"Connected Cars & Future of the Mobile Ecosystem"
DigiWorld Economic Journal n°105
Interview with Thierry VIADIEU
Program Director for Connected Car & Autonomous Driving, RENAULT
Conducted by Yves GASSOT, CEO, IDATE DigiWorld Institute
DW Economic Journal: Could you describe the scope of your responsibilities at Renault?
Thierry VIADIEU: As far as connected cars are concerned, the field of endeavour for the Product Planning and Programs department covers on-board systems (multimedia systems), offboard systems (servers) and connected services. For autonomous vehicles, it covers autonomy and the components that enable that autonomy (sensors, radars, cameras, LIDAR, etc.).
Our task is to ensure that what we want to deliver to our customers (as set out by the Product Engineering and Sales and Marketing departments) is properly expressed, then taken into account by those in charge of development. We give them the budget they need, and we ensure that the plan they put into effect lines up with their mandate. These projects are then contracted with the Vehicles Program departments which will adopt these developments and we commit to results.
Over the course of its lifespan, we ensure that the project is on track and make the necessary decisions when it deviates. Top management receives progress reports on a regular basis.
We often associate the notion of the self-driving car with that of the connected car, as the latter is a stage in and a prerequisite for making a car autonomous. But users are not terribly clear on exactly what services a connected car provides. What does Renault offer its customers in this regard? And which applications do you believe are the most promising for the next five years? Can you share any figures on your connected car output?
Autonomy and connectivity cover two different technical fields, and exist independently of one another. But of course the autonomous car will be highly connected.
The connected car has been around for some time. For instance, the traffic information given by navigation systems requires connectivity. Today, through its RLink systems, Renault offers a range of connected services: traffic information, Coyote, access to e-mail, access to a variety of apps from the app store, data for fleet management or pay-as-you-drive insurance contracts, opening car doors using a smartphone for car-sharing services (RAccess), and so on.
In a not too distant future, the range of services on offer will be very broad and cover different value fields such as monitoring the state of the vehicle (preventive maintenance), remote actions (setting the vehicle's inside temperature, opening the boot for deliveries), easy driving (booking parking spots, travel recommendations), mobility services (opening doors with a smartphone, multimodal solutions), personalised virtual assistant with connections to one's digital devices (links to calendars, appointment bookings, restaurant reservations, etc.). Depending on their needs, each customer will choose the services they find most useful.
The job of the autonomous car is to gradually relieve drivers of certain driving tasks, aiming to take a complete control of the vehicle. This will give drivers more time to do other things during their drive time, so an advanced connectivity solution will be absolutely vital to the offer of autonomy. This offer could go as far as the ability to work in one's car, and videoconference from the vehicle.
The ubiquity of the smartphone and the apps designed for the two main platforms, iOS and Android, is pushing car-makers to offer drivers the ability to replicate the familiar digital environment on their vehicle's display. At the same time, car-makers also want to protect the independence of their relationship with customers for certain services, such as maintenance. What are the services that the car manufacturer must deliver directly or indirectly, but independently from mobile application platforms?
A fluid relationship between the customer's smartphone and the car's multimedia system (which we call smartphone integration) is key to ensuring the digital continuity our customers demand. That being said, we need to keep in mind that – while awaiting the autonomous vehicle – the driver is still in the driver's seat, and any activity that might distract her/him and threaten her/his safety must be avoided. This is why certain apps are "replicated" in the multimedia system, and in a very strict fashion. So drivers will have access to a very limited number of their smartphone's features.
As to the relationship with the two digital giants, Google and Apple, it is clear that all car-makers have certain concerns over the ultimate consequences of smartphone integration. Some have taken the path of defining integration standards that allow them not to rely on those developed by Google and Apple, while others have even announced they would not be offering those applications.
At Renault we have chosen to offer CarPlay (Apple) and Android Auto because we think that's what our customers want. On the other hand, we are very careful about creating a balanced relationship and about the data being relayed, by ensuring that it in no way jeopardises our customers, or our business models.
