that it is extremely complex to define ex ante the perimeter of a regulation. Moreover, the same regulation may affect different platforms in different ways, for instance a pay platform and a free platform are not affected in the same manner by restriction on data usage. Finally, the markets where platforms operate are dynamic and innovative. Market power has to be evaluated from a dynamic competition perspective and regulation should not impede this dynamic process.
Notice that it is in the broad interest of a platform to optimize the quality of interactions between its members and correct externalities because this raises their value. The literature has put some limits to this view, but intervention should occur only for clearly identified failure. I would point out two factors that may be matter for that.
A key distinction should be between situations involving bottlenecks and others where all users can easily switch or use several platforms. A bottleneck arises when each platform enjoys the exclusive rights for the conduct of transactions with some of its users. This gives some monopoly power on these transactions and we know that competition between platforms will not resorb it. We may then want to reduce this market power. This is similar to a one-way access problem familiar to telecommunication regulators.
Second, platforms providing free services to some sides rely on a limited set of instruments to coordinate users, which may not be enough to address issues of externalities. Indeed a good coordination of the sides would require as many prices (or subsidies) as there are sides. Free platforms by nature cannot pass on to consumers the true opportunity cost, which may induce excessive usage or may distort prices charged to other sides. This may induce inefficiencies and calls for special scrutiny.
Do you think that today regulators and competition authorities take sufficiently into account the specificities of multi-sided markets (provided you think they should)?
Regulators and competition authorities are now aware of the concept and its importance in some industries. However they lack tools and knowledge to incorporate this dimension in their analysis. I think this is a reason why we don't see as many applications to cases as we would like and why they prefer to rely on more conventional analysis. Some cases are more obviously two-sided than others, the credit card cases for instance. But even if the concept is not explicitly mentioned in decisions, it is often present in the reasoning (an example is the approval of the merger of the satellite digital radio services Sirius and XM by the FCC in 2008).
In platform markets, we observe some big multi-platform players, such as Apple, Google, Amazon, or Facebook, with distinct core businesses and overlapping activities. Do you think this multi-dimensional feature of the competition affects the ways these firms compete with each other?
I am not a specialist of strategy but I think this is the case. These platforms started with very different objectives and business models. This affects their priorities and strategies in terms of pricing, choice and organization of activities. Clearly Google Shopping is organized in a very different manner than Amazon marketplace, reflecting their different competencies and services. I always thought that part of the initial difference of strategies on e-books between Amazon and Apple was due to the expertise of Amazon in the domain of cultural goods.
Bruno JULLIEN is Senior Researcher at CNRS and the Toulouse School of Economics (TSE), and a senior member at Institut d'Economie Industrielle (IDEI). He is currently Scientific Director of TSE. His interests cover industrial organization, in particular in the domain of network economics, ICT and competition policy, as well as regulation, insurance and contract theory. He is recognized as a world leading academic researcher on the economics of two-sided markets, which he contributed to develop. Bruno Jullien has published numerous articles in renowned scientific reviews such as Econometrica, Journal of Political Economy, Review of Economic Studies, RAND Journal of Economics. He is currently co-editor of Journal of Economics and Management Strategy and associate editor of Geneva Risk and Insurance Review. He is Fellow of the Econometric Society, member of the Steering Committee of Association of Competition Economics and of the Economic Advisory Group on Competition Policy of the European Commission. He is a fellow of CEPR, CESIfo and CMPO. Bruno Jullien has also been advising firms and decision makers on regulatory and competition policy issues for more than 20 years. He graduated from Ecole Polytechnique, ENSAE and EHESS, and holds a Ph.D. in economics from Harvard University. He started his career as a researcher in Paris at CEPREMAP and CREST. He was also a Professor at Ecole Polytechnique. He joined the University of Toulouse in 1996. He has been Director of the research centre GREMAQ (1997-2004) and Deputy Director of Toulouse School of Economics (2010-2011). He received the Bronze Medal of CNRS, the "Palmes Académiques", the ACE best article award and the JIE best article award.
The Communications & Strategies No. 99 "The Economics of Platform Markets - Competition or Regulation?" is available!
