Frédéric Pujol, Head of the mobile services, IDATE DigiWorld
Europe’s future society and economy will rely heavily on 5G infrastructure. The impact will go far beyond existing wireless access networks, with the of having faster communication services that are available everywhere, all the time.
5G is a real opportunity for the European ICT sector, which is already well positioned in the global R&D race. 5G technologies will be adopted and deployed globally in line with the needs of developed and emerging markets.
While many of the technical aspects attached to 5G are scaling up globally, requirements analysis for key vertical sectors is progressing rapidly. The emergence and deployment of 5G technology is likely to trigger innovation in the industry, thus leveraging sustainable societal change.
There is a vision for 5G to become a stakeholder-driven, holistic ecosystem for technical and business innovation, integrating networking, computing and storage resources into one programmable and unified infrastructure. In addition, thanks to real-time and larger traffic volume capabilities, 5G is expected to enable the transport of software to the data rather than the other way round, i.e. executing software on the device where the data are produced instead of sending all data to a centralised datacentre – thereby paving the way for new opportunities in the cloud computing market, where European companies could gain a significant market share.
In the long run, it will not be enough to explore the requirements of vertical industries, and a proper analysis will also need to be conducted of market trends to sense new, upcoming technology, especially from companies outside the industrial mainstream. Potentially disruptive technologies typically go widely undetected by the established industry, but clearly have a real potential to become engines of significant technical change and innovation. Unanticipated 5G features are likely to emerge from future technological, legal, societal and socio-economic considerations
DELVE DEEPER WITH THE FOLLOWING IDATE DIGIWORLD MARKET REPORTS
World LTE market & MBB spectrum: Markets at June 2015 & Forecasts to 2019 Players - Technologies - CapEx – Pricing – Dec. 2015
Key outcomes from WRC-15: Four years to pave the way for the future of telecoms, Feb. 2016
The global revenues from telecom services will grow from 1,174 billion EUR in 2015 to 1,293 billion EUR in 2020
Head of Strategies Telecoms Business Unit , IDATE DigiWorld
With revenues from mobile services as principal growth engine, which will grow by 14% between 2015 and 2020 (+2.8% per year on average), and reaching 814 billion EUR in 2020.
With global penetration more than 100% in 2014, subscriber growth is expected to gradually slow down over the next few years. The number of fixed Internet subscribers is increasing at roughly the same pace, but customer numbers are eight times smaller. The one billion mark is not expected to be reached before 2020 and traditional landlines continue to loose ground as VoIP and mobile gain ground.
The spread of broadband
the number of fixed broadband subscribers is expected to reach 1 billion worldwide by the end of 2019. The number of LTE customers is shooting up, with services based on carrier aggregation no longer being limited to just the more developed countries.
Three major factors will play in favour of the spread of broadband:
• The success of bundled offers (fixed telephony, VoIP, TV, mobile telephony) and the appetite for video applications.
• The investment of telecom operators in the migration of their infrastructures to mobile or fixed broadband.
• The comfort provided by ultra-fast mobile broadband and the new uses it enables.
Revenue from telecom services
The global revenues from telecom services will grow from 1,174 billion EUR in 2015 to 1,293 billion EUR in 2020, representing an average annual growth of 2.0%.
• Revenues from mobile services will grow by 14% between 2015 and 2020 (+2.8% per year on average), reaching 814 billion EUR in 2020.
• Revenues associated with data transmission and Internet will grow more strongly (+21% between 2015 and 2020, i.e. +4.3% per year on average), to reach 344 billion EUR in 2020.
• Revenues from fixed telephony will continue to decline significantly (-23% between 2015 and 2020, i.e. a decline of 4.6% per year on average), to be at 135 billion EUR in 2020..
Disparate performances from operators in emerging countries
Top telcos in emerging countries continue to suffer from a sudden halt in value growth. China’s three operators in particular have seen virtually no progress: China Unicom actually reported a 3% drop in revenue. Their margins are come in line with industry standards: between 30% and 40% of EBITDA margins.
