20May/140

Yearbook 2014 : L’économie numérique sous pression

GASSOT Yves

Yves Gassot Directeur Général, IDATE

L’IDATE dessine les lignes de force de la réorganisation des télécoms, de l’internet et de l’audiovisuel.

image-Yearbook2014La 14e édition du DigiWorld Yearbook vient d'être publiée. Nos experts proposent une lecture fine du monde numérique. Chiffres clés,  événements marquant des marchés de télécommunications, de l’internet et des médias numériques, analyses : tout y est.

Nos experts apportent leur éclairage à vos questions :

• Comment évoluent les secteurs clés de l’économie numérique ?
• Les opérateurs télécoms européens sous pression peuvent-il réagir ?
• Quel avenir pour l’industrie des contenus ?
• Quelles sont les lignes de force qui vont marquer le futur internet à l'horizon 2025 ?

« Les tensions n’ont jamais été aussi fortes entre les opérateurs et fournisseurs de solutions techniques et de contenu, même si, au-delà des affrontements, aucune plateforme et aucun acteur ne peut s'affranchir d'une certaine ouverture pour tirer parti des compétences, des standards, des clients des autres acteurs de l'écosystème numérique, comme on peut le voir aujourd'hui dans le domaine de l'innovation mobile », explique François Barrault, Président de l'Institut, dans la préface.

Une occasion pour lui d'introduire le thème du prochain DigiWorld Summit (Montpellier, 18 au 20 novembre 2014), puisque le rendez-vous annuel de l'IDATE aura lieu cette année sous le titre "Mobility reloaded".
Pour Yves Gassot, Directeur général de l’IDATE, « l’année 2013 et les premiers mois de 2014 ont encore apporté une riche moisson d’événements et de nouvelles conjectures sur les orientations des marchés numériques. Nous avons retenu de cette actualité foisonnante, qui s’inscrit dans le triangle analysé dans la précédente édition - Mobilité, Cloud et Big data - les grands enjeux qui cristallisent les débats entre les acteurs de l’écosystème numérique ».

Les trois défis des télécoms

Un premier enjeu majeur a trait à la longue route qui semble encore nous séparer de l’objectif d’un marché unique des télécommunications en Europe. Dans ce secteur, l’Europe fait figure d’exception, avec une baisse continue des revenus de 12 % et des marges depuis cinq ans. Il est donc essentiel de voir si le mouvement de consolidation qui semble s'amorcer permettra de relever les trois grands défis suivants :
• le premier est de sortir de la guerre des prix qui menace la capacité à investir dans les infrastructures de nouvelle génération ;
• le second est de reprendre la route du marché unique des télécoms en Europe, qui passe notamment par des opérations transfrontières et l'émergence d'acteurs véritablement paneuropéens ;
• le troisième est de disposer des marges et de la taille qui permettent de réinventer le modèle économique des telcos dans un contexte qui paraît dominé par la dynamique des acteurs Over-The-Top (OTT).

La nouvelle loi de l’Over-The-Top

Le second enjeu souligne précisément le nouvel ordre Overt-the-top (OTT) qui s’impose à la fourniture d’applications et aux différents acteurs de la chaîne de valeur. Les réflexions sur le futur de l’économie numérique doivent surtout s’appliquer à réinventer des modèles économiques compatibles avec une chaîne de valeur qui renvoie, dans un monde tout IP, l’essentiel des applications et des services à l’extérieur des réseaux. C’est la loi de l’Over-The-Top. Si cette loi de l’OTT s’applique à tous comme une nouvelle donne inévitable, elle n’implique pas une intégration verticale systématique ou une confusion des métiers (ce que laissent parfois entendre les réflexions sur la convergence). Elle ne préjuge pas non plus des rapports de force qui s’appliqueront au partage de la valeur. Même si des positions de force indiscutables existent au niveau des grandes plateformes des géants de l’internet, l’avenir nous apparaît comme relativement ouvert. Les géants du Net ne sont d’ailleurs pas à l’abri d’un jeu complexe d’incertitudes :

