CEO, IDATE DigiWorld
As in previous years, IDATE DigiWorld has selected four topics for its 2016 Collaborative Research Programme, which will be taking place in Paris, London and Brussels. The aim of the Programme is to give our 50 Member Companies, which support the DigiWorld Institute’s activities throughout the year – and, if space allows, outside private and public sector players as well – an opportunity to engage in frank and meaningful think tanks.
The programme for each think tank includes three workshops hosted by a team of IDATE DigiWorld experts, with contributions from participants and outside experts. Once the workshops are over, the IDATE DigiWorld team will deliver a summary report to all those who participated.
The topics for the 2016 Collaborative Research Programme 2016 are as follows:
• Digital single TV market vs. globalisation (Paris)
The European Commission’s Digital Single Market (DSM) project is devoted to fostering the emergence of a single market for digital services, and notably for TV services, by creating a framework for geo-blocking and supporting a European copyright system. How can we create a credible single TV market in Europe in the Netflix era?
• The Digital Agenda and broadband targets: Benchmark of national programmes (Brussels)
The aim of this think tank is to obtain a detailed snapshot of superfast network rollouts by discussing the mix of technologies being employed in each market (FTTH/VDSL/vectoring & bonding/G-Fast/DOCSIS…) along with the targets and forecasts for 2020. The main focus, however, will be on exploring current private sector investments and future public sector spending to complete national coverage. How much will governments need to spend? What schemes are being used to manage these public investments? And how are they likely to impact the sector’s industrial organisation over the long term?
• 5G: outlook for vertical markets (Paris)
In addition to ushering in faster connections, 5G will also be synonymous with addressing potentially multifarious needs, born of the IoT’s development in the different sectors of activity. What can be said about the coexistence of the different LPWA solutions and expected future developments? What case studies can serve to illustrate the multiplicity of requirements that 5G will need to satisfy? What regulatory hurdles will need to be overcome (security, liability, net neutrality)? And what are issues and challenges ahead for telcos?
• Verticals and the digital transformation: Revenue streams and beneficiaries (London)
This think tank will take stock of a decade of current and future disruptions (Cloud, Big data, 3D, robotics, IoT, mobility, social networks…) in infrastructure, the production of goods and services and customer relationships. It will draw on case studies to explore new business models (e.g. the servicisation of production), the shifting balance of power in the Internet ecosystem (horizontal platforms vs. new vertical players), regulatory issues and more.
The first workshops will be held in June, so get in touch with us soon to request a more detailed presentation* and, in the meantime, enjoy the Newsletter!
2016 Collaborative Research Programme
Sign up today for one or more of our Collaborative Research Programmes
*For more information, please contact Sophie Monjo: email@example.com – Tel:+33 (0)4 67 14 44 56
Published in DigiWorld Economic Journal DWEJ No. 101
Interview with Lorena Boix Alonso, EC-DG Connect, Brussels
Conducted by Sally BROUGHTON MICOVA
DW Economic Journal: You recently completed a comprehensive consultation on audiovisual media services with a view to possible revision of the EU's regulatory framework in this area. How much of a call for change is there from stakeholders?
Lorena BOIX ALONSO: The Audiovisual Media Services Directive (AVMSD) was adopted in 2007 and replaced the Television Without Borders Directive of 1989.
Since 2007 – and let alone since the '80s –, the audiovisual media landscape has changed significantly, in particular due to the phenomenon of media convergence. In light of these changes, we are currently reviewing the Directive and assessing its regulatory fitness, with a view to presenting a new legislative proposal later this year.
The public consultation we organised last year is an important part of this exercise and informs our future actions.
Currently, the AVMSD regulates television broadcasts and on-demand services. It applies to programmes that are "TV-like" and for which providers have editorial responsibility. The preliminary trends of the consultation show some convergence of stakeholders' views on the need to revise the scope of application of the rules. However, respondents are not always clear as to how to do this, what new services should be involved and to what type of rules they should be subject. The main concern seems to be viewers' protection, including minors.