To illustrate the merits of having a good relationship between the car-maker and an application, let's use the simple example of looking for a petrol station. An application that indicates all of the petrol stations in the vicinity is clearly useful when we are driving and need to fill up. However, its value increases tremendously if it can also gauge how full the tank is and tell us the best time and place (cost, mileage remaining) to fill up the tank.
The car dealership obviously has a very important role in selling vehicles and promoting the latest innovations, and in maintenance and customer relations. In what way do you take this into account? What is their role today, and how will it change in future?
Renault dealers play a key role in our relationship with customers, and in informing them about our products. We believe this will continue to be the case with connected services. Naturally this relationship is evolving as customers are getting more and more information from the internet, and are able to discover products online from home, but it is undeniable that physical contact with a product and an informed representative will remain an important ingredient in quality of service. As proof, I offer up the direction being taken by certain major internet companies, such as Amazon, which plan on opening up brick and mortar shops in major cities. In this respect, the density and proximity of the Renault network is a major asset that we will be sure to leverage.
We can also cite the initiative taken by a number of Renault dealerships which offer what we could call "RLink genius bar sessions" to give customers an opportunity to familiarise themselves with the system.
When we move into the autonomous car stage, we have to stress the impact of regulatory imperatives, of consumers' reactions – be they enthusiastic or disoriented – and the influence and role of the internet big five (GAFAM) and of new entrants: could you comment on these central issues and challenges ahead?
Regulation is a very important, so as not to say crucial aspect. Laws and regulations will need to evolve to allow extensive use of the autonomous car, and Renault is naturally involved in the discussions that are underway on the matter. It is a difficult exercise because, as with most car-makers, we sell our models in a great many locations around the globe, and there is still no overall regulatory framework that applies to autonomous cars.
On the matter of users, I think they have a tremendous ability to adapt, and when the services on offer are useful and have been carefully designed, there will be no obstacles to adopting them. On the contrary!
For us, the internet giants are certainly potential partners. As with all of our partners and suppliers, we look closely at what they can offer us, while also be vigilant about the skills and responsibilities we want to maintain or acquire. Today, they appear to be positioned solely in the driverless autonomous car, and we don't know if one day they will be direct competitors.
What are the most strategic technological developments that self-driving car vendors will need to master? What R&D and partnership (with its peers, and with electronics and IT companies) policies is Renault putting into place? Do you think that the costs associated with the connected/autonomous car will drive a period of consolidation in the automotive industry?
When it comes to the development of autonomous cars, the different sensors that become the car's "eyes and ears" naturally play a major role. They will evolve, be able to "see" farther and under any conditions (snow, rain, etc.), will be increasingly reliable and especially increasingly affordable so that all product ranges can benefit from them.
But if there is one area in which all automotive manufacturers, and of course the Renault-Nissan alliance, are investing massively, it is the development of the software that will manage all of the vehicles' sensors and systems. We need to develop the right algorithms, incorporate elements of artificial intelligence, ensure the robustness of zero-fault execution (the bugs that are such a familiar part of our daily lives are "forbidden" in an autonomous car, whose software needs to be as robust and reliable as the software that drives the most sensitive installations) and have a self-learning capacity that allows it to improve on an ongoing basis.
I believe this is the key to the development of the mass-produced autonomous car.
As to the impact on a consolidation of the automotive industry, this sector has already undergone considerable consolidation in recent years, creating several "titans" that produce more than 8 million vehicles a year, and I expect to see more close partnerships over certain technologies rather than corporate mergers.
The autonomous car will generate thousands of Gigabytes, often with stringent quality and latency requirements that will mean connectivity costs cannot be overlooked in vendors' business models. What are your views on this? Do you believe, like some, that your business model will include monetising some of the data generated? How much are you banking on the advent of 5G which is currently mobilising the telecoms industry?
Today, the cost of relaying data over the GSM network is a significant element in connected services' business model. The use of a SIM card that allows users to switch from operator to operator, or plans that allow them to pool or spread out their consumption are important factors in limiting the impact of this cost. As is monetising generated data. That being said, data traffic still carries a high price tag in some countries which creates an impediment to deploying services to all of our customers around the world.
