Senior Consultant, IDATE DigiWorld
Within the latest edition of its half-yearly updated observatory for superfast-broadband access, IDATE – world leading FTTx intelligence provider – announces the impressive milestone of 300 million subscriptions at mid-June 2015, for world consolidated. Furthermore, superfast technologies(1) represented nearly 38% of broadband access subscriptions at mid-2015, 8 points more than one year before.
FTTH/B is still the leading superfast broadband solution, far ahead of FTTx/D3.0, followed by VDSL
• FTTH/B represented 61% of FTTx subscriptions at mid-2015. Growth of FTTH/B subscriptions will continue until 2019, but at a lower pace than during 2014, year of real success in China.
• FTTx/D3.0 represented at June 2015, 27% of FTTx subscriptions. After two years of significant growth, proportion of FTTx/D3.0 on Superfast Broadband is stable
• VDSL, for its part, lagged behind, representing 12% of subscriptions at mid-2015 compared to 13% in June 2014
The regional breakdown is very heterogeneous
• No huge changes in the geographical predominance of APAC on the FTTH/B market.
• FTTH/B is also the main deployed technology in MENA. It was the case also in LATAM, but now it is meeting stronger competition from VDSL technologies in the region (Brazilian market).
• FTTx/D3.0 is still dominant in North America and is generally growing more rapidly than other technologies.
• There is considerable space for VDSL in Europe where incumbents still wish to optimise their copper networks.
(1) For the definition of superfast platforms we consider three main architectures: FTTH/B, VDSL and FTTx/D3.0 deployed by cable operators
The growth rate of FTTH/B subscriptions should continue to increase at an annual average rate of 10% until 2019
• The growth in the total number of FTTH/B subscribers will gradually decrease from 37% in 2014 to 6% in 2019: this is linked to the progressive maturity of the markets.
• By 2019, the share of FTTH/B subscriptions will represent 32% of total broadband market worldwide (to be compared to 22% at end 2014).
• FTTH/B is now deployed in all major regions in the world, at different levels: FTTH/B represents a great opportunity for countries where broadband is not widespread (Latin America, Africa and some countries in Asia-Pacific).
The take-up rate of FTTH/B worldwide will grow gradually from 32% at end-2015 to 34% by end-2019
Whilst regional disparities will persist, the ranking of leading regions will change:
• Eastern Europe will see its take-up rate grow from 30% to 41% from end-2015 to end-2019, much higher than in Western Europe, from 26% to 40% during the same period.
• In North America, the take-up rate will rise from 41% to 46% at end 2019.
• In Asia-Pacific, the take-up rate will grow thanks to the dynamism of China and new markets such as Indonesia, Kazakhstan and Vietnam.
• In Latin America, the adoption rate will be steady as FTTH/B is at is early stage and players will focus more on expanding coverage.
IDATE publishes a half-yearly updated FTTx observatory, gathering qualitative and quantitative data of 70 countries and +150 players – see details online
Project Manager, IDATE DigiWorld
What belongs together, grows together
Converging markets provide a bright future in terms of market growth. Take Enterprise Cloud Computing, for instance: we sized the market – IaaS, PaaS and SaaS revenues altogether – at EUR 80.2bn in 2015, in 2020 we forecast that this number will more than double: EUR 192.4bn with SaaS still as strongest revenue segment, but IaaS coming close behind.
Why convergence matters
• The convergence of telecom and IT B2B markets consists in the development of services by IT players on telecom markets, and by telecom players on IT markets. It comes mainly from the development of the Internet, of Internet access for consumers and businesses, and of services over IP. Because of this, some telecom and IT services can be provided transparently by networks. Technologies such as voice-over-IP or cloud computing have thus emerged in recent years relying on broadband access, and commoditised IT systems. Our latest study has a focus –for IT markets– on cloud computing, big data, security (including management solutions known as Bring Your Own Device (BYOD) and IT consulting. For telecom markets, we focused on unified communications (including collaborative tools) and M2M (on the service stack only). These markets are those where both IT players and telecom players are providing services. However, not all these players are positioned on converging markets. Furthermore, businesses have invested heavily in IT systems and services and can be expected to continue to invest as their business issues can be answered by telecom and IT services. Among business needs, analytics and big data seems to be the most important, along with reducing costs and overheads as the first strategic business priority.
How telecom and IT services meet current business needs
* NB: Security does not fit the selected business needs in this table, but it does answer a major need for better security, in a context of important cybersecurity threats.