DigiWorld Summit 2015
IDATE will contribute to the debate at the upcoming DigiWorld Summit on 17, 18 and 19 November, in Montpellier, with:
- Fatima BARROS, Chair BEREC
- Carlo d'ASSARO BIONDO, President EMEA strategic Relationship, Google
- Bruno LASSERRE, Président de l’Autorité de la Concurrence
- Eduardo MARTINEZ RIVERO, Head of Unit « Antitrust Telecom », DG Competition, EC
- Sébastien SORIANO, Président de l’ARCEP
Information & Registration:
Europe kicks off its review of the regulatory framework for electronic communications: issues and challenges
CEO, IDATE DigiWorld
The European Commission has officially begun a consultation on the new regulatory framework adapted to changes in the electronic communications sector
This review process, which is a regular occurrence in the life of European directives, is taking an unusual turn for at least five reasons:
1. It follows a less than glorious period during which the attractive idea of accelerating developments to achieve a single market for telecommunications led the Commission and its partners, the EU Parliament and Council, to devote many long months to endless negotiations over net neutrality and roaming in Europe. Ultimately, the Council approved a compromise-laden agreement, under terms that should also enable Parliament to bring its own Connected Continent negotiations to a close.
2. This review also comes at the end of a period of steadily decreasing revenues for telcos in Europe. IDATE forecasts that, even by 2020, the sector will not be back to 2008 levels. If we appear to be seeing the first hints of a recovery, it is still a slightly downhill slope for virtually every major European market. We could argue that this is due to disinflation and digital productivity factors, and point out, quite rightly, that it is margins that count. Margins are indeed getting back on track, but it would be difficult to argue that their decline over the past several years affected only dividends, and not investments as well. The top five European telcos’ combined CapEx on mobile systems in 2013 was only just over 50% of what carriers in the United States spent that year, on the same size population.
3. These problems, coupled with the restrictions inherent in deploying ultra-fast fixed and mobile networks, resulted in a series of primarily in-market mobile/mobile and fixed/mobile mergers and acquisitions, under financially favourable conditions. These deals did relieve competitive pressure to some degree, should helpto put an end to crumbling margins and should bolster operators’ spending. To date, they have not accelerated the creation of a single European market by triggering a wave of cross-border M&A deals, as the previous Commission had more or less explicitly hoped. We can nevertheless point out that, over the past several months, the sector’s regulation has been established largely during merger deals, and more as a result of decisions from the DG Competition and national competition authorities, than from the work of DG Connect and national regulatory authorities (NRA). It is worth mentioning that this has often been the case in the United States as well: one recent example being the approval given to AT&T’s takeover of DirecTV that was contingent on the carrier stepping up its fixe ultra-fast broadband network rollouts.
4. The previous review, and especially several EU recommendations, focused on working out the details of making the transition from regulation centred around accessing legacy copper networks, to regulation adapted to accessing new infrastructures. This issue is becoming more and more central, and is clearly the core concern of the current review. First, we are far from having achieved the objectives of the Digital Agenda, e.g. >30Mbps access for all Europeans by 2020, and a connection speed of 100Mbps and up for more than 50% of them. So the emphasis needs to be on provisions that stimulate competition, but also those that give market players incentives to invest. Second, the tremendous diversity in market configurations and technical options mean that, in terms of methodology, any regulatory guidelines that Europe adopts on ultra-fast broadband can only apply in a very general way. There are countries, such as Belgium, Denmark and the Netherlands, for instance, where competition comes down to a duopoly of cable versus the incumbent carrier’s superfast access networks, with all of the complex wholesale access issues this entails (on VDSL with vectoring, on cable systems, and in relation to new entrants’ investments in the ADSL unbundling market). Then there are other countries that have managed to increase connection speeds in part by investing in upgrades to the incumbent carrier’s network, while maintaining equal access rules for these infrastructures. Such is the case in the UK where, even though pushed to do so by BT’s rivals that were accusing the telco of a margin squeeze, a review conducted by Ofcom led the regulator to reconsider the principles of a managerial separation for Openreach. There is also the relatively singular case of France – even if there are some overlaps with the situation in Spain and Portugal – where the focus is on symmetrical regulation which, at least in the country’s largest cities, limits access to the indoor portion of FTTH networks, and promotes a sort of distribution of coverage initiatives depending on the location. Another singularity of the situation in France is the very high percentage of FTTH coverage achieved thanks to public-private partnerships. We should add that the review will not only have to take this patchwork of national circumstances into consideration, but also the emergence of very high-speed cellular networks with the launch of LTE Advanced and the first forays into 5G.