Regarding 5G, naturally we are keeping a close watch over its development, but current projections indicate that coverage will still be very slim in 2020, so we cannot concentrate our developments for the next five years around 5G.
We often stress the time lapse between automotive industry cycles (four to five years) and digital innovation cycles. But if we take the example of the transition from LTE to 5G we see that, even in the digital world, not everything progresses as quickly as the latest version of WhatsApp or the rollout of the latest smartphone model…
The vision for the connected car, as for the self-driving car, needs to be part of a more wide-reaching thought process devoted to the different components of the digital transformation that is affecting mobility: the servicisation of car use, the influence of the first car-sharing platforms and ride services, how cities are changing, smart roads, etc. What initiatives are you taking with respect to these various trends, and how would you describe a car-marker 10 years from now?
As with most other car-makers, Renault is not focusing all of its attention or investments on the development of the car solely, even if it is autonomous and connected. Either directly or by having a stake in other ventures, we are interested in all aspects of innovation in what we call the mobile digital ecosystem (car sharing, car pooling, multimodality, peer-to-peer rental, etc.). It is also an opportunity to engage in discussions and run trials in large cities such as Lyon and Bordeaux where Renault is partnered with Bolloré.
Here, it is likely that the development of the autonomous car will run parallel to investments in outfitting roadways (smart roads and motorways), paving the way for new forms of mobility. One of the challenges will be managing the co-existence of classic cars and autonomous (possibly driverless) cars within a complex environment.
To answer your last question, I tend to believe that ten years from now the car-makers that remain – and of course the Renault-Nissan Alliance will be among them! – will be similar to car-makers today in many respects. We will undoubtedly see a shift in the value chain, and an expansion of car-makers' business into mobility products and closer ties with the digital world. But at the centre of all this is an object – the car – which is more and more technologically complex and subject to increasingly stringent regulations (security, emissions, CO2). This is what constitutes an automotive manufacturer's core business, and what I believe explains why there are virtually no new entrants to the sector.
Thierry VIADIEU. RENAULT Program Director for Connected Car (since 2012) and Autonomous Driving (since 2016). Graduated from the Ecole Nationale Supérieure des Ingénieurs Electrotechniciens de Grenoble in 1985 and received a PhD in Material Science from the University of Grenoble in 1988. Entered RENAULT in 1988 as research engineer. Then RENAULT Powertrain Division from 1992 until 1999 working on programs and strategy. Moved to NISSAN Headquarter in 1999 after the signature of the Alliance, starting in Manufacturing Strategy. Moved to NISSAN Corporate Planning in 2003 as General Manager and became NISSAN Corporate Vice President in 2005. In 2006, moved to NISSAN Thailand as ASEAN VP. In 2009 became RENAULT-NISSAN b.v. Director for Alliance Powertrain Planning.
CEO, IDATE DigiWorld
The GSM Association’s Mobile World Congress has taken hold as the mobile industry’s biggest annual event, as well as a significant event for a great many Internet and entertainment sector players.
What do we expect to hear about in Barcelona in 2017?
We will no doubt see three to four main themes emerge from the event. We are betting that they will relate in some way to the following five topics:
5G of course! We will no doubt see on display demonstrations based on much smaller devices and equipment, so miniaturised and closer to what will actually be deployed. Not everything has been standardised, but we will be able to measure the progress made in antenna technologies (MIMO and beamforming) which will bolster frequency use, in access to millimetre wave spectrum (effectively >6GHz) which will mean much wider channels, in virtualisation and slicing with Cloud-RAN architectures …
But the status of 5G on the stands, and the announcements and press releases on pilot rollouts are also expected to illustrate two rather different approaches to pioneer applications. On the other side of the pond, the two market leaders, AT&T and Verizon, are clearly playing the Video First card. Their announcements today are heavily focused on fixed 5G trials. Essentially, they have ascertained that video is the main purveyor of traffic and can help monetise 5G’s higher speeds as much as subscriber data (programmatic advertising), that TV and video are going the way of streaming, that they are not national wireline operators and that 5G could replace or complement access provided by cable companies (which are now entering the mobile market) and Fttx. Asia is also heavily video-centric, perhaps with the added dimension of gaming which demands low latency, and the prospects surrounding virtual reality. In Europe, debates and the work being done are focused more on identifying the needs of the different vertical markets, such as integrated/autonomous cars, so 5G is defined less in terms of its higher speeds than by security and latency metrics.