- Il y a celles qui sont relatives aux ambitions à l’international des leaders chinois - Alibaba, Sina, Baidu, Tencent - ou du japonais Rakuten.
- D’autres découlent de la dissémination du numérique dans l’ensemble des secteurs. Elle génère des opportunités mais aussi des champions sectoriels - Uber, AirBnB - avec qui il faut coexister quand ils ne sont pas prêts à se vendre.
- Il y a enfin celles qui sont relatives, plus généralement, aux scénarios du futur de l’Internet esquissés par l’IDATE autour d’un débat sur l’openess, la privacy, la sécurité et la fiscalité : une réglementation accrue pourrait limiter les volumes de données collectées et leur exploitation tandis que le développement systématique de technologies ouvertes ou standardisées pourrait générer une dynamique de marché et d’échange moins dépendante de l’intermédiation des plateformes dominantes.

La télévision « full OTT » ?

La TV linéaire, dont la fin est régulièrement annoncée, est encore là pour longtemps, avec sa part de plus de 90 % des revenus d’ensemble de la TV. Mais des mutations profondes, mettant sous forte pression les acteurs en place, sont en train de remodeler le paysage audiovisuel mondial sans toutefois remettre en cause la puissance nord-américaine, qui dispose historiquement des plus puissants groupes médias et désormais des plus grandes plateformes de distribution avec Apple, Amazon et Netflix :
- le développement rapide des services à la demande, et notamment la SVOD ;
- la distinction technique entre distribution sur réseaux managés et distribution OTT va progressivement disparaître, laissant la place à une concurrence aiguë pour le contrôle de la distribution commerciale ;
- la remise en question du modèle de l’IPTV, et l’apparition de solutions Broadcast + OTT sous l’effet du cord-cutting.

Vous souhaitez vous procurer le DigiWorld Yearbook 2014 ? Rendez-vous dans notre boutique.

Pour lire le second article dédié au DigiWorld Yearbook 2014.

Les partenaires du Yearbook 2014 :

partenaires-yearbook

 

13Feb/140

Edito by Yves Gassot

GASSOT Yves
 
Yves Gassot

CEO, IDATE


Round-up for 2014

It’s hard, in the first editorial of the year, to avoid laying out the overriding themes that we expect to see play out over the next twelve months. But it is still too early for me to deliver a complete summary of the year gone by, which has become the much-anticipated task of our DigiWorld Yearbook.
You will also need to wait until the next Executive Note to find out the central topic selected for this year’s DigiWorld Summit (but you can already mark your calendars for November 18, 19 and 20).

What I can share with you, however, is our belief in the profound relevance of certain issues, by summarising three topics that we have chosen to explore in this year’s Collaborative Research Programme (CRP 2014). These are think tanks open to existing IDATE member companies and those wanting to join, who will work for close to a year with a dedicated team of our analysts on the following subjects:

Telecoms USA: model or counter-model?

Following thorough on the two projects carried out in Brussels in 2012 and 2013 on telcos’ new business models, and the new European policy options being considered, we will work to deepen our understanding of the specific points that explain the different directions being taken on either side of the Atlantic.

The internet of things: will everything be connected?

We are going to analyse the true potential of the internet of things, by taking account of the developments that need to occur in the technical environment, difficulties in generating income from both consumer objects and industry applications and, finally, governance and personal data ownership issues, with tie-ins to our 2013 think tank on personal data

What will tomorrow’s TV and video networks look like?

Here we are building on the 2013 Video as a Service think tank by exploring issues surrounding the future of television and video distribution networks, and by analysing long-term scenarios for the delivery of TV and video products, taking particular account of the cooperation and convergence between networks, i.e. hybridisation involving both fixed and cellular networks

Other topics may be added to the CRP. For instance, we are contemplating an ambitious project that aims to define what could be a comprehensive, metropolitan area-scale digital investment strategy, going beyond marketing clichés and segmented vertical approaches.

I can also tell you that the next issue of Communications & Strategies (DigiWorld Economic journal) will be published in March, and is shaping up to be a promising one. It will be devoted to scoring Europe’s telecommunications sector, and examining potentially clashing policies.
And, finally, a reminder that the best way to delve into the subjects that are consuming our teams is though the reports that we publish every month as part of our annual Market Research programme.

8Aug/13Off

Internet Services: where is the value?