5. Lastly, the context has also been changed by the accelerated pace of the digital transformation in every vertical sector, and the growing influence of game changers such as mobility, the cloud, big data, etc. This new environment goes beyond the more or less clearly defined topic of level playing field, which had been confined to complaints over the imbalance in regulatory restrictions imposed on telcos and OTT. We can sense that regulatory imperatives are torn, on the one hand, between the desire to continue to restrain telecom markets that can be governed by ex ante regulation once effective competition is in place and, on the other, a tendency to want to apply this approach to all of the stakeholders along the value chain.
Clearly, there are many reasons to be interested in the regulatory review process that is underway. Talk will also focus on significant market power (SMP) and the three criteria used to test it, on harmonising spectrum policies, OTT-telco relations… But the process is proving more open and more complex than the last time around.
IDATE will contribute to the debate in various ways, through its publications (*), its market reports and its series of annual events. Let me take this opportunity to mention the outstanding panel of guests that will be on hand to discuss these very issues at the upcoming DigiWorld Summit on 17, 18 and 19 November, in Montpellier
• Fatima BARROS, Chair BEREC
• Sébastien SORIANO, Président de l’ARCEP
• Eduardo MARTINEZ RIVERO, Head of Unit « Antitrust Telecom », DG Competition, EC
• Bruno LASSERRE, Président de l’Autorité de la Concurrence.
Hope to see you there!
Director of the Innovation Business unit, IDATE
VOIP and instant messaging have not harmed EU telcos
IDATE has today published a new report, which shows:
• The introduction of VOIP and instant messaging have not harmed traditional European telcos and associated overall revenues
• In fact, there appears to be a small net benefit: losses to SMS revenues have been balanced by overall increases in revenue from data-tariffs -- driven by demand for services such as VOIP and instant messaging
• While there have undoubtedly been tough challenges for traditional telcos in Europe over the last 10 years, this report shows the biggest challenges have come from EU regulation and internal competition in the telecom industry, especially for voice calls (mobile termination, roaming, transition of telcos to managed VOIP, etc…)
The report does acknowledge that there has been some impact in two specific areas in Europe:
• In countries where SMS price was artificially high (in some cases more than 10 times the price of SMS in other European countries) the decline in SMS revenues was accelerated by instant messaging services, such as Whatsapp. However in countries where SMS has been cheaper or provided as part of an unlimited tariff, Whatsapp and other instant messaging services have had negligible impact on carrier revenues.
• VOIP calls have eaten into international voice calls but the relative losses here are small and in some cases the competing VOIP services have been provided by the carrier themselves.
> Written with financial support from Google, the report is available here.
> Indepth market elements can also be found in reports regurarly published in the DigiWorld Reasearh catalogue from IDATE: “Communication Services”
Senior Consultant, DigiWorld IDATE
A fast-growing market with 42 billion connected objects in 2015 and the promise of +14% annual growth up to 2025
IDATE has published its analysis of and forecasts for the global Internet of Things (IoT) market. An opportunity to deliver a synthesis of the Institute’s many reports on the matter (smart cars, M2M, smart grids, smart cities, smart toys…) to examine a market which, although developing rapidly, still raises a host of questions: is it really taking off, and how fast? Which business models seem the most reliable? Which market players and countries are in the best position to benefit from this new stage in the Internet’s evolution?
Although the Internet of Things is a powerful concept, it is not necessarily a market in and of itself. IoT encompasses a very disparate array of fields that need to be examined separately, to obtain an accurate understanding of their particular features, and their true growth potential.