A crucial pillar of the Directive is the so-called country of origin principle. Thanks to this principle, service providers only need to abide by the rules of a Member State rather than of multiple countries - making things simpler for businesses, especially those wishing to develop cross-border. Quite unsurprisingly, most of the respondents to the consultation want to maintain the country of origin principle.
De facto, the country of origin principle has facilitated the growth and proliferation of those services. As of end 2013, 5,141 TV channels were established in the EU. Almost 2,000 of them targeted foreign markets. This share has increased from 28 % in 2009 - year of implementation of the Directive - to 38 % in 2013 (from 45% to 68 % for the UK). As far as VoD services are concerned, in 2015, on average in Member States, 31 % of the VoD services available were established in another EU country.
Another subject on which we observed a clear trend in the responses to the public consultation is the importance to ensure the independence of national audiovisual regulators.
We have however observed less clear trends regarding other areas covered by the Directive, for example on the way forward for the rules on protection of minors, commercial communications and promotion of EU works.
The independence of regulatory authorities has historically been a touchy subject for some member states, thus it was not really dealt with in the current Directive nor the one before it. However, things seem to be different this time around, particularly with the regulators themselves taking a stand on the issue. Why have things changed and what exactly is on the table?
The independence of audiovisual regulatory bodies is key for the implementation of legislation in an impartial manner (i.e., free from influence by political players or industry). When regulatory bodies lack independence, this has a direct impact on the effective transposition and application of EU legislation. This is why many EU regulatory frameworks in other domains (i.e. telecom, gas, electricity, postal services, personal data protection) require from Member States regulatory independence. In the field of media, regulatory independence is also important for the preservation of a free and pluralistic media system.
However, the Audiovisual Media Services Directive does not impose an explicit obligation on the Member States to create an independent regulatory body.
The currently-running review of the AVMSD is assessing whether the Directive should be reinforced explicitly by requiring Member States to ensure independence of audiovisual regulatory bodies. As I said, the preliminary results of the public consultation indicate that the majority of respondents would support this position.
The Commission has established the European Regulators Group for Audiovisual Media Services (ERGA), which is – among other tasks – looking precisely into the issue of independence. And yes – in particular following the newly approved amendments to the Polish media law – the Group has recently pointed to the importance of independence.
ERGA called "upon all Member States of the European Union to act to uphold the principle of independence of the media across all European Member States." The Group also called on the Commission "to continue to actively monitor developments and to take all necessary steps to support a free and independent media, including the taking of firm action against the weakening of the necessary institutional arrangements".
How does what your team is working on in relation to audiovisual media services interact with other elements of the Digital Single Market plans such as copyright reform and addressing online intermediaries?
The Digital Single Market (DSM) strategy for Europe calls for a modernisation of the AVMSD to reflect market, consumption, and technological changes. It requires the Commission to focus the scope of the AVMSD and on the nature of the rules applicable to all market players, in particular those for the promotion of European works, protection of minors, and advertising rules.
The overall vision of the DSM strategy is to create an internal market for digital content and services and ensure that Europe is a leader in the global digital economy. To meet this objective, the DSM puts forward a range of initiatives beyond the AVMSD review.
The AVMSD review is being coordinated with these other DSM initiatives such as the assessment of the role of online platforms and intermediaries as well as the evaluation of the telecoms framework. Besides, the Commission continues to work on the modernisation of the copyright framework as well as on the implementation of a set of support measures accompanying these legislative changes in order to facilitate cross border access to European content within the digital single market.
What can we do about "the Netflix problem"? Have any good ideas come to light in your consultations in relation to OTT audiovisual services?
We are well aware of the concerns, raised by some in the public consultation, related to the lack of a level playing field, resulting from the different level of requirements introduced by Member States. This relates particularly to the field of promotion of European works.
New players start investing in new content. This is already a trend in the US. US players active on the EU market, e.g. Netflix and Amazon, also start investing in European productions. European VoD players are also more and more financing European content, also often in the form of co-financing.
However, it is true that these players do not contribute to the financing of new European content to the same extent as traditional players (television and cinema) do.