 

Vincent BONNEAU
Head of Internet Business Unit at IDATE

The Internet services industry is often perceived as a world of completely free services (and thus implicitly low quality), where everything is supported by advertising. In reality, the situation is obviously more complex. The majority of Internet services revenue comes from paid or transactional services, and the proportion of advertising revenue is trending downward (see Chapter 2, Internet markets) with the development of new services around mobile, cloud computing and even social networks, which rely more and more (at least partly) on paid solutions.

A low-cost approach to services?

Many services are actually offered in freemium versions, with a basic free version (often ad-supported) and a more premium paid version. Spotify and Deezer use this model for online music distribution, and Dropbox and similar services use the same for cloud computing. The goal is to establish a large user base by offering free services, and to then use this base as a lever to attract users to the paid services. The associated marketing costs are therefore next to nothing. The bestperforming players are managing to convert almost 15% of their user base to the paid versions.

Even paid services providers (including freemium models) are adopting low-cost pricing strategies, which breaks with traditional pricing models (like Skype for VoIP, Netflix for SVOD, Amazon for e-commerce and PayPal for payments) and thus undermines traditional service providers. However, this does not mean that Internet players never offer premium services.

Telco and OTT provider revenue in Europe's 5 biggest markets

Premium services still exist on the Web

Where monetisation and value creation of Internet services has seen the most success is when providers have used an approach that combines lower-cost pricing and premium services aimed at the end user and/or third parties (such as merchants, advertisers and developers). It is often the functionality offered to the user rather than the price that is premium, especially in terms of customer service (Amazon), scope of the service, account management and device support (Netflix), decision support, ease-of-use (PayPal). Most players also rely on a two-sided approach.

The service offered to third parties who connect with or capture data from users is premium. The price per unit for this is often moderate, too. But the service is very attractive for advertisers and merchants in such terms as quantity and quality of available data, ease of implementation, value-added services, targeting capacity. Advertisers are always willing to pay more for advertisements to reach the most attractive targets. The CPMs are therefore much higher on financial information sites. It is, then, ultimately data, and personal data in particular, that constitutes the premium resource of the Internet.

How top internet companies are positioned

Premium services need advanced tools

To effectively implement premium services on the Internet (and consequently data management and processing), most players are investing heavily in infrastructure for both hardware and software. Major Internet players are positioning themselves around essential technological cornerstones, such as data centres, the Cloud, browsers, operating systems and even devices themselves, or specialized solutions such as DRM. They are implementing their own solutions and developing proprietary approaches if necessary, even offering their resources to third parties (such as Amazon Web Services, Google Analytics, Facebook Connect). Google invests almost one billion USD per quarter in infrastructure.

Advanced software solutions are also central to many Internet players’ activities, particularly around data processing and analysis, which is the focus of the recent growth of big data (see the Big data section in this chapter). Google is therefore indirectly behind the current reference service Hadoop, which derives from Google’s MapReduce.

Averageannual per-user revenue for digital content

Premium Internet services involve platform development

Premium services also require vast amounts of data to be collected. This data capture can be direct (via user tracking),declarative or from various sensors. It can also come from third parties through agreements (possibly via their API).

This has pushed most of the major players to develop platforms capable of collecting data from third-party services. This platform links users of the Internet player’s service with developers, merchants and advertisers who want to connect with a wide audience, with varying levels of targeting. It is therefore an essential intermediary tool. To increase interest in their platform, the major Internet players are also keen to offer a part of their infrastructure and devices (Nexus, Kindle Fire) at low costs, despite their relatively premium specifications.

About the Digiworld Yearbook

While digitisation will bring more growth to certain developed markets, the next decade will show a marked decline in linear television revenue in the video sector, and a corresponding increase in new on-demand services. For the incumbent audiovisual operators, their capacity to generate revenue from these new services will dictate whether they can sustain their levels of turnover. They will, for all that, only find growth opportunities in emerging markets.

digiworld yearbook 2013
197 pages that deliver the finest market insights from IDATE experts who track the changes at work in the globe’s telecom, Internet and media industries throughout the year.

the DigiWorld Yearbook is published in English and French and available in print and PDF format. An iPad edition, developed by Forecomm, is also available.