IDATE forecasts that the global IoT market will grow from a base of 42 billion objects in 2015 to 155 billion in 2025, which translates into an average annual increase of 14%.
• Unsurprisingly, the Internet of Objects (IoO) represents the bulk of the IoT market (80%), thanks to its widespread adoption by a number of sectors, and to the very low cost of tags.
• The Connected information devices segment is the second largest in terms of volume, representing 13% of connected things, and set to grow by an average 13% a year up to 2025.
• M2M (machine to machine) represents only 6% of connected things today.
• And the smallest market in terms of volume is also the newest: Wearables & connected objects with 1% in 2015. But it is also the market that will grow the fastest over the next 10 years: by an average 30% per annum up to 2025.
World Internet of Things market, 2013-2025
Source: IDATE DigiWorld, “The Internet of Things”, October 2015
Compared to the size of the Internet of Objects and Connected information devices segments, the rest of the market is splintered between a host of vertical markets:
• the utilities market is reporting rapid growth, stimulated by regulations and public policies;
• the electronic equipment and automotive markets are also among the largest today, while the consumer electronics industry is incorporating connectivity into more and more traditional products, such as cameras.
The different sectors’ contribution to the global Internet of Things market, in 2015
Source: IDATE DigiWorld, “The Internet of Things”, October 2015
Is the IoT market changing shape?
To provide a clearer strategic analysis of this disparate set, IDATE has chosen to break down the Internet of Things market into four key areas. A distinction can be drawn between consumer and business products, on the one hand, and between the different types of connectivity, on the other:
• silo connectivity: a close loop of dedicated links between objects and servers, using direct connectivity or a hub, e.g. a smart meter or a payment terminal;
• interconnected connectivity: different types of communication between the objects themselves, mainly through the same hub, e.g. appliances in the home such as a washing machine that signals the end of the cycle on the TV screen.
The report provides a detailed analysis of the resulting, four key IoT markets:
• M2M, which covers production loops and closed loops based on applications;
• Wearables and connected objects which, by definition, do not talk to each other;
• Industrial Internet, which refers to the smart factory concept, with interactions between multiple applications that need to optimise their internal processes;
• The smart home, a concept under which applications can communication with one another without having to go through the Internet.
The Internet of Things market
Source: IDATE DigiWorld, “The Internet of Things”, October 2015
Connected Things Forum
These many facets of these topics will be explored at the Connected Things Forum on 18 November 2015, as part of the DigiWorld Summit, with:
• David d'AMORIM, Director of Innovation, La Poste
• Ezio ARMANDO, Managing Director in charge of Emerging Technologies, Accenture
• Xavier BOIDEVEZI, Vice President Business Development & Digital, SEB
• Bernardo CABRERA, Head of M2M Marketing & Projects Management, Bouygues Telecom
• Vincent CHAMPAIN, Operations Director, GE Corporate France
• Andreas FIER, Head of Academic Relations, Deutsche Telekom AG
• Didier GUILLOT, Innovation and multi-utilities Direction, director, Sagemcom
• Thibault KLEINER, Head of the Network technologies unit DG Connect, European Commission
• Ludovic LE MOAN, CEO, Sigfox
• Soline OLSZANSKI, VP Strategy & Innovation, Hub One
• Olivier ROUXEL, in charge of RFID & IOT assignments, DGE
• Marcus WELLER, Fonder & CEO, Skully
#DWS15 and on Twitter @DigiWorldIDATE
Directeur de la Business unit Territoires Numériques, IDATE
La Métropole de Lyon renforce l’attractivité de son territoire en investissant dans la desserte généralisée en fibre optique des entreprises, des sites publics et para-publics.
La décision de la Métropole de Lyon illustre l’implication des collectivités territoriales sur l’accélération des déploiements fibre sur les territoires. En effet, au travers de ce projet portant sur la mise en œuvre d’un réseau d’initiative publique (RIP), c’est l’attractivité et la compétitivité du territoire métropolitain qui seront renforcées.