Several of these operators are actively engaged in an international expansion into Africa and Latin America, but also into advanced markets, particularly in Europe.
European operators starting incrementally to get back on track
Telcos in Europe are back on a growth path. If most of the top carriers are still reporting decreasing revenue, some are seeing an increase, notably Deutsche Telekom, Telenor and to a lesser extent Orange, thanks to their international operations. Their spending on LTE and superfast fixed access networks (FTTx) has not yet paid off and helped to bolster ARPU.
Debate over the crucial role that trust will play in the digital economy’s future
The 38th annual DigiWorld Summit will run from 15 – 17 November 2016, and have as its central theme: The Internet of Trust. It will be an opportunity to engage in a meaningful international debate over digital trust issues – starting with security and privacy – which have become major sources of concern for all of the ecosystem’s stakeholders.
As the number of reported cyber-attacks worldwide is growing by close to 40% a year, we expect that upcoming stages in digital technologies’ evolution will only amplify the phenomenon. And this to such an extent that any future scenario is possible: from a continuation of the current chaos to a breakdown in trust that would lead to the construction of a new digital economy, which will no doubt differ in many respects from the one we know today.=
• Are we reaching a tolerance threshold for online trust?
• How can veteran digital industry players (equipment suppliers, telcos, IT companies) capitalise on the current climate?
• Are verticals threatened by the situation or, on the contrary, on the winning side of trust and security issues?
• Do we need a new regulatory framework to govern, or reassure, market players and consumers?
> Including the 120 speakers on this edition:
• Eva BERNEKE, CEO, KMD
• Anne BOUVEROT, CEO, Morpho
• Isabelle FALQUE-PIERROTIN, Chairwoman, CNIL
• Pierre, CHAPPAZ, Co-founder & Executive Chairman, Teads
• Didier LAMOUCHE, President & CEO, Oberthur
• Joseph LUBIN, Founder & CEO, ConsenSys, Co-Founder Ethereum
• Carlos LOPEZ BLANCO, Global Head, Public and Regulatory Affairs, Telefónica
• Stéphane RICHARD, Chairman & CEO, Orange
• Corrado SCIOLLA, President Europe, BT Global Services
• Nicolas SEKKAKI, CEO France, IBM
Choosing the theme for the 2016 DigiWorld Summit came about quite naturally. The vast majority of IDATE DigiWorld were eager to tackle the topic of trust.
For some time now, trust has been recognised as a vital ingredient in the success of a brand, an economy or a society. This is all the more true in a world being transformed by digital innovation. In its scenarios for 2025, IDATE DigiWorld underscored that trust was one of the key variables in tomorrow’s digital ecosystem. To shore up this belief, we need only look at some recent headlines:
• the cyberattacks against telcos, TV networks and government agencies,
• the legal wrangles between Apple and WhatsApp and government authorities wanting access to the encryption key for the devices or messages;
• the very drawn out European Union negotiations over new data protection rules;
• the end of the Safe Harbor transatlantic agreement and ensuing debates over the new Privacy Shield;
• questions over the dangers surrounding connected/driverless cars, and the growing ubiquity of the IoT in general;
• the ad–blocking phenomenon;
• questions over what impact multiple FinTech solutions will have on the soundness of the banking system, and blockchain’s ability to replace today’s trusted third parties;
So trust is a focal point for telcos, cloud computing companies, Internet giants, start–ups, governments and regulators, but also for every economic sector across the board, not to mention consumers and citizens.
And, as always, acknowledging risk must not prevent us from also analysing opportunities, in terms of innovation, differentiation strategies and the competitive advantages available to many market players.
Once again this year, the vital meeting place that this international conference has become, will include plenary sessions that will provide a springboard for a series of high–level specialty forums. These forums are an opportunity to delve deeper into the main trends we expect to see in mobile networks with the advent of 5G, ultrafast broadband, the Internet of Things, the TV market’s transformation in Europe, FinTech, video games, the digital promise in Africa and what makes a smart city.