All these aspects are considered in the context of the AVMSD review. In that view and even though all the options are open at this stage, during our assessment we are looking in particular into the best ways to ensure the promotion of European works in on-demand services.
How do you think we are going to be able to encourage European content production and distribution in the future?
The promotion of European works is a key value of the Directive. The current provisions of the Directive have contributed to the cultural diversity in Europe though the production and distribution of valuable European content. For instance, the 66th Berlinale film festival that took place in February was a very good example of the creative power and diversity of cinema, with a new attendance record. I believe we can celebrate the fruits of the work of the European audiovisual and film industry that we can all be very proud of.
However, it is undeniable that the market and viewing habits have changed since the last review of the Directive, in particular regarding the rapid developing of Video on Demand. Young people consume audiovisual content increasingly on-line. People want access to audiovisual content whenever and wherever they are, on the device of their choice. Technology has made this possible.
I believe this can be a great opportunity to increase the production and circulation of European films. The Commission is very much keeping this objective in mind in the revision of the AVMSD rules on promoting European works as well as in the context of the implementation of the Creative Europe MEDIA programme. In addition, the Commission is launching other coordinated initiatives to exploit all synergies available to increase attractiveness of European films. This require measures in various areas on which the Commission is working together with all interested parties including the audiovisual sector ( film producers, authors, distributors, sales agents, VOD services, broadcasters, etc.) as well as public authorities and film funds in the frame of the European Film Forum.
On December 2015, the Commission adopted the Copyright Communication "Towards a modern, more European copyright framework" which sets an agenda of non-legislative measures meant to accompany the legislative agenda in order to ensure a wider access to audiovisual content across borders. The rationale for these measures is that audiovisual works and films require investment in order to really benefit from the DSM and to be widely accessible. Audiovisual works and films need to be available in formats and catalogues ready for use and to be understood (issue of language versions).
Finally, the Commission is also deeply engaged into the Creative Europe Media programme, which this year celebrates its 25th anniversary. Through this programme the EU invests roughly €100 million per year in European films and audiovisual industries and supports projects which are aimed at enhancing the prominence of European films on VOD Platforms.
Lorena BOIX ALONSO is the Head of Unit for Converging Media and Content Unit, Directorate General for Communications Networks Content and Technology since July 2012. Formerly, she was Deputy Head of Cabinet of Vice President Neelie Kroes, European Commissioner for the Digital Agenda. During Ms Kroes' mandate as Commissioner for Competition, Lorena Boix Alonso commenced in October 2004 as a member of her Cabinet and became Deputy Head of Cabinet in May 2008. She holds a Master of Laws, with a focus on Antitrust Law and Intellectual Property, from the Harvard Law School. She graduated in Law from the University of Valencia (Spain) and then obtained a Licence Spéciale en Droit Européen from the Université Libre de Bruxelles. She joined the European Commission Directorate-General for Competition in 2003. Prior to that, she has worked for Judge Rafael García Valdecasas, at the European Court of Justice, as well as Deputy Director and Legal Coordinator of the IPR-Helpdesk Project and in private practice in Brussels.
More information on DigiWorld Economic Journal No. 101 "Towards a single digital audiovisual market" on our website
Senior Consultant, IDATE DigiWorld
Handset value chain shake up – menace or salvation for operators?
Basile Carle, lead device expert at IDATE, raises the question he addressed in his latest study: “Smartphones as we know them today – beginning with the iPhone in 2007 – have clearly enabled operators to better monetize connectivity and therefore helped to generate a return on their earlier investments in 3G network rollouts. Paradoxically they have also accelerated the transfer of a portion of telcos’ share of the value chain over to newcomers, namely handset suppliers and over-the-top (OTT) – or online – vendors. The time has come to revisit the handset subsidies question! Why should operators continue to finance a device – i.e. the smartphone – when other players capitalize more and more on that device: players who threaten to turn operators into mere providers of connectivity, dumb pipes which, although essential are in danger of becoming a commodity?”
From feature phone to Smartphone 2.0 – changes in the value chain
The advent of the smartphone 2.0 triggered a shift in the value chain and a change in business models that forced operators to rethink the way they finance mobile handsets, and this within an increasingly competitive marketplace.