La Métropole de Lyon (Grand Lyon), en attribuant à la société Covage, lors de son Conseil communautaire du 21 septembre 2015, sa délégation de service public très haut débit, entend accélérer la couverture fibre de son territoire. L’IDATE, qui a été l’assistant à maîtrise d’ouvrage de la Métropole de Lyon pendant toute la durée de la procédure, a participé à ce projet ambitieux qui permettra de desservir en fibre optique près de 100 zones d’activités, plus de 400 immeubles d’entreprises, plus de 1100 sites publics et para-publics.
Sur la Métropole de Lyon, la dynamisation des offres à très haut débit à destination des professionnels, des entreprises et des acteurs publics est attendue pour permettre notamment des raccordements sur fibre optique plus aisés et rapides, pour des coûts réduits.
L’Observatoire des RIP réalisé par l’IDATE au premier trimestre 2015 pour le compte de la CDC et de la Fédération des Industriels des Réseaux d’Initiative Publique (FIRIP) a mis en évidence que la présence des RIP sur les territoires permettait en particulier :
• Un foisonnement de l’offre des opérateurs, avec pour plus de la moitié des RIP la présence de plus de 10 opérateurs proposant leurs services pour les entreprises, les acteurs publics et le grand public.
Présence des opérateurs sur les RIP
Source : Observatoire 2015 des RIP réalisé par l’IDATE pour la FIRIP et la CDC
• Des économies substantielles sur les coûts télécoms supportés par le grand public, les entreprises et les acteurs publics : dans le secteur professionnel, c’est ainsi près de 60 M€ au niveau national qui sont économisés par les entreprises et les acteurs publics clients des offres à très haut débit fournies par les opérateurs présents sur les RIP.
Gains annuels sur les coûts télécoms pour le grand public, les entreprises et les sites publics grâce à la présence des RIP
Source : Observatoire 2015 des RIP réalisé par l’IDATE pour la FIRIP et la CDC et données Avicca
L'IDATE, renforce une expertise déjà bien reconnue auprès des collectivités et des Pouvoirs publics locaux et nationaux
Les consultants de la business unit Territoires Numériques de l’IDATE interviennent sur l’ensemble des problématiques numériques en offrant une palette de prestations répondant aux attentes de ses clients, dans les domaines des réseaux à très haut débit, des observatoires et de l'évaluation, du développement économique, et des schémas directeurs d'aménagement numérique.
Dans le domaine de l'aménagement numérique des territoires, l'IDATE a notamment réalisé les SDTAN de la Région Alsace, des Conseils Généraux du Gers, de la Lozère, du Val-de-Marne, du Val-d'Oise, de l'Essonne, de la Loire, du Territoire de Belfort et du Syndicat mixte de l'Aire Urbaine Belfort-Montbéliard.
L'IDATE est également conseil dans la stratégie Très haut débit (THD) et assistant à maîtrise d'ouvrage de la Région Alsace, de Rennes Métropole, ou encore de l'Etablissement public Debitex qui porte un projet de 80 000 prises FTTH sur 27 communes de la Seine-Saint-Denis et du Val-d'Oise.
ICT industry players vs. the new disrupters
From 17 to 19 November 2015, the 37th annual DigiWorld Summit will bring together 140 top-tier speakers from around the world to Montpellier, to share their views with the more than 1,200 participants from over 25 countries. French Tech will also be in the spotlight during the 2nd annual DigiWorld Week and at the inaugural DigiWorld Awards.
For IDATE Chairman, François Barrault, the theme of “Digital-First” – which was chosen in concert with DigiWorld Institute members – “refers to the tremendous rise of digital technologies in the business world, and huge changes in consumer behaviours. This astonishing acceleration is upsetting the status quo and shaking up the traditional economy, paving the way for new business models ushered in by the digital economy”.