Enter the ties with IoT, and we expect to see new assessments of 3GPP (NB-IoT, LTE-M, 5G) standards in Barcelona, in terms of how thy complement and compete with LPWA standards, such as Sigfox or Lora, operating in unlicensed bands.
When it comes to infrastructure, it will be difficult to avoid debates over the investments required to deploy 5G. The South Koreans and Japanese are planning on being frontrunners, spurred by the upcoming Olympic Games. Verizon and AT&T will be quick off the mark. Once again, they will need to gain a competitive edge over T-Mobile and Sprint. Carriers in Europe are being spurred by the European Commission. They may lag behind their counterparts in the United States, Japan, South Korea and even China, much as they did when it came to 4G (LTE). As a result, growth forecasts for the network equipment market worldwide are not terribly sunny, especially for mobile networks as both the fixed services and equipment markets have become more dynamic. We will need to wait until 2019 and 2020 to see an impact of the new 5G cycle on CAPEX. Under these circumstances then, we will also be talking about the situation with network suppliers? What will happen if Huawei continues to grow as it has over the next three years, while the market’s value remains unchanged?
And what about smartphones? We know that the market has flattened out in terms of unit sales, and even more so in terms of value. Innovation is getting harder to come by. As it was in Las Vegas a few weeks back, the focus in Barcelona will probably be on voice interfaces, flexible displays, virtual reality…
Lastly, the latest headlines could well loom large over the MWC. Of course uppermost in everyone’s mind is the impact of the Trump administration, with rumours surrounding M&A deals that are currently under examination (AT&T – Time Warner) or back on the table (Sprint – T-Mobile ), talk of Verizon’s entry into cable or Comcast’s into the mobile market, news that affects Netflix (whose CEO will be one of the GSMA’s special guests in Barcelona), and the ongoing hubbub around net neutrality, unlimited plans and zero rating.
Our teams will be on hand in Barcelona, and will update you in March with our reports, and we look forward to seeing you at the DigiWorld Clubs in Brussels, London and Paris for a debriefing!
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World LTE markets – 5G initiatives & MBB spectrum In 2020: 4.7 billion LTE subscribers forecasted when 5G is launched.
Director of Studies, IDATE DigiWorld
We forecast, overall, a little less than 5 billion LTE SIMs worldwide or 54% of total SIMs at YE2020. According to our forecasts, the 3 billion mark will be reached in 2018.
LTE has gone mainstream since 2015
When 5G is expected to arrive in 2020, LTE will account for 40% of SIMs.
From a regional perspective, Asia-Pacific accounts for more than half of the total LTE SIMs at YE15. Its share is expected to grow steadily till 2017 when it will begin to decrease.
We assume Africa and emerging countries will take over at this time. We expect Africa and Middle East will account for 9% in 2020 compared to 3% at YE2016. According to our estimates, the European share would stabilise around 16%.
China Mobile will keep its lead. Second and third ranks are subject to strong competition
China Mobile (428 million) has more than four times as many LTE SIMs as China Telecom (90 million) which ranks 2nd as at end June 2016!
Verizon Wireless was passed by China Telecom in the first half 2016 and is now heavily challenged by the 3rd Chinese player, China Unicom.
The top 10 operators come from 3 countries only: Asian countries lead (China, Japan) and the USA. On the near term, Chinese players will undoubtedly dominate the market.
5G: 1.7 billion 5G subscribers anticipated in 2025
• Migration from 4G to 5G is expected to be fast.
• The 1 billion mark will be passed in 2025.
• Asia will account for more than half (58%, 950 million) of the subscriptions in 2025.
• With 274 million 5G subs, Europe is expected to account for 17% of total 5G subscriptions in 2025 (and EU-28 for 11%).
• On a longer term, there will be growth avenues in MEA.