The 2012 edition can be downloaded for free
The 2013 edition is available for purchase. Print: €99.99, incl. VAT; PDF and iPad: €54.99, incl. VAT

 

  • You can have a look at the digiworld yearbook 2013, purchase it or even download the 2012 version for free at : www.digiworld.org/yearbook/
6Aug/13Off

Next Gen TV: OTT and on-demand services

Gilles Fontaine

Gilles FONTAINE

Deputy Managing Director
Director of the Business Unit TV & Digital Content Business Unit, IDATE

The video distribution chain is evolving. Traditional programming models have been turned on their head (shortened release windows; Netflix releasing all episodes of a series all at once); video consumption on tablets is growing, before connected TVs really take off; and linear TV is relying on social networking faced with the growing strength of Internet platforms with a native specialisation in personalised recommendations.

Evolution in action

The various categories of player are seeing their historical models under threat. Cable and IPTV network operators have had to review their content distribution strategies. Some (Comcast) are strengthening their offerings to compete with OTT services, while others (Telecom Italia) are offering as a minimum a combination of linear television and on-demand services without quality of services guarantees. Television channels, whose core business is aggregation, want to keep their added value in a climate of growing on-demand. On the one hand, the major free channels are looking to promote live events to maintain the link with their mass audience; on the other hand, pay-TV services are introducing VOD to increase their attractiveness and are also investing in exclusive rights.

VOD service revenue worldwide

Fragmentation before convergence?

The growing number of offerings and players coming onto the video market is leading to fragmentation. New players, from the Web and also consumer electronics manufacturers, are coming out with new free or paid services that fi ll market segments ripe for exploitation, such as subscription-based VOD services, which compete with pay-TV, and ad-supported premium programming, which competes with the catch-up TV services of free channels.
The lines between linear services and on-demand services are likely to blur with the advent of mixed services that combine linear (or relinearised) television and directly competing on-demand programming. Fragmentation is also occurring due to the proliferation of proprietary ecosystems that are breaking away from the traditional ‘standardisation’ of television distribution and reception. In an effort to both promote their proprietary devices and to exploit customer loyalty, TV manufacturers and developers of mobile phone, tablet and connected TV operating systems are seeking to create their own ecosystems.
However, this fragmentation should be reversed in the medium term as a few distribution platforms start to dominate, offering the major content services and differentiating themselves by the quality of experience delivered to their customers. We should see the situation return to something like the traditional television model, where the various distributors are generally offering the same services, but packaged differently.

We can therefore identify three opposing visions for the long-term evolution of video content distribution:

  • The traditional model of packaging access and content together: Using an intelligent network equipped with a smart box, telcos and cablecos distribute packages that they have negotiated with content service providers or directly with the producers.
  • The self-supply model: Strong-brand content services use the open Internet to reinforce or re-establish a direct link with consumers.
  • The digital store model: E-commerce sites offer all content and make it available to consumers through recommendation and personalisation engines.

Long-term growth outlook for on demand television services

What impact will we see on the market?

While digitisation will bring more growth to certain developed markets, the next decade will show a marked decline in linear television revenue in the video sector, and a corresponding increase in new on-demand services. For the incumbent audiovisual operators, their capacity to generate revenue from these new services will dictate whether they can sustain their levels of turnover. They will, for all that, only find growth opportunities in emerging markets.

TV: the top on-demand service market in 2022

About the Digiworld Yearbook

While digitisation will bring more growth to certain developed markets, the next decade will show a marked decline in linear television revenue in the video sector, and a corresponding increase in new on-demand services. For the incumbent audiovisual operators, their capacity to generate revenue from these new services will dictate whether they can sustain their levels of turnover. They will, for all that, only find growth opportunities in emerging markets.

digiworld yearbook 2013
197 pages that deliver the finest market insights from IDATE experts who track the changes at work in the globe’s telecom, Internet and media industries throughout the year.

the DigiWorld Yearbook is published in English and French and available in print and PDF format. An iPad edition, developed by Forecomm, is also available.

The 2012 edition can be downloaded for free
The 2013 edition is available for purchase. Print: €99.99, incl. VAT; PDF and iPad: €54.99, incl. VAT

 

  • You can have a look at the digiworld yearbook 2013, purchase it or even download the 2012 version for free at : www.digiworld.org/yearbook/
24Jun/13Off

Sorry, but this post is not available in English

19Jun/13Off

Telcos: evolve or die

POUILLOT-Didier

Didier Pouillot
Director of the Telecom Strategy Business Unit,
DigiWorld Yearbook project leader, IDATE

Digiworld Yearbook 2013

 

What is the future of telcos Business models ?