Supervising the programme is IDATE CEO, Yves Gassot, drawing on IDATE consultants’ knowledge and expertise. “Once again this year,” says Mr Gassot, “the participants coming to Montpellier will get an invaluable, detailed snapshot of all of the latest digital industry events, thanks to the plenary sessions and the many forums, and to a large and prestigious panel of speakers from Europe, the United States and China who will be on hand to debate the multifarious questions raised by the ongoing digital revolution”:
• What are the promises of this new age of knowledge? with Jimmy WALES, Founder, Wikipedia
• How is the Internet changing the travel industry? with Peter VERHOEVEN, Managing Director EMEA, Booking.com and Alex SCHLEIFER, Head of Design, Airbnb
• How are veteran toy companies reacting to the video game invasion? with Dan JUDKINS, Head of Global Design and Development, Hasbro Inc.
• How are the Internet giants adjusting to the changes at work? with Carlo d'ASARO BIONDO, President EMEA strategic relationships, Google
• In with the new for a telco going global, with Michel COMBES, COO, Altice
• Is everything about to change for telcos? with Santiago Fernández VALBUENA, Group CSO, Telefónica
• What services will be attached to smart devices? with Bruno BARLET, Executive VP France, LEGRAND, Vincent CHAMPAIN, Operations Director, General Electric and Xavier BOIDEVEZI, VP Development & Digital, SEB
• Just how far can telcos go in helping their customers’ digital transformation? with Thierry BONHOMME, Senior Executive Vice President, Orange Business Services
• Do we really need new dedicated networks for the Internet of Things? with Geoff MULLIGAN, Chairman, LoRa Alliance and Ludovic LE MOAN, CEO, Sigfox
• Will the next Netflix come from China? with WEN Rui, Director of national Business Development, Youku Tudou
• Will new gen mobile TV be the new killer app for video? with Richard LUCQUET, Director, Business Development Technology Partnerships & Licensing, Oncue (Verizon)
• What does the future hold for a top, integrated telecom equipment supplier? Vincent PENG, President Western Europe, Huawei
• Does regulation need to adapt to Internet rules? with Fatima BARROS, Chair 2015, BEREC, Sébastien SORIANO, Chairman, ARCEP and Bruno LASSERRE, Chairman, French competition authority
• Can we count on digital markets to deliver a new period of growth? with Georg GRAETZ, Associate-Labour Markets, London Economics School and Jean-Hervé LORENZI, President, Cercle des Économistes
• As well as: Accenture, BBC, Bouygues Telecom, Deutsche Telekom, Ericsson, France Télévisions, edX, IBM,
• JC Decaux, NEST, Nokia, Qualcom Life, SEB, SNCF, Studio Bagel, Wilseed Studio…
The DigiWorld Summit programme has grown in 2015, to give us a chance to explore the ins and outs of the tremendous and wide-reaching effervescence at work in digital industries today: “This is why we are hosting the second annual DigiWorld Week, which was designed as a collaborative space for partner events. We will also be hosting the first ever DigiWorld Awards, which were created to identify and reward French talent abroad, with special guest, Axelle Lemaire, French Minister of State for the Digital Sector,” explains IDATE’ deputy CEO, Jean-Dominique Séval.
> View the complete programme at:http://digiworldsummit.com
DigiWorld Week 14 – 22 November 2015
IDATE expands on the two days of the DigiWorld Summit, and plays host to an exciting event-filled week. Delving deeper into the issues and shaking up ideas through symposiums, workshops, hackathons, exhibitions, festivals, master classes, digital café… Exploring a host of topics, including the cloud, IoT, eHealth, FX, digital arts, smart agriculture, management, …
> Get the latest news at: www.digiworldweek.com
DigiWorld Awards 19 November 2015
In partnership with Business France and French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising French digital start-ups (Equipment and devices, Networks and telecoms, Internet services and application, M2M and IoT…), created abroad. Awards will be in four categories: Africa and the Middle East – The Americas – Asia – Europe. The winning start-ups will be added to the international innovation support programmes being run by Accenture, Capgemini, Ericsson and Orange.
> For more details: http://www.digiworldsummit.com/awards
Follow us on Twitter: @DigiWorldIDATE
Senior Consultant, DigiWorld IDATE
SDN and NFV, Cloud computing, OSS/BSS are leading priorities for telcos
IDATE publishes a market report on the network technologies deployed by telcos to tackle the current technical and economic stakes. The report explores how the technologies answers telcos’ needs while analyzing their impact on the industry ecosystem.