Source: IDATE, Telecom & IT Convergence, November 2015
• IT players are keeping a majority of market share on all converging markets: this is estimated by IDATE as between 60 and 75% on telecom converging markets, and between 90 and 99% on IT converging markets, where the IT players’ market share remain very important. In volume, the most important converging market is that of IT consulting services, reaching more than 700 billion EUR in 2015, with 95% market share held by IT players. Even if the overall convergence is leading to telcos and IT players competing on specific markets, their targets remain different. This distinction explains the asymmetry of market share between telcos and IT players on these markets. Large IT players mainly address large accounts, providing highly customised solutions and usually no ‘off-the-shelf’ or ‘turn-key’ solutions. Their solutions are especially designed to meet the needs of large accounts, each of which has a different IT systems configuration. For instance, on the cloud computing market, IT players mainly provide private-cloud services as well as hybrid cloud as it involves customised private-cloud services. Smaller IT players, and especially the pure ones, can address both large accounts and small and medium-sized enterprises (SMEs) as they can provide turn-key solutions, which is type usually chosen by SMEs.
• Telecom players (mainly telcos) have a role to play on all converging markets, but with other customer targets than IT players. Telcos have earned a strong degree of trust from their customers, both large accounts as well as SMEs. This long-term relationship allows them to provide and to sell additional services, complementary to their traditional communication services. Telcos therefore provide bundled services that include communication services (mobile and fixed), cloud storage, office suite in Software-as-a-Service (SaaS) (cloud) and a basic security suite (firewall, anti-virus and VPN). These services are especially appreciated by SMEs as they are looking for low-cost turn-key solutions. Telcos do not develop all of these bundled services, usually just reselling some of them, such as cloud SaaS products or security products. These bundled offers are, however, almost the only ones on the market: telcos thus have here a strong competitive position for this kind of business. In terms of investments, telcos mainly provide these services over their own infrastructure (without investing strongly in new capex), or resell products. In terms of revenues, these additional products do generate a measurable amount – estimated at between 5 and 10% of overall telco revenues.
Growth potential for telcos in the SaaS and IaaS markets
Source: IDATE, Telecom & IT Convergence, November 2015
Get more valuable insights about convergence enablers and business needs in our recently published market report
At the 37th annual DigiWorld Summit, in partnership with Business France and La French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising digital industry start-ups created by French entrepreneurs outside of France.
Why identify and reward start-ups created outside of France?
‘We got the idea for these awards when planning the international programme for the DigiWorld Summit. We found that we were meeting more and more start-ups created by French teams who were operating in all corners of the globe,’ explains IDATE’s Deputy CEO, Jean-Dominique Séval.
This is a perfect illustration of the multifarious talents of “French Tech” – a term used to refer to all those who work for or with French start-ups in France and abroad. Entrepreneurs, first and foremost, but also investors, engineers, designers, developers, conglomerates, associations, media companies, public operators, R&D centres… all working to further start-ups’ growth and international reach. French Tech is a shared initiative of which Business France is a founding member, instigated by the French government but sustained and developed by industry stakeholders.
As part of the globalisation action plan for French Tech in 2015, the Government decided to support the emergence of a French Tech Hub in major cities around the world that represent key centres for development for French Tech start-ups. The goal is to “stimulate a collective mobilisation” and to bring the various public actors (Business France, consulates, chambers of commerce, local authorities…) together under a single umbrella with a network of entrepreneurs that have a solid footing in overseas markets (start-ups, conglomerates, investors, engineers, designers and developers), which can serve as mentors for young start-ups wanting to develop their business in that market, and as ambassadors for French Tech with local decision-makers.
The DigiWorld Awards therefore provide a unique opportunity to identify the many entrepreneurs who have created a start-up abroad, and to recognise those who have been successful overseas, perhaps before coming to France!
And the nominees for 2015 are…
The start-ups eligible to be nominated had to satisfy the following criteria:
• Be a company created outside of France by at least one French person;
• With no offices or operations in France;
• And have a digital tech industry business as its main activity: equipment and devices, networks and telecoms, Internet services and applications (BtoC, BtoB…), M2M, IoT…
The Jury made an initial selection from among the roughly forty applications received, choosing three start-ups from each region. A Special Jury Prize will be awarded to an overseas start-up born of the Montpellier Métropole Méditerranée and Région Languedoc-Roussillon development ecosystem.