The changing value chain of smartphone distribution
Source: IDATE, Rethinking handset subsidies, December 2015
As competition becomes increasingly fierce, operators have altered their approach to subsidies, largely in an attempt to streamline their sales and marketing investments, especially as it became clearly that, more and more, handset suppliers were emerging as their competitors. This resulted in different strategies from operators, one consisting in rethinking subsidies themselves the other consisting in proposing alternatives financing solution in a SIM only and commitment free world.
When thinking again on subsidies themselves, a distinction needs to be made between subsidies whose purpose is to attract new subscribers, and those used to keep existing customers. Some operators subsidise new customers’ handsets as heavily as those of existing customers when their contract is up for renewal.
Other operators, however, are focused either on keeping old customers or on acquiring new ones. The decision will often vary depending on their market share. A leading operator will tend to be more concerned with keeping existing customers, whereas a challenger will probably take a more aggressive approach to attracting new customers than to keeping its existing ones.
If some operators have decided to continue to partially subsidise their customers’ handsets in exchange for a contractual commitment, most have also introduced SIM-only plans that separate the flat monthly fee from the cost of the handset, and so freeing customers of having to sign up for a minimum contract length. While users can keep their old handset, it nevertheless remains important for operators that new customers who sign up for these plans own a handset whose features enable them to take advantage of all of the functions supplied by the network, whether 4G, carrier aggregation, VoLTE, etc. … Hence the importance of proposing new financing solutions
Impacts of new handset subsidies’ plans
This new approaches in device subsidies has also had an impact on the devices themselves. Suppliers of high-end handsets initially suffered a drop in sales as customers were put off by the price of their products once subsidies were removed. But these companies have adapted to the new situation by introducing their own financing solutions.
By the same token, this shift has enabled the emergence of new players in the marketplace. Companies that present themselves as local – i.e. national brands that created localised versions of what are often Chinese products – have forged themselves a position in the low-end handset segment, and are working to build up the market for handsets sold in retail outlets rather than by operators’ themselves.
Meanwhile, operators have been gradually going back to developing their own brand of handset. Contrary to the first wave of phones that carried operators’ brands, the goal here is less to sell handsets that are more or less locked into the operator’s own services than to get a better handle on costs. These branded products enable operators to earn a slightly higher margin than they do selling OEM products. So their appeal applies as much to subsidised solutions as unsubsidised ones.
By the time 5G is deployed, the (distant) prospect of seeing handsets become active components in the network’s operation – e.g. for relaying signals to the edge of the cell or to a dead zone – could trigger another rethink of handset financing. As the devices become part of the network’s equipment, it could once again be in operators’ interest to help finance them.
Get more insights on changing handset value chain and impacts for operators and manufacturers, through our dedicated market report
Director of Studies, Strategy Business Unit, IDATE
but facing important heterogeneity from one country to another in terms of demographics, economics and players’ involvement.
The FTTH/B market remains at an early stage in the LATAM region: at end 2015, there were 3.65 million subscribers and 20.1 million Homes Passed in the 16 countries analysed in the panorama. Most countries are still focusing on the expansion and availability of traditional Broadband throughout their whole territory. The region is also facing economic difficulties: the disparity is not only between countries, but also inside countries, which can explain why Superfast Broadband is not a priority yet.
One of the main characteristics of the region is its heterogeneity: the involvement of national authorities differs a lot from one country to another as they include or not the telecommunications infrastructures in their overall development strategy. On the regulatory side, there are no specific rules devoted to the enhancement of superfast Broadband in general and FTTH/B in particular.
At end 2015, the largest FTTH/B market in LATAM is Mexico, which now slightly overpasses Brazil with 1.29 million subs (vs 1.25 million subs in Brazil). Both countries represent more than 69% of the regional number of subscribers, which is representative of the demographics. Another country showed a very interesting growth, Colombia, which now counts more than 1.3 million Homes Passed and 150,000 subscribers.