Face to the high consumers’ expectations in terms of experience, the transformation of network architecture remains at the heart of telecom operators’ priority. Indeed, network infrastructures are being assailed by the new constraints of applications, and by users’ demands for higher bandwidth and better quality. In the very competitive market and in order to save costs, telcos are working to optimize their investments in infrastructure while generating new revenue streams. Thus, optimization technologies in the network architecture have been taken into account with the integration of traffic and policy management, video optimization and OSS/BSS in the current telecom network infrastructure with the main upcoming disruptive technologies: cloud computing, SDN (Software-Defined Networking) and NFV (Network Functions Virtualization).
Indeed, there is a clear priority for the implementation of cloud computing in telcos’ network making it cloudified, virtualized and software-based networks. Preparing the transition with SDN and NFV is considered as a key part of major telcos’ global strategy detailed in Telefónica’s UNICA and in AT&T’s Domain 2.0 programs.
• Cloud computing equipment market will hit 45 billion EUR by 2019
• SDN and NFV equipment market will experience an annual growth rate of 53% per year between 2015 and 2019 and is seen as the most dynamic market among the network optimization technologies studied in the report.
These disruptions generate substantial changes in the network industry, with an acceleration of the convergence between IT and telecoms as telcos increasingly implement technologies under the form of software and applications shaking up the ecosystem. Core businesses of traditional equipment makers are particularly affected due to the value shift currently happening in the telco sector. Equipment suppliers need to redefine their strategies and to position themselves around the cloud, software and services while new suppliers from IT have been introduced in the carrier infrastructure ecosystem.
In the report, IDATE provides a database with forecasts of network optimisation technologies up to 2019 covering 3 regions – North America, Europe and Asia Pacific – and global consolidated. Overall, for each of these regions, 7 segments are forecasted - traffic and policy management, Telco Wi-Fi, Mobile backhaul, Video infrastructure, SDN/NFV, cloud computing and OSS/BSS.
Also included in the package, status of the art of each network optimization technologies market as well as telecom equipment makers’ strategies for 5 players including Cisco, Ericsson, Alcatel-Lucent, Huawei, NSN and strategies of major telecom operators for 7 players including AT&T, DT, Orange, Telecom Italia, Telefonica; Verizon and Vodafone.
Find out more in our dedicated market report
Senior Consultant, IDATE
Internet is becoming not-so-free
Internet Giants are increasingly finding themselves under scrutiny for unfair competition and tax issues – what was once regarded as a free OTT ecosystem is now facing regulatory challenges. Internationally operating players working in various domains and geographical locations are complicating this regulatory challenge, with different cultures and market conditions requiring different approaches.
While this past decade has seen a completely new economy evolve based on the Internet and OTT players (remember, Google’s IPO was only just over 10 years ago), new challenges have also been created by this phenomenon, one of which is regulation. Until recently, new Internet services and business models were being actively encouraged, with the aim of helping to galvanize the economy; however, there is now simply too much revenue involved and more regulatory intervention is becoming inevitable.
Major OTTs diversifying into various service domains
Source : IDATE, The Future Internet in 2025, July 2015
The domains in which regulation on OTTs is currently gathering the most urgent attention are the fields of taxation and fair competition, the regulatory needs being brought about by the sharp rise of leading sharing economy players such as Airbnb (accommodation rental platform) and Uber (car sharing application), where users can offer a spare room (Airbnb) or a car ride (Uber) between end users as opposed to using standard (more expensive) channels such as hotels and taxis. Such players are not required to work under the same rules as those of their traditional counterparts; licenses are not needed, insurances are not taken care of and rigorous safety concerns are not necessarily required. Further, tax issues are often overlooked, with many sharing economy participants not even aware that there is tax involved; they simply do not have the mindset that they are participating in a revenue-generating business, but are simply “earning a few bucks” in a relatively hassle-free manner. This then leads to an unfair playing field, giving the OTTs an unfair advantage over their traditional counterparts.