Increasingly stiff competition, particularly in Europe, and the growing role of the internet and OTT (over-the-top) services, has upset the telco industry. Revenue from calling minutes is tumbling, data traffic is exploding and NGN (LTE and fibre) rollouts require massive investments. This is the backdrop, then, against which telcos are having to consider the future of their business models.

 

1_telecom_market

Creating more value from access

They do have certain leverage to deal with this change, starting with creating more value from network access now that OTT services are increasing user consumption. NGN technologies allow telcos to increase speeds (‘best network’ strategy) and to introduce noticeable quality improvements, both of which can differentiate their offerings. The challenge now is to increase data revenue, smartphone and tablet use and to extricate themselves from the price wars raging in certain national markets. So we are starting to see new pricing strategies emerging, with per-minute charging being replaced by new ways of creating value from access and data: tiered pricing based on speed and access quality, data-sharing options between multiple devices and/or users, and bundles that include optimised access for a group of applications.
Other than necessary investment in infrastructure, implementing these innovative approaches also requires significant effort in upgrading software tools (OSS/BSS) in order to control traffic and usage in real time, and to provide the flexibility required for policy management and real-time charging.
Also worth underscoring is that operators see the migration of IT architectures to the cloud and the proliferation of connected objects (machine-to-machine, the internet of things) as major opportunities to earn back on some of their spending on access.

2_making_money

Moving toward two-sided markets

Alongside this strategy, telco services can take two approaches:
• adding value to access and using a two-sided market approach, by enhancing wholesale services: telco CDN,
• API agreements (billing, geolocation and others)
• beyond access, by relying on certain assets that underpin their originality. For example, value can be created from the personal information available through their consumer relationship, either by optimising their own offerings (downstream side in the two-sided structure), or by selling analytics services to third parties (upstream side).

The challenge is therefore to find the right balance so as not to destroy the image—and the value that comes with it—of a ‘trusted third party’ that consumers have of them. There are also increasing opportunities with regard to services. Operators can harness the creativity found in start-up companies, as seen with Telefónica Digital) while managing the risks of destabilising agreements that would likely be signed with major OTT players. They can also enter into collaborative projects, with players from user sectors (particularly within vertical markets), or between themselves to define applications deemed strategic (NFC and payment) or related to traditional interpersonal communication (see joyn RCS services). In particular, this would involve challenging the proprietary solutions developed by device manufacturers.

3_tiered_pricing

Industry reorganisation in the medium or longer term

These changes to business models tailored to operators’ specific assets could be accompanied by a consolidation of the telecommunications landscape in the more or less long term, particularly in Europe which has been singularly hard hit by the economic crisis and by having an extremely fragmented market. It is possible that the new round of mergers in the US could make its way to this side of the Atlantic, or result in a series of infrastructure sharing and pooled investments.

Maintaining the status quo could, on the contrary, only speed up European telcos’ loss of power, impede the development of NGN and, ultimately, result in their being taken over by carriers from the US or one of the powerful emerging economies.

About the Digiworld Yearbook

digiworld yearbook 2013
197 pages that deliver the finest market insights from IDATE experts who track the changes at work in the globe’s telecom, Internet and media industries throughout the year.

the DigiWorld Yearbook is published in English and French and available in print and PDF format. An iPad edition, developed by Forecomm, is also available.

The 2012 edition can be downloaded for free
The 2013 edition is available for purchase. Print: €99.99, incl. VAT; PDF and iPad: €54.99, incl. VAT

 

  • You can have a look at the digiworld yearbook 2013, purchase it or even download the 2012 version for free at : www.digiworld.org/yearbook/
10Jun/13Off

The state of the digital world in figures

Interview with Didier Pouillot, Digiworld Yearbook project manager

Interview published in weekly letter from ARCEP - 7 June 2013

Find the intervew Didier Pouillot by ARCEP on the occasion of the publication of the 13th of the DigiWorld Yearbook: our annual publication on the state of the digital world. (Interview available in french only)

Source: ARCEP's website

Didier Pouillot reviews the status and trends of DigiWorld markets: telecommunications, computer and television, an economy that accounts for 6% of global GDP, but whose performance is currently short of those of the general economy, particularly in Europe, on which Didier Pouillot explains the situation. This is also an opportunity to recall the issues in each market of the digital economy with many business models are changing mainly because of internet giants: Facebook, Amazon, Google, Microsoft and Apple, and more broadly OTT services.