A unique international forum for debate and networking
|> DigiWorld Week
A week devoted to understanding what makes our new digital world tick (12 – 20 November 2016)
|> The DigiWorld Awards
Recognising the best digital start-ups created by French entrepreneurs abroad
Key facts & figures
Europe’s trailblazing conference on the digital economy
The DigiWorld Summit is an annual event organised and hosted by IDATE experts, with the support of DigiWorld Institute members. Every year it holds ultra high-level international debates on the core issues shaping the digital economy, with the finest speakers and industry insiders.
• Participants: 1,200 participants at the DigiWorld Summit and more than 5,000 at DigiWorld Week
• Speakers: 120 speakers from around the world; 400 at DigiWorld Week
• Partners and sponsors: over 100 partners and sponsors (businesses, public sector, media…)
• Social media: 15,000 tweets (trending topics) and 2,000 live followers
For more information, visit our website: www.digiworldsummit.com
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.
Director of Studies, IDATE DigiWorld Contact
Fixed LTE will be definitly part of the game: by the end of 2020 we forecast, overall, almost 5 billion LTE SIMs worldwide or 78% of total SIMs.
The fixed-mobile convergence has been trending for years. The opportunity to use LTE and its evolutions as a solution for providing high-speed Internet access at fixed locations has raised generated much interest in the last two to three years.
The use of LTE for fixed access makes sense. The elements to make adoption possible are there. Throughputs delivered over LTE are on par with fixed ones or are expected to be on par in the medium term. Population coverage is almost universal and will continue to increase to cover hard-to-reach areas. LTE fixed monetisation without any data caps is another valuable asset. All the lights will be on green when coverage reaches rural areas thanks to low spectrum use or to government push.
On the technological side, fixed LTE holds many virtues over WiMAX, satellite, mobile LTE or XGP/AXGP technologies even if there are no real specificities to fixed LTE when it comes to standard.
• Fixed LTE networks are basically just LTE networks addressing fixed users. Fixed LTE retains mobile LTE advantages in terms of throughputs/capacity and latency. Population coverage is likely to remain a weakness. It is not really a different technology from mobile LTE but it is to be implemented in very different ways when it is provided as a fixed-only technology or as a complement to a mobile network. Other fixed LTE advantages include:
• Higher power emission levels than for mobile LTE leading to improved signal quality.
• Mobile LTE is mostly operated on FDD mode and on TDD for fixed LTE. Fixed LTE could be mostly operated on TDD mode which is better suited for providing Internet access than FDD. Higher frequencies considered for fixed TDD LTE notably in 3.5 GHz, 2.3 GHz and 1.4 GHz bands or in very high frequencies necessitate heavy deployment of small cells for blind-spots coverage and the use of satellite to handle tightened backhaul issues.
• Hybrid solutions combining xDSL and LTE show similar strengths to fixed LTE with slightly higher latency. They are gaining traction with some commercial launches in Europe.
• Satellite and especially new LEO satellite constellations can likely offset the relative weakness of fixed LTE in terms of population coverage.
Favourable market dynamics have pushed a number of players to jump onto the bandwagon. They aim at either enlarging their customer base, giving a boost to revenues (MNOs, integrated players, satellite), or taking a chance to remain a market disruptor and eating into mobile revenues (OTT), or at repositioning themselves in case of an upturn (LMDS players, PHS or WiMAX providers and CDMA2000 450 MHz players). CDMA2000 players are migrating towards LTE in the 450 MHz band. Former PHS (Japan) or WiMAX providers also see real opportunities in shifting towards fixed LTE. Manufacturers offer fixed LTE solutions to meet market demand and help operators close the gap between investment and returns.
From a commercial perspective, the door is open for fixed LTE as a mid-term solution whose business case however is rather limited in developed countries, mainly focused on connecting the un- or under-connected in rural areas. In developing countries where fixed broadband is really limited, the market for fixed LTE is more promising.