On the largest markets, competition seems to have had a positive impact and really enhanced FTTH players to enlarge and/or accelerate their rollouts. This is for instance the case in Brazil, Argentina, Mexico, and Chile. The kind of players involved in FTTH can also be quite different when comparing the countries. In some cases (Argentina, Mexico, Chile, Uruguay…), the incumbents play a key role and are really active in this new market. But in most cases, the first rollouts have been initiated by small private players, focused on limited areas, at least in the short/medium term. As an example, the Mexican market grew significantly during 2015, with +46% subscribers: the competition between two leading players, Telmex on one side and TotalPlay on the other side, seems to positively drive the market. On its side, the Brazilian market grew a little bit less (+ 32% subs) and is also driven by the strong involvement of national players, but also of small players rolling out in very located areas.
Since 2013, we have seen the emergence of pan-regional players, in particular when coming to the Caribbean islands. Cable & Wireless Communications, through its brand name LIME, is a leading player in Barbados and Jamaica, where it is involved in FTTH rollouts. Another player was cable operator Columbus Communications, which operated under the brand name Flow in Barbados and Jamaica but also in Grenada ad Trinidad & Tobago. At beginning 2015, Cable & Wireless acquired Columbus Communications and decided to provide its Superfast Broadband services under the Flow brand in most markets. Even if Docsis 3.0 is the main infrastructure, the cableco also rolled out some FTTH networks in small areas.
In larger countries, we can of course mention Telefonica Group, which applies a strategy dedicated to each market where it is present. Then, America Movil is another important LATAM player through its brand Claro. America Movil is also deploying both FTTLA+Docsis 3.0 and FTTH networks, depending on the concerned country.
The involvement of such kind of pan-regional players could represent a great opportunity for the enhancement of FTTH/B in the region as, even if not obvious for the moment, they could decide to adopt a common strategy on the different market, one supporting another…
Generally speaking, the LATAM region has a strong potential for FTTH, because of its demography and the dynamism of its real estate market. But it also encounters difficulties due to the fact that the international interconnectivity is not always efficient. For instance, in Bolivia, the international interconnectivity is undersized, which has an impact on the real capacities that ISPs are able to provide to their customers.
However, we have seen very positive signs for FTTH since 2013: the growths in terms of both coverage (Homes Passed) and take up rate (subscribers) are impressive (respectively +46 and +57% in 2014, then +27% and +39% in 2015).The FTTH offering seems to have encountered a great success towards end users. Most players provide Triple Play services that include TV services. And several players have launched 1 Gbps solutions few months ago now.
Number of FTTH/B Homes Passed in LATAM countries
Source: IDATE, on behalf of the FTTH Council LATAM Chapter
When comparing the LATAM region with other ore mature ones in the world, it is obvious that the potential is very high because the market is at its very early stage. But it is also noteworthy to mention that, in terms of penetration rates (number of subscribers on total numbers of households in a country), 9 LATAM countries have entered the global ranking as of September 2015, with rates from 1.76% (Brazil) to more than 47% (Uruguay, where the penetration rate is even higher than in the leading European countries in the ranking!).
IDATE publishes a half-yearly updated FTTx observatory, gathering qualitative and quantitative data of 70 countries and +150 players – see details online
Florence Le Borgne
Director of Studies, IDATE DigiWorld
since the deep dip in 2009 one sole direction: upwards!
Regarding the latest update of IDATE’s half-yearly TV & video services observatory, Alexandre Jolin, Senior Consultant at IDATE, claims: “TV revenues are stronger than ever: from €366.8bn in 2015 they will hit the €413.1bn mark in 2020: still six times higher revenues than generated by video services (both physical and online). Within TV revenues, ad spending will grow at a tremendous pace until 2020 – It will increase by 14.6% – and will be relatively close behind pay-TV revenues. This is particularly notable because the European TV ad spending revenues dropped hardly in 2008, followed by a sluggish growth until 2015. In order to put in relation: Online advertising (both fixed and mobile, video and non-video altogether) worldwide revenues are skyrocketing, nevertheless they will leave behind global TV ad spending at best up from 2019. With this in mind, traditional TV still seems to have a bright outlook for this decade, both for ad spending and other related revenues.”