Discover the perspectives, key trends, and scenarios about World LTE markets and 5G initiatives in our last report
Head of Innovation Business Unit, IDATE DigiWorld
Telcos are in a crucial need to reinvent themselves. Their pure connectivity revenues (voice, messaging, broadband, linear TV) are expected to be flat at best for the next 4 years, while CAPEX are continuing to increase (6% in 2015) with the development of digital services (OTT, IT and IoT), pressuring the networks with an ever increasing demand.
The overall economic climate, quite negative in advanced economies and even in many emerging countries, is also detrimental to the telecom industry, which - like many other industries - has become a cyclical economy in the last three years and is therefore subject to slowdown in case of recession. Competition is coming from large OTT players, but is in reality quite marginal compared to the intense internal competition from telcos themselves, favoured by tough regulatory regimes and by the introduction of disruptive technologies like IP.
In this overall quite dark picture, telcos have nonetheless some signs of hope on which they can prepare the future. Their EBITDA margins remain quite high, and the regulations are becoming more relaxed. Without a surprise, the biggest expectations should come from the digital disruptions, which can serve both as enablers of the telco’s operations (internal optimisation) and as new revenue generators through diversification, when combined with digital assets of telcos. Indeed, in all scenarios, telcos will benefit significantly from developments around cloud services, M2M and payments.
All the major telcos have embarked in such transformations through plans for 2020 (or sometimes less coordinated activities). But most telcos are betting here with an approach that corresponds to the Club scenario. In this scenario, telcos would follow the same approach than large OTT players, building a platform with proprietary technologies and investing in their own infrastructure and stores to offer an advanced customer experience, mostly paid by consumers themselves. They would likely succeed around payments, video services, M2M or smart home, but would likely significantly fail to expand around other services, dominated by large OTTs or vertical players for IoT. Whatever the criteria (revenue, EBITDA, FCF), this scenario is indeed not the most attractive for telcos, especially in terms of EBITDA.
The most favourable scenario for telcos in terms of revenues is in fact the Shield scenario, with a 3.8% CAGR for the 2016-2025 period (compared to only 2.4% for the Club scenario). Telcos would strive in a market dominated by cybersecurity issues and less intensive usage of personal data. They would leverage their network assets with additional investments and combine them with devices (generic and vertical) and cloud services. Their more local approach and their brands would make them appear as key players for M2M, security and payments. But this would require huge investments and additional OPEX, degrading both EBITDA margins and FCF margins compared to 2016 in order to ensure security. This would make it the least attractive scenario for telcos in terms of FCF, with even less than in 2016.
Regarding EBITDA margins, there is more to expect for telcos from the Tech scenario. The market (at 4,600 billion EUR, the biggest for all digital services of all scenarios) would skyrocket through the combination of advanced interoperable technologies sold as a service or as API at a low unit price and recombined into innovative solutions. A lot of the development would be funded with advertising and analytics around new connected objects. Telcos would benefit mostly indirectly from such developments, as wholesalers of premium capacity and (critical) connectivity in addition to other assets like billing. Telcos would enter an environment of commodity services but with a huge demand. With more indirect sales through APIs, their margins would improve in spite of still requiring spending more to meet the demand.
Finally, the best in terms of FCF margins for telcos is the Low cost scenario, performing a little better than the Tech scenario, which would develop in line with lower expectations from end-users in terms of technical innovation but more requirements in terms of privacy/data control and cost-efficiency. Telcos would focus on a limited portfolio of basic products, both traditional and digital, and take a leaner and more agile approach, with network outsourcing and sharing to pure utility cost-optimised companies and digital-based sales and customer-care through self-service. Advanced digital disruptive standardised technologies would be used intensively internally to optimise all processes, allowing telcos to operate with EBITDA margins of 41% (compared to 30% in 2016) and lower CAPEX. This would provide the best level of FCF, despite smaller markets for digital services overall and even declining markets for traditional telecom services.
To delve deeper into Next Gen Telcos, check out our last report
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CEO, IDATE DigiWorld
The question has been raised, and rightly so. The digital transformation that is expressing itself through the swift and constant stream of innovation and growing achievement (the cloud, ultrafast access, IoT, big data, AI, VR, etc.) is enthralling for many of us, but a source of deep concern for many others.