Discover the slides from the London Yearbook presentation with Ronan Dune, CEO Telefónica :

Digiworld Yearbook 2013 Presentation in London, with Ronan Dunne, CEO Telefónica UK Limited. from DigiWorld by IDATE

About the Digiworld Yearbook

digiworld yearbook 2013
197 pages that deliver the finest market insights from IDATE experts who track the changes at work in the globe’s telecom, Internet and media industries throughout the year.

the DigiWorld Yearbook is published in English and French and available in print and PDF format. An iPad edition, developed by Forecomm, is also available.

The 2012 edition can be downloaded for free
The 2013 edition is available for purchase. Print: €99.99, incl. VAT; PDF and iPad: €54.99, incl. VAT

 

  • You can have a look at the digiworld yearbook 2013, purchase it or even download the 2012 version for free at : www.digiworld.org/yearbook/
30May/13Off

Scorecard for the digital economy in 2012

Digiworld Yearbook 2013 : scorecard for the digital economy in 2012

DigiWorld markets took a hit in 2012, with growth dropping to 2.7% after two years on the road to recovery.

DigiWorld markets took a hit in 2012, with growth dropping to 2.7% after two years on the road to recovery. Meanwhile new online, or over-the-top (OTT), services continue to grow by around 20% on average—although, in terms of revenue, they are still outweighed by veteran solutions by more than 20 to 1.

Digiworld Market figures and forecasts 2010 to 2016

Hardware markets have been the hardest hit, with growth dropping by 2.4 points overall in telecom, IT and consumer electronics (CE) markets combined. The first two are still in the black, thanks in large part to rising smartphone sales on the telecom front, and strong tablet sales on the IT front. CE hardware (audio and video equipment) is in bad shape, however. Television sales, which are naturally one of the market’s mainstays, are struggling to find a boost comparable to the one delivered by the introduction of fl at screens in the 2000s.

Services, meanwhile, have fared somewhat better, with growth rates of between 2.7% for telecommunications and 4% for television, by way of 3.8% for IT and software services. These markets outperformed hardware segments in 2012 and were far more homogenous. Yet there are still huge gaps in regional performance levels across the board (see next chapter).

Hardware markets gasping for air

At the end of 2010, we saw signs of concern in certain hardware segments—despite what had appeared to be a year of recovery by and large. PC sales were down, and the industry was already wondering what new products would help keep TV sales on the up (3DTV? Connected TV?). Results for 2011 were relatively reassuring, with sales continuing to rise in both the telecom and IT markets. Only consumer electronics was suffering, although not too badly. Still, 2012 proved a blow, with sales dropping virtually across the board, and pressure on prices largely eradicating any positive infl ux from users upgrading to new devices. TV sales were the hardest hit, and propelled the 7% drop in sales for the CE sector. Increased competition in the smartphone and tablet markets have also shaken things up in the other two sectors.

Services markets still holding on

When the recession was at its height in 2009, the boast was made that ICT services in general and telecom services in particular could weather any storm: there was much talk of resilience, no doubt thinking that, as with counterpart hardware, these services were not only able to take the blows but also to rebound, and find their way back to their initial trajectory. That was then. Although there is no denying a certain relative resistance, it now seems very unlikely that we will return at any point to the growth rates of the mid-2000s, and even less to the double-digit growth of the late 1990s. Or rather, that only a slim portion of services will—thanks to the explosion of new online services. Core veteran services, on the other hand, are up against a new set of pressures from these fledgling rivals: decreased value of telecom services, of customer relations for IT services, and of programming for TV networks.

About the Digiworld Yearbook

digiworld yearbook 2013
197 pages that deliver the finest market insights from IDATE experts who track the changes at work in the globe’s telecom, Internet and media industries throughout the year.

the DigiWorld Yearbook is published in English and French and available in print and PDF format. An iPad edition, developed by Forecomm, is also available.