The winners in each category will receive their trophy at a ceremony held during the DigiWorld Summit plenary session on 19 November 2015, with special guest Axelle Lemaire, France’s Secretary of State for Digital Affairs.
Prizes and rewards
Each of the prizes will be awarded by the event’s sponsors – Accenture, Capgemini, Ericsson and Orange – which will each provide the winning start-ups with access to their international Innovation resources.
• The winning start-ups will be invited, thanks to our partner Air France, to the awards ceremony being held during the DigiWorld Summit plenary session on 19 November 2015.
• The winners will be added to Wproject (www.wproject.fr), the key listing and promotional platform for French entrepreneurs working abroad.
Accenture will leverage its Accelerated Growth Partnership (AGP) teams, offering personalised support aligned to the start-up’s growth challenges.
AGP Accenture teams have created a unique methodology to evaluate start-ups’ growth challenges and provide Accenture’s expertise in the three following areas:
• Commercial development support: drafting a business case, creating a “use case book”, C-Level clients presentation,
• Start-up’s registration in the Accenture Open Innovation Catalogue, joint sales prospecting…
• Injection of resource: providing relevant technical support, integration, industrialized testing, applications development
• Offering Accenture proprietary assets: pre-developed connectors, Accenture Tech Labs innovations, pricing estimators, marketing formats
The prize sponsored by Capgemini Technology Services, a Capgemini group subsidiary, will allow one of the award-winning start-ups to enjoy global exposure and advice from its teams that are part of a worldwide network.
Applied Innovation Exchange: Capgemini provides support through concrete, exchange-based innovation, in collaboration with its customers in dedicated locations: the Applied Innovation Exchange. Capgemini delivers practical solutions using its SMACT (Social, Mobile, Analytics, Cloud and Things) toolkit, to improve its innovation capabilities in all areas. This global network of close to 40 innovation labs provides a testing ground and expertise in every domain, to help further research, ideas and prototyping through Design Thinking. Capgemini thus provides a gateway to an exclusive ecosystem of mature, emerging digital technologies. This Applied Innovation Exchange experience, which is dedicated to technological innovation in all sectors, has forged a fine reputation for enabling start-ups to grow, thanks to a wealth of exchanges during sessions with its customers.
The prize sponsored by Ericsson will allow one of the award-winning start-ups to benefit from the Ericsson group’s support system for start-ups, and particularly Ericsson Garage. But other, potentially complementary approaches are also possible, depending on the project, its level of maturity and its geographical location. In particular, we are able to provide advice and support from Ericsson experts, preferential access to our angel funding for start-ups and incubation possibilities, drawing on our global presence in more than 180 countries. The Garage is an incubator for innovations related to our core business areas. The goal is to work as a start-up and develop the first prototypes that can serve as the basis for future commercial solutions. Ericsson already has two Garages in Europe: one in Kista, near Stockholm, and one in Budapest. A Virtual Garage solution has also been deployed, to enable remote access.
The Orange prize will allow one of the award-winning start-ups to benefit from one or several start-up support resources, depending on the project’s stage of development and requirements. These may include mentoring from Orange international experts, preferred access to our financial vehicles, training in and access to Orange APIs, or market tests/user focus groups thanks to our community of testers.
At Orange, we know that creating a new company is not easy. That is why we support start-ups at a crucial stage in their development, to help them grow and take their business to the next stage. To this end, we have been developing the international network of Orange Fab accelerators since 2013, which now cover four continents. It is a win-win programme with a dual objective: accelerate innovation for Orange customers and accelerate the growth of start-ups by allowing them to access the market more quickly. Start-ups benefit from the advice of international experts in marketing, business models, user-centred design, technology etc. They also receive valuable advice from mentors and experienced entrepreneurs with a background in digital innovation. In certain countries, eligible start-ups also receive financial support, as well as access to dedicated or shared workspaces.
2015 DigiWorld Awards jury members
> Find complete details at: http://www.digiworldsummit.com/awards/
Since 1977, IDATE’s teams of specialists have earned a global reputation for independent, high quality analysis of digital industry markets, through three closely linked areas of activity:
• DigiWorld Institute: a European think-tank for members, policy-makers and players of the digital transformation
• DigiWorld Research: a global observatory of digital markets and innovation
• IDATE Consulting: bespoke market research and consulting solutions
> For more information: www.idate.org
About Business France
Business France is the national agency supporting the international development of the French economy, responsible for fostering export growth by French businesses, as well as promoting and facilitating international investment in France. It promotes France’s companies, business image and nationwide attractiveness as an investment location, and also runs the V.I.E international internship program.