A sizeable percentage of the population on both sides of the Atlantic do not even think about it, while having become heavy consumers of all things digital, or see it simply as the inexorable eradication of jobs as robot technology takes hold. Leading economists are pondering the decrease in productivity gains, the polarisation of the labour force, the creation of a deflationist and stagnant economy. They wonder whether the “digital revolution” can still be considered a driving force behind a new economic revival and the source of wealth creation, in the same way that the steam engine and electricity once were.
We ourselves believe firmly that any desire to step back from digital progress is a dead end. On the contrary, we need to galvanise our country by investing more, as much in training, as in scientific culture, research and innovation, and of course interweaving digital technology and the transition to other sources of energy. But the argument, the push for inclusion – a byword at Davos this year – and solidarity mechanisms also need to be more widely developed and rethought.
Support from the World Bank and the OECD for reviving investments, especially in infrastructure, will no doubt raise a new series of questions in the coming months. For IDATE DigiWorld, the questions on our minds that pertain to our main areas of focus include:
. How much of a priority should be given to financing new generation ultrafast fixed (FTTH) and mobile (5G) networks?
. What is the logic behind telcos’ investments in content? And, more generally, why should telcos invest in diversifying their business?
. Which innovations (wearables, VR, digital assistants, connected cars…) could take over from the smartphone as key growth drivers?
. At what point can we expect to see a return on investment for the cloud, IoT, big data, etc. rollouts of the past several years in all of the major sectors? Could this “4th industrial revolution” be Europe’s chance to return to centre stage in the digital world?
Here then, in this first newsletter of the year, are some of the topics we have begun to contemplate with our Members, and which will undoubtedly be explored in detail as part of our various initiatives, our monthly DigiWorld Clubs in Brussels, London and Paris, the DigiWorld Future symposiums in the spring (18 May in Brussels, 23 May in London and 6 June in Paris), and of course the DigiWorld Summit, which will run from 14 to 16 November this year.
So 2017 is shaping up to be a year of lively and crucial debate!
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Director of Studies, "Telecom Strategies" Business Unit, IDATE DigiWorld
Customer experience draws primarily on customers’ network usage and their perceived quality, as well as their interaction with the telco’s different services (sales, support and administrative), whatever the communication channel.
Customer Experience Management, or CEM, is the term used for the programmes implemented to improve customer experience.
A complex but essential undertaking
In what is now a saturated market, it is essential that operators pay heed to customer experience if they are to retain the loyalty of their subscribers. Yet telcos have fallen behind their counterparts in other sectors, particularly OTT players.
A sophisticated CEM strategy relies on the consolidation of all customer information, not just subscription data and historical contact with the operator, but also network usage, geolocation and even comments posted on forums. Such a complex undertaking is far from being implemented by telcos, who sometimes struggle to reconcile their mixed and mobile databases. Verizon is a typical example of a company with organisational silos, whose fixed and mobile operations are two clearly separate entities.
Customer experience also implies a change in corporate culture, with each employee is required to serve the customer. This implies a sizable managerial undertaking and the involvement of senior management is therefore essential.
Customer experience incorporates increasingly cutting-edge technologies
The digitisation of communication channels is gathering momentum, including stores (interactive kiosks, click & collect services) and call centres (agents communicating with customers via chats or messaging).
In order to minimise their costs, operators are installing increasingly intelligent automated solutions. Websites host virtual agents based on artificial intelligence, while call centres use interactive voice servers with speech recognition technology. Telcos can also draw on the technological tools developed by the Internet giants: data analytics, predictive analytics, profiling, event processing and biometric authentication, as well as artificial intelligence, chatbots, machine learning and even blockchain.
Yet the human aspect remains an essential, differentiating factor
Websites offer chat options and social networks are developing in this area. User forums provide an ideal intermediate solution, offering the human aspect but less costly.
Faced with competition from low-cost operators, the big telcos are taking their stores more upmarket with a focus on customer experience, in an effort to enhance customer loyalty and expand the range of subscriber services, particularly connected objects.