Head of Wireless Business Unit
Regional initiatives on 5G are already under way in Japan, South Korea, China, USA and Europe. Cooperation is also being established between these regional initiatives in order to foster R&D and standardization work.
Even though standardisation for 5G has not yet started, there is already a broad consensus on what kind of performance 5G technology will have to support.
• 5G will have to be suited to a whole raft of services, ranging from consumer services to any vertical market in the industry, going through public safety organisations. Whereas 4G was rather conceived purely as a mobile broadband technology, 5G will have to be flexible enough to allow new services or business models to emerge.
• 5G will thus have to function on any kind of spectrum, be it low or very high spectrum, shared, licensed or unlicensed. It will need to collaborate more easily with other technologies (terrestrial or not), perform perfectly in both densely-populated and rural areas, and operate in traditional cellular mode as well as in new mode, such as in mesh/relay mode when necessary.
• 5G will also have, of course, to be more spectrally efficient but also more energy efficient to allow new use cases, new devices or objects to emerge and communicate with the resources available. Together with energy efficiency, cost efficiency will play an important role in 5G.
• In terms of concrete specifications, METIS, the EU-funded project, defines 5G as a technology to support mobile data volumes 1,000 times higher per area; numbers of connected devices 10 to 100 times higher; typical user data rates 10 times to 100 times higher; battery life 10 times longer for low power MMC; and end-to-end latency five times lower.
5G will not just be about improved throughputs but about the good throughput for the right user, on average and not just in theory. Although 4G has improved throughputs quite a lot as compared to 3G, there is a sizeable difference between peak throughputs and average throughputs. As an example, with 5G, the target is to provide 50 Mbps connectivity everywhere, thus addressing both coverage and capacity issues.
The efforts to reach standardisation of 5G will begin with the Release 14 of LTE but will continue in further releases. The 3GPP has started to make plans for its upcoming standardisation with the submission of the technology to the IMT 2020 process in ITU-R. Under 3GPP plans, work on requirements should start by the end of 2015, lasting until end-2017, when proposals should begin for standardisation work to gradually start in the first half of 2018, lasting until 2020. This standardisation process should first enable 5G deployment below 6 GHz while the final specification will have to enable the support for all the candidate bands.
The IMT-2020 requires that the technology be submitted by June 2019 with a high-level description, and by October 2020 with a complete description. The first submission is aimed at enabling an initial evaluation of the technology against the IMT 2020 requirements. The initial plans of 3GPP are to have the technology in frozen stage by December 2019.
Looking further into details, the various initiatives worldwide do agree, relatively speaking, on the same roadmap to be followed. There should be an initial focus on mobile broadband use case in order to secure the transition between LTE and 5G since this is the main LTE use case.
In this first phase, the focus would be on lower frequencies but there does not seem to be any consensus on what ‘lower frequencies’ means. Some players – a minority of them, it should be said – consider that these development and standardisation efforts should focus on frequencies below 6 GHz while others, such as Ericsson, Nokia and Qualcomm, think that the frequency bands between 3 and 30-40 GHz should be addressed straight away in the first phase while the second phase would address the whole frequency range envisioned, i.e. from 1 GHz to 100 GHz.
Learn more about the nascent 5G framework in our in-depth market report
Directrice d'études, IDATE DigiWorld
What will the Internet look like in Africa and the Middle East?
The IDATE DigiWorld teams of experts have published the second edition of the special report exploring the ins and outs of the digital economy in Africa and the Middle East
By and large, Africa and the Middle East are experiencing the same market shifts that telecom services in the West have undergone over the past two decades, albeit in their own particular way: slowing growth rates due to a relative saturation of the mobile telephony market, which is the sector’s chief driving force, combined with often stiff competition that weighs on margins. And a body of users that still remains to be conquered who have more modest purchasing power than operators’ existing customers.