The 2012 edition can be downloaded for free
The 2013 edition is available for purchase. Print: €99.99, incl. VAT; PDF and iPad: €54.99, incl. VAT

 

  • You can have a look at the digiworld yearbook 2013, purchase it or even download the 2012 version for free at : www.digiworld.org/yearbook/
3Oct/12Off

IDATE’s 2012 DigiWorld Yearbook

POUILLOT-Didier

Didier Pouillot

Director of Studies - Head of Digital Plan Practice, DigiWorld by IDATE

 

Mapping the digital world

 
IDATE presents in Moscow the 12th edition of its DigiWorld Yearbook which provides readers with a concise portrait of the digital world. The Yearbook begins with a look back at the trends that shaped 2011, then goes on to explore the key issues in 2012 and, here, takes a looks at the map of the digital universe.

The presentation by Didier Pouillot, Project leader of the DigiWorld Yearbook edition, takes place during a special session, at "Telecom Networks 2.0: Sharing Engineering International Forum" organized by SVM Media & Events Group (detailed programme http://sharing-forum.com)

Live Presentation of the session on:
Sharing Engineering International Forum
(Starting at 9:30am in Moscow, 4th October 2012)
 
 
This event will give us the opportunity to present you the latest edition of our DigiWorld Yearbook 2012, which has become an essential tool for digital professionals, providing a compact and accessible review of the main events of the past year, the latest data on the markets and market players, and the major technological and regulatory trends on the world stage. We will benefit from this occasion not only to focus on the key role of Russia in the telecom and ICT market, but also to show our willingness to position Russia at the heart of our European analysis and research.

Is this the beginning of the end for telcos in Europe?

While the Internet giants clearly have a starring role to play in this newly redrawn landscape, the same cannot necessarily be said of telcos. Emerging economies have been driving the global market for several years now while, in advanced economies, telcos are no longer enjoying the tremendous rates of growth brought by the 20 years of development of mobile telephony. This is forcing them to reinvent their business models to adapt to this relative state of maturity, to increased competition in the marketplace, to the disappearance of the minute as the base unit for billing, to competition from OTT players over their core applications, to financing imperatives created by the surge in traffic…

This reinvention process is only just beginning for telcos. It is going by way of changes in access billing schemes within two-sided ecosystems, offering a) customers tiered pricing based on quality (speed, latency, priority), usage, the connected devices and integrated applications and b) managed network solutions to players further down the chain: CDN, cloud, IaaS and API. Other more radical approaches, or ones born of impatience at the pace of FTTH rollouts, see outsourcing and network pooling schemes as the beginning of the end for the sector as it stands: on the one hand is infrastructure-sharing, enjoying a de facto monopoly, financed by utilities or direct public funding and, on the other, service providers’ models and competition…

But what concerns us here is something else again: the gap between the North American and European markets during this time of difficult transition. The gap can be seen, first, in the way revenue is progressing, especially in the mobile market which grew by 4.5% in 2011 in the United States, while over in Europe (EU-27), telcos’ consolidated revenue dropped by 0.5%. Of course this is due in part to the dire economic situation in Greece (-13.1% for mobile services in 2011), Portugal (- 6.2%), Spain ( 3.2%) and Italy (- 0.8%). But the situation is also bleak in France (- 2.2%) and the UK (- 0.6%). Although not necessarily a contributing factor, also worth mentioning is the four or five-point gap in the capex-to-revenue ratio between the top American telcos and Europe’s incumbent carriers (in domestic spending).

Plus, we cannot help but wonder about a policy that is proving incapable of promoting innovation and investment in the new superfast infrastructure that Europe needs, or competition and price control policies. The third gap results from the sector’s relative fragmentation in Europe, compared to the consolidation we have seen over in the States – even if American authorities’ denial of the AT&T/T-Mobile merger put things temporarily on hold. Meanwhile Europe’s telecommunications’ industry, like Europe as a whole, continues to struggle to create the much sought-after single market.

Growth of the mobile services market in Europe (EU-27) and the United States

Didier POUILLOT
Responsable Telecom Economics and Business Modelling
d.pouillot@idate.org

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28Jun/12Off

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