Opportunities for innovation: social media, mobile and personalised services
Social networks also represent a new means of communication between operator and subscriber. They offer a wealth of information that can be used to match the best message and solution to each individual customer.
While telcos are clearly aware that mobile is an essential link between operator and subscriber, the applications rolled out so far are seeing only limited success. Mobile represents a considerable opportunity in terms of innovation for telcos, who can combine usage and geolocation data to offer solutions that are both personalised and contextual, and even to position themselves as trusted third parties.
The key challenge of CEM is to incorporate data from customers’ various interactions with the operator and their social networks. Operators can use analytics tools to offer personalised solutions to customers, anticipating and meeting their needs as they gradually wind down the traditional communication channels (which are more costly). In particular, the fine-tuning of contextual solutions based on usage (Vodafone targeting subscribers going skiing abroad, for example) is still a relatively untapped growth outlet.
This process could also be used for other ends: optimising network deployment by closely analysing network usage or evaluating customer experience data (incorporating geolocation data in particular), which could then be sold to third parties.
Delve deeper about Telecom Customer Experience Management with the following IDATE DigiWorld market report
Didier Pouillot & Sophie Lubrano , IDATE DigiWorld
Faced with the challenge of digitising government operations, the economy and everyday life, Africa is innovating with singular development models that make use of the latest technologies.
Africa has a number of singular features that have carried over into an original development model. First, the weak purchasing power in most countries has driven the rise of a low-cost market, both for services and mobile handsets, primarily with a prepaid model. The transition to data services could follow the same path, dominated by low-end plans billed based on data volume. Further down the road, Africa’s growing middle class will make it possible to move beyond the low-cost approach and foster the development of value-added products.
The region has also managed to capitalise on the latest technologies, leapfrogging over several stages of development, starting with the use of wireless technologies for accessing the Web. The continent should also benefit eventually from upcoming innovations such as constellations (drones, balloons, micro–satellites) to bring access to rural areas. Lastly, Africa has been a seedbed of innovations in services, in the financial arena (e.g. the well-known success of e-money), health, farming and education. Also noteworthy is the development of entertainment services, with well established film and TV production hubs and the more recent video game hubs.
Africa’s digital industry is expanding, with the creation of technology hubs, incubators for start-ups, regional trade and collaboration networks, bolstered by the support of local governments and global digital industry leaders.
DELVE DEEPER WITH THE FOLLOWING IDATE DIGIWORLD MARKET REPORTS
World Telecom Services Market: Trends & Analyses, July to December 2015 – Jan. 2016
World LTE market & MBB spectrum: Markets at June 2015 & Forecasts to 2019
World FTTx market: Markets at December 2015 & Forecasts to 2020 – Jul. 2016
Telco investment challenges: CapEx dynamics – Dec. 2015
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
Blockchain & Financial market transformation: The challenges and opportunities of FinTech for the financial industry
Senior Consultant, IDATE DigiWorld
Banking has long represented a big market for IT and digital technologies. It is probably one of the sectors that has invested the most in information technologies over time, for retail banking activities, and more recently for risk control systems to ensure compliance with banking and finance regulations.
More recently, however, digital innovation in this sector has been overtaken by the explosion of FinTech. Hundreds of start-ups have demonstrated the potential to innovate and transform the banking and finance as we know it. In light of recent events, several areas of innovation have emerged from the development of FinTech, either in competition or partnership with veteran banking industry players.
Every corner of the financial sector is affected, from payment solutions, to credit and lending activities faced with crowdsourced alternatives, the use of blockchains and cryptocurrency-based solutions, to the emergence of high frequency trading, big data analysis solutions and AI roboadvisors.
These technologies are disrupting the finance ecosystem, and paving the way for new players, and new business models. They also open up opportunities for the industry to transform itself and become more efficient and profitable.
DELVE DEEPER WITH THE FOLLOWING IDATE DIGIWORLD MARKET REPORTS
Blockchain, Oct. 2016
Mobile Payment: The state of the industry, amid new stakes, Apr. 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.