The regulatory response to these players currently varies from one country to another, or even from state to state in the larger countries.
• Citing the unfair competition landscape, Uber has been banned outright in Spain, whereas in Italy the application is allowed and the noise coming from the Italian government appears to be supportive of Uber, considering modifications to their regulation to make it easier for them. These are exceptions to the rule, however, with most governments placing an intermediate ruling whereby Uber is allowed but only for licensed drivers.
• Tax collection remains a hot topic, especially for Airbnb where local transient occupancy taxes (“hotel taxes”) are compulsory for all listings yet collection remains difficult. While initially Airbnb stressed that they were not responsible for the collection of the taxes, their stance has softened recently and since the latter part of 2014 they have started to automatically collect and remit the hotel tax in some areas, such as San Francisco and Amsterdam. It is understood that they are continuing negotiations with various other cities also.
It should be noted that while it is these startups that are causing the OTT regulation debate of tomorrow, the large Internet giants and in particular Google are also under scrutiny for unfair competition and tax issues. However these issues have been under investigation for a number of years and are evolving, albeit slowly, with occasional developments from time to time. The same can be said for regulatory debates on the likes of net neutrality, data protection and intellectual property (copyright) issues.
Europe is still debating over which approach to adopt
Such developments in the debates often come from the same countries, with the likes of the US, France, Germany, Spain and the Netherlands often ahead of the rest when proposing and/or enforcing OTT regulation. In addition to what has been mentioned above, net neutrality has continued to make headlines. While Europe is still debating over which approach to adopt, the United States has recently made a bold move by reclassifying broadband as a telecommunications service, thereby paving the way for strict net neutrality regulation. In Europe there are moves by the European Union as a whole, such as the proposed reform of the data protection directive, but some countries stand out more than others. The Netherlands, for example, were the pioneers of net neutrality deployment and the first country to introduce an “Airbnb law”, legalizing the business in exchange for tax payments. Germany has been strict on Uber, at one point banning the service as in Spain, although this motion has been overturned (for now), while both Germany and Spain have ruled that Google are required to pay for information published on Google News. France has strong legal frameworks on many OTT related domains, and is also at the forefront of debates concerning sharing economy players.
Find out more on Net Neutrality and key stakes for tax optimization, privacy, copyrights and other topical issues surrounding OTT regulation in our dedicated market report
Senior Consultant, IDATE DigiWorld
They have minimal impact on traditional telecom markets
In 2014, the OTT communication services market (the total of OTT revenues generated from VoIP, IP messaging and a share of social networking) will have surpassed 10 billion EUR. Growth is expected to continue and the global market value will reach 23.7 billion EUR by 2018, representing a CAGR of 21.6% from 2014 to 2018. Still, OTT counts for only a very small proportion of market value compared to that of the telcos.
What are the impacts of OTT communication providers on the telcos from a market value perspective? The figure below provides IDATE figures for both telco communication revenues and OTT communication revenues for the period 2012 to 2018. Telco communication revenues are composed of fixed telephony revenues, mobile voice revenues and mobile messaging revenues. OTT communication revenues are composed of VoIP, IP messaging and a part of social networking revenues (as already explained in detail in section 3).
Source: IDATE in OTT Communication Services, December 2014
The reality here is that compared to telco communication revenues, OTT communication revenues remain very marginal. As has already been seen, the OTT communication market value is set for growth with CAGR of 21.6% from 2014 to 2018. Still, looking at the big picture, even in 2018 OTT communication will only account for 3% of the total market.
Further, IDATE forecasts that the telco communication market will not decline over this period of time, although it will not particularly grow either, with a CAGR of 0.2%. As a result, the total communication services market (telco and OTT combined) is expected to see a CAGR of 0.6% from 2014 to 2018.
Judging from these figures, IDATE believes that the communication market is not a simple case of “OTTs taking away revenues from telcos”, which is the often-painted picture of the market. Rather, it is a case of the telcos maintaining their current market values, while OTTs are growing their market value by themselves.
Find out more about VoIP, IP Messaging, Social Networks and the main market players’ strategies in our dedicated market report