Founded on 1 January 2015, from a merger between UBIFRANCE and the Invest in France Agency, Business France has a staff of 1,500 in France and in 70 countries throughout the world, who work with a network of public- and private-sector partners.
For further information, please visit: www.businessfrance.fr
|Jean-Dominique SévalIDATEMob: +33 (0)6 70 70 85 firstname.lastname@example.org||Emmanuelle Renaud-PionnierPortis-edMob: +33 (0)6 09 09 15 email@example.com|
#DWS15 and on Twitter @DigiWorldIDATE
To many, the deal seemed like a foregone conclusion, and we had been looking forward mostly to the negotiations that would steer it to completion (see the attached press release). It is hard to know exactly what motivated the Bouygues Board’s decision.
We ourselves had underscored the tremendous complexity of such a deal that involved the acquisition of the number three operators’ customer base and the sale of its network and a portion of its frequency holdings to the country’s number four operator, Iliad/Free. This dual negotiation was nevertheless necessary, for both financial reasons and to get a jump on the Competition authority’s expected reservations about the merger. Here, we understand that Bouygues was very reluctant to endure the uncertainties of a long period of anti-trust investigation, with no guarantee of substantial compensation should the deal fail to win approval.
To this can be added the federal government’s very strong reservations, and the difficulties in negotiating credible guarantees for the future of the company’s teams and jobs.
Lastly, without underestimating the ability of the Bouygues Telecom team, its 4G network and its frequency holdings to achieve pre-Free EBITDA (25%) by 2017, we cannot discount the possibility of further merger and acquisition deals in the French telecom market.
More informations about IDATE's expertise and events :
IDATE’s latest report explores telecom carriers’ strategies with respect to Content delivery networks (CDN). It analyses the impact of telcos’ arrival into the CDN value chain, especially with respect to pure-player CDN companies and equipment suppliers.It concludes with an analysis of the market that telcos can expect to capture over the long term, especially in the realm of mobile solutions which today are few and far between.
Telco CDN: strategic business for telcos and two-sided market enabler
As internet traffic continues to grow, spurred in large part by video consumption, most incumbent carriers have become engaged in a strategy to deploy their own content delivery network (CDN), which is integrated into their access network. Telcos will use a fixed CDN for their internal purposes, to improve the quality of the content services they distribute. This allows them to earn revenue from users, notably on managed services like IPTV, to offload traffic and to reduce their network expenditures. As to mobile networks, we have not really seen any native mobile CDN solutions as yet, but rather fixed solutions adapted to mobile systems. We are nevertheless starting to see initiatives from mobile equipment suppliers such as Samsung and Ericsson, in partnership with Akamai.
Operators are using telco CDN as a way of shoring up their two-sided market strategies, by generating new revenue streams, notably from OTT vendors. In other words, operators are looking to to be both a both technical and economic solution to their development issues. But the way they are positioning their CDN is somewhat tentative, and they are struggling on the sales end of things when targeting media or internet companies, as both have a range of alternatives for distributing their video services, such as paid peering.
An increasingly complex CDN value chain
The direct competition that telco CDN are facing has more or less required them to embrace coopetition, and create partnerships with their rivals. Traditional CDN players developed their solutions to target telcos, offering CDN resale and managed CDN solutions as well as licensing schemes. Some operators, such as AT&T and Orange, stumbled when initially rolling out their own CDN, before turning to more long-established CDN players as partners, in particular via distribution deals.
So CDN market competition has heated up since telcos entered the fray, and become full-fledged links in the newly revamped CDN value chain. They are part of what is now a complex ecosystem where players often occupy dual positions:
• telcos are both rival and customer for long-established CDN players, in both the retail and wholesale markets;
• with respect to internet companies, telcos may be both their wholesale supplier and their retail market competitor;
• equipment manufacturers are also positioned in the value chain, targeting client telcos and competing with traditional CDN companies.
The CDN market is in the throes of a second wave of consolidation, which will result in an even more competitive environment as telcos acquire traditional CDN players, a case in point being Verizon’s recent takeover of EdgeCast.