Sub-Saharan Africa: the world’s fastest growing Internet access market
Forecast average annual growth rates
Under these circumstances, the transition to mobile data services, thanks to expanding 3G coverage and the deployment of 4G, marks a natural and promising progression. We expect to see the strongest increase in Internet access of anywhere in the world, particularly in sub-Saharan Africa, both because these countries lag so far behind and because of growing demand amongst the local population. The availability of smartphones that are affordable for a large percentage of the population, combined with initiatives such as Zero rating for basic service bundles, are helping things along. As a result, high-speed mobile density could climb from 20% in 2015 to 44% in 2019. However, it is not yet certain that this growing Internet market will allow the region’s telecom services industry to maintain the roughly 5% annual growth rate that it did from 2010 to 2014. We must also factor in demographics and steady economic growth – which, although still not strong enough, is nonetheless substantial compared to what we are experiencing in Europe – along with other elements that should enable Africa, on the whole, to avoid the long slump that telcos in Europe have suffered.
In addition to outfitting cities with Internet access infrastructure, attention needs to be paid to – and original solutions devised for – rural areas that must not be overlooked, so that the pace of the population explosion in cities can be reined in.
There is no shortage of proof that Africa and the Middle East are capable of real innovation in multiple digital economy sectors
Faced with these imperatives, the ability to finance massive investments in 3G and 4G cellular network rollouts, in national and regional backbones, and in the equipment needed for businesses (optical and satellite connections in business parks and districts, cloud solutions) require operations to be optimised so that margins can improve. Outsourcing and sharing tower infrastructures, consolidation in markets with too many players with a tiny market share, initial and ongoing training of personnel, and the search for synergies with electricity supply programmes are among the core paths to advancement that businesses and public policies will likely focus on. As in other markets, the importance of stable and balanced regulation that establishes a strong interplay of competition policies and support for investment and innovation cannot be underestimated.
Evolution of fixed and mobile usage and density
Lastly, telecommunications policies do not exist independently of the social, economic and regulatory issues surrounding usage and the development of innovative online services. We already have proof that Africa and the Middle East are capable of innovation in a number of digital market sectors. Mobile payment and money transfer solutions, in a region where banking structures are often lacking, are among the most oft cited examples, along with applications devoted to development, education, sustainable farming, managing utilities (water, electricity), health and tourism.
But we also need to add e-commerce and entertainment to the list, thanks to the first video game hubs in South Africa in particular, and those that have ties to well established film and TV production conglomerates. The countries are not all progressing at the same pace, and not all enjoy the same political stability, but our optimism forces us to see positive signs in the clusters emerging in certain markets, in the first incubators, the trading and collaboration networks being forged at the regional level, in some instances with the support of Internet heavyweights from the West now staking a claim.
Mobile density in Africa & the Middle East
Director of Studies, IDATE DigiWorld
In developed countries, the broadband market’s evolution is being shaped by the transition to superfast broadband (SFB) and by fixed-mobile convergence. Telcos have to react – especially on the verge of continuous consolidation in the communications industry. In 2015 merger & acquisitions already shook up markets profoundly.
In both fixed and mobile access markets, the trend is one of increasing speeds, and especially the transition to superfast access (>30 Mbps) thanks to NGA network rollouts. But each is progressing at its own pace.
In the mobile sector, LTE rollouts are progressing rapidly, and subscription rates in Western countries are already high. It is safe to say that 80% of residents in Japan, South Korea, North America and the biggest European markets will be covered by LTE networks by the start of 2016, as will roughly 60% of the people in China. In addition to rapidly reaching 90+% coverage in the most advanced markets, LTE will steadily enable increasingly fast connection speeds: in excess of 30 Mbps thanks to frequency aggregation, more base stations in urban areas and the use of small cells combined with wide channels in high frequency bands. Starting in 2020, these developments will fold into 5G rollouts which are expected to deliver Gigabit-class datarates.