Expected boost from mobile traffic and non-video services starting in 2016
Telco CDN accounted for a mere 0.7% of the global CDN market in 2013. But the long-term outlook is good, and they are forecast to grow by 90% annually over the next five years. 2016 is expected to be the year that operator CDN really take off, spurred by growing distribution on mobile networks and distribution of non-video content. By being indispensable players in the mobile ecosystem, telcos will be able use CDN to optimise traffic on cellular systems. The creation of CDN federations also opens up new opportunities for CDN market players to expand their footprint.
Tiana RAMAHANDRY, Consultant
Net neutrality : From one extreme to the other or the great transatlantic divide
Should we take legal measures (and if so, which) to prevent internet service providers (ISP) from becoming the web’s gatekeepers, and undermining the open internet?
The question is apparently far from resolved, and recently gave rise to two completely opposite set of events on either side of the Atlantic.
In the United States, two potential game-changing moments have occurred. First is the decision from the federal Court of Appeals in Washington that seriously undermines the principles laid down by the FCC. Once again, judges have ruled that FCC provisions forbidding operators from blocking access to lawful sites, or slowing a connection when they decide that generated traffic is preventing the network from running efficiently, have no legal foundation. If they do not contest the FCC’s power to regulate the internet (and have admitted the legality of the obligation to be transparent in the commercial information provided to consumers), they decided that the federal agency’s stipulations cannot go beyond that, once ISPs’ services are not governed by the principles of common carriage (which are imposed on telecommunications services and forbid any form of discrimination).
We should also remember that cable companies have always refused to bow to common carriage rules, including when they began to provide broadband access via cable modem. The FCC did not want to introduce asymmetrical regulations when telcos began providing ADSL access, and confirmed at the time that internet access would be considered an information service. Even if it wanted to, the FCC today would have little chance of persuading Congress from changing its mind about this. It does, however, have some power when it comes to imposing remedies as conditions for approving mergers or acquisitions (as it did on Comcast when it took control of NBC).
Which brings us to the second major bit of news: the interconnection agreement between Comcast and Netflix. In the past, the SVOD service – which is thought to account for a quarter of internet traffic during peak hours – had consistently refused to negotiate any paid peering agreement with telcos and cable companies, preferring to use the services of the transit operator in charge of its content delivery network (CDN) and managing peering locations with ISPs. Hence the surprise over the deal with Comcast, even if we do not know exactly how much Netflix has agreed to pay (as the deal is a commercial one) or what we should make of it. Some are seeing this as the natural outcome to the Washington court ruling, and its de facto eradication of net neutrality rules. Although, in fact, interconnection agreements have never been covered by the FCC’s guiding principles. What we can take away is the clout that the number one ISP in the US was able to wield over Netflix. But we may also discover an agreement that is in fact advantageous for the SVOD service. One that allows it to avoid having to got through a transit operator, and improve the quality of access to its programming in the bargain. Some market watchers are saying that the planned merger between Comcast and Time Warner Cable, which is currently being scrutinized by antitrust authorities, may have forced the cable giant to offer proof of its ability to play well with a major service provider.
So what happens next? Comcast is not the only ISP, so we are waiting to see what kind of deals Netflix might strike with the markets other two heavyweights, AT&T and Verizon. And Netflix is not the only content provider. In addition to ISPs’ services, we need to remember the competition brewing between the various TV access device providers (Roku, Amazon Fire TV, Chromecast, Apple TV…) and online media (video, game, music) stores that combine their own content and access to third-party services. A few days after the Comcast – Netflix deal was announced, we learned that Apple was negotiating a deal with Comcast to have guaranteed bandwidth for the supply of its own VOD service…
Meanwhile, on the other side of the Atlantic, the game changer came from the European Parliament. Taking up the report released by Ms Kroes last September, it sought to strengthen Europe’s net neutrality legislation. Rather than sticking with a balanced text that gives NRAs the power to oppose ISPs’ discriminating against content and application providers, it adopted a definition of net neutrality that we had thought confined to only its most stringent proponents: ““Net neutrality” means the principle according to which all internet traffic is treated equally, without discrimination, restriction or interference, independently of its sender, recipient, type, content, device, service or application” (amendment 234, retained). Under these circumstances, the ability to differentiate access offers or to charge extra for preferential treatment on ultra high-speed fixed and mobile (1) networks will have been nipped in the bud.
Of course, it is likely that the European Council will want to make changes to the text before it is passed into law. But it is curious to see how the Kroes report, which was supposed to focus on creating investment incentives, resulted in this proposal.
And astonishing to see such extreme and opposite directions taking shape at the same moment on either side of the pond.