A comparison of fixed and mobile coverage in some of Europe’s largest markets (30 Mbps in LTE and FTTH/B), 2012-2020
Source: IDATE, LTE vs. fibre, December 2015
• Progress is slower in increasing fixed network coverage rates. It is also more complicated since it involves a mix of technologies that is specific to each national market. Schematically speaking:
- VDSL technology, which uses the legacy copper network’s local loop at least partially, makes it possible to achieve speeds of >30 Mbps, and even in excess of 50 Mbps, thanks in particular to developments such as vectoring and bonding;
- DOCSIS technologies, for cable companies that reuse the last mile of TV broadcasting networks’ coaxial cable. The vast majority of them are already selling plans with a speed of more than 100 Mbps and Gigabit-speed plans are soon to follow;
- FTTH technology which requires massive investments and a good deal of time to deploy fibre to customer premises. These systems deliver a headline speed of 100 Mbps and will be upgraded steadily to Gigabit-speed access.
• In advanced markets, fixed and mobile NGA rollouts will go hand in hand, even if preliminary observations and forecasts give superfast mobile a slight edge in terms of pace. The current situation is giving rise to fixed-mobile convergence strategies, which are clearly illustrated in Europe through the recent spate of merger and acquisition deals.
The impetus behind the convergence trend can be found in the resulting advantages:
bundles and cross-selling synergies in customer accounts, online and brick-and-mortar shops, applications and video content;
integrated approach to fixed and mobile infrastructure: sharing backboning, though Wi-Fi which is now an effective bridge between fixed and mobile and, more and more, the savings generated on backhauling with the increasing use of small cells in densely populated areas, and through sharing SDN/NFV software infrastructures. Eventually, mobile services will represent a significant percentage of fixed network revenue, while the latter will provide short-range wireless access.
• The countries where fixed-mobile convergence is the furthest along are Spain and France, where more than 40% of subscribers use the same operator for their fixed and mobile services. But there is also a general trend in Europe of markets being gradually structured around integrated fixed-mobile operators, as the result of an ongoing series of mergers and acquisitions.
• The trend is less prevalent in the United States due to the fragmentation of wireline telcos, cable companies and mobile operators which often have only regional or local footprints. But US cable companies are investing in Wi-Fi and showing an interest in mobile services (Comcast) while AT&T, by taking control of DirecTV, is integrating fixed and mobile products at the national level.
• As a small percentage of areas in advanced countries will probably still remain uncovered by operators’ FTTH/B networks in 2020, wireless access and especially LTE will likely be sold as a substitute, alongside satellite access plans and in some instances with hybrid LTE/DSL routers. This configuration is already being tested by several operators in the United States and in Europe. Added to this is the swath of customers in urban areas who have only a mobile subscription, even for their Internet access. The availability of additional spectrum resources, and notably in the 700 MHz band, often attached to obligations to cover more sparsely populated areas, should also facilitate this approach.
• In emerging economies and especially in Africa, Internet access – which today is still confined to a fraction of the population – will be delivered primarily through the expansion of 3G and the deployment of LTE networks. But the needs of businesses and city demographics will progressively generate investments in wireline fibre networks, and set off a fixed-mobile convergence trend.
Find out more on Fixed-Mobile Converges and the latest trends and figures for LTE and FTTx in our dedicated market report
Head of radio technologies & spectrum practice, IDATE DigiWorld
IDATE has just released a report on “Mobile operators’ investments”
This paper, published with the support of Ericsson and Qualcomm, investigates the level of mobile revenues, investments (Capex) and usage in Europe, as well as the interrelation between those metrics. The study compares the EU5 (France, Germany, Italy, Spain and the UK) with the other world mobile leaders, namely the USA, Japan and South Korea.
The results show that Europe is falling behind other regions in the use of mobile technology to benefit businesses and consumers and may be jeopardizing the region’s future ability to fully take advantage of evolving wireless technologies. The relative decline of revenue in recent years for Mobile Network Operators (MNOs) appears to be due to policy decisions aimed at maximizing short-term consumer benefits at the expense of long-term investment incentives. The data suggest this strategy is backfiring. The lower revenues in Europe have deterred MNOs from investing, which in turn delays the roll-out of networks and the adoption of services by consumers. Consequently, the unit costs of some services to consumers are higher than in other regions.
Investment in mobile communication infrastructure creates local employment and significantly contributes to growth, as an enabling factor for the digitalisation of other industries.
The Digital Single Market initiative is an opportunity to adopt a pro-investment and pro-innovation mobile regulatory framework, enabling Europe to lead in mobile communication through its attractive market size, growth potential and technology expertise. The findings and data of this study suggest consumers, businesses and individual European economies will benefit from policy makers’ adoption of a balanced regulatory framework that encourages investment in mobile infrastructure and technologies.
DigiWorld Summit 2015
IDATE will contribute to the debate at the upcoming DigiWorld Summit on 17, 18 and 19 November (Montpellier): “Digital Infrastructure” with:
• Michel COMBES, COO, Altice
• Thierry BOHNOMME, Senior executive Vice President, Orange Business Group
• Santiago Fernandez VALBUENA, Group Strategy Officer, Telefonica
• Alain FERRASSE-PALE, President & Managing director, Nokia France
Information & Registration:
Head of radio technologies & spectrum practice, IDATE
Now mainstream for MNOs and key issue for smart city
Mobile data traffic is continuing to grow fast. To cope with the data surge, MNOs are in a very complicated situation, where they need both to provide improved coverage or capacity to customers and to proceed with great caution on spending. This latest IDATE report presents the state-of-the art of the small cell and Wifi opportunities to close the gap and highlights strategies at play. It also gives the flavour of future scenarios.
Wifi is not brand-new. It has been playing a key role in releasing network congestion for years because it is not expensive. Seamless connectivity and handover between cellular and Wifi are addressed carefully. Carrier Wifi solutions that promise an enhanced customer experience and security through Passpoint/Hotspot 2.0 are currently implemented by players. Wifi has also been widely adopted to provide voice services through Wifi calling, also known as VoWiFi.
All in all, small cell and carrier Wifi are needed for a smooth transition to 5G, scheduled at the earliest for 2020. IDATE forecasts the small cell market is at last close to take-off. We foresee a huge growth of the small cell market driven by a robust increase in mobile data traffic:
• Macrocell densification continues in Europe as population coverage has not yet reached the 95-100% range.
• Alongside macro cells, MNOs are increasingly relying on carrier Wifi and small cells to cope with mobile data surge in cost-cautious times. Small cells have extended beyond the first devices dedicated to residential use and moved to urban, enterprise and rural areas. Technical innovations facilitate the management of small cell interference with the macro network. Small cells give the opportunity to come closer to the user and to increase customer experience. They can be installed in street furniture, for instance.
• In this face-off between cellular and Wifi, different players want to take a share of the cake.
Wifi-first players appeared in 2014 in the USA with a disruptive proposition: customers are using primarily free Wifi and they switch to paid cellular when Wifi is not available.
With Wifi, cablecos are on the road to offer quad-play services. Mobile is both an additive strategy to grow into a new market segment and a defensive strategy to cement cable’s stronghold in households.
OTTs were very successful in creating innovative services and in expanding them to many different devices. With a 20 USD plan, Google Fi is able to threaten MNOs in the USA and to attract young price-sensitive customers. Apple was very successful in eating into MNO revenues with popular iPhone services.
Small cells as a strategic path to the smart city
Small cells can use existing street furniture such as lamp posts, billboards or bus stops to come closer to the customers: JCDecaux pioneered the concept of subsidizing public street furniture in exchange for rights to advertise. Installation can also be done on municipality furniture such as lighting poles and traffic lights: Philips promotes actively the LED technology. Supporting digital lamp posts, it signed a partnership with Ericsson to integrate Ericsson’s small cell equipment in lamp posts.
Towards hyper density and emergence of smart cities
Source: IDATE, Small cells and Wifi offloading, August 2015
Find out more information on "Small cells and Wifi offloading" in our dedicated market report
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