Key TV facts and outlook
The global TV industry’s revenue will come to €366.8 billion in 2015 and €413.1 billion in 2020.
• Pay-TV revenue will grow by 11.7% between 2015 and 2020, to reach €199.0 billion in 2020.
• Ad revenue will increase more rapidly (+14.6% between 2015 and 2020), to reach €178.3 billion in 2020.
• Public financing/licensing fees will continue to increase significantly (+8.3% in 5 years) to reach nearly €35.9 billion in 2020.
Breakdown of TV market revenue in 2015
Source: IDATE, State of TV & Video Services worldwide, December 2015
Regarding TV access, the number of TV households worldwide will reach 1.742 billion in 2020 (+9.1% since 2015).
• Cable will the remain the chief access channel (623.8 million households in 2020) but will gradually lose ground to satellite and IPTV which will account for 33.4% and 10.3% of TV households, respectively, at the end of 2020.
• Despite the development of hybrid TV solutions, terrestrial TV should continue its decline on the first TV set and drop down to number three spot by 2020, with a 20.5% share of the global market.
• The development of hybrid solutions that combine live programming on broadcast networks (terrestrial and DTH) and OTT video services over the open Web is a key variable in the future development of the various TV access modes, and may well shake up current trends.
Video hard copy sales and rental will total €10.8 billion in 2020
• This means that the global market will decrease by 40.8% compared to 2015.
• Blu-ray will be the most common format and help temper plummeting hard copy sales.
On demand video revenue will reach €54.3 billion in 2020, which is 119.6% more than in 2015.
• OTT video will continue to be by far the biggest earner, generating 83.9% of total revenue.
• VoD will still be the dominant model on managed networks. It will generate €5.8 billion in 2020 versus €2.9 billion for subscription video on demand (S-VoD).
Breakdown of on-demand market revenue in 2015
Source: IDATE, State of TV & Video Services worldwide, December 2015
Learn more about our ongoing monitoring of TV & Video Services covering 39 countries, 10 regions and world consolidated.
Published in DigiWorld Economic Journal DWEJ No. 100
Interview with Mark T Bohr
Intel Senior Fellow, Technology and Manufacturing Group Director, Process Architecture and Integration Conducted by Gilbert CETTE & Yves GASSOT
C&S: Moore's Law is turning 50. Can you comment on and characterise the progress so far? How important is this in the amazing digital development that we're witnessing? Mark T. BOHR:
Moore's Law is a driving force of technological, economic and social change and is a foundational force in modern life. While most people have never seen a microprocessor, we use countless devices every day that are made possible by microprocessors and Moore's Law. Microprocessors and related technologies have become so integrated into daily life that they've become indispensable, yet nearly invisible.
Against the regular predictions of its demise, Moore's Law endures and remains essential to today's generation, which has come to expect and enjoy the experiences and opportunities defined by the observation.
Moore's Law will enable us to continuously shrink technology and make it more power efficient, allowing Intel and the industry to rethink where – and in what situations – computing is possible and desirable. Computing can disappear into the objects and spaces that we interact with – even the fabric of our clothes or shoes. New devices can be created with powerful, inexpensive technology and combining this with the ability to pool and share more information, new experiences become possible.
Moore, in a recent interview, said he thought that in the coming 5 to 10 years his "law" would be validated… Other observers think it will have seen a period of acceleration in the decade after 1990, followed by a sharp slowdown in the 2000s. Do you share this view? How do you account for the different analyses? Do you think Moore's Law has been slowed down because of the physical limitations to increasing the number of transistors per chip? Because of the 'diversion' of some R&D spending on the part of chip producers toward the fight against heat generation? Because of the exponential and hence unsustainable increase in the R&D spending it would take to extend Moore's Law? Or for other reasons?
The demise of Moore's Law has been predicted many times. Continuing Moore's Law is getting tougher, but we believe we have a lead versus our competitors. We remain confident in our ability to deliver Moore's Law and expect to continue true cost reduction through leading-edge process technology and generating real product improvements that apply across our product portfolio.
What other constraints might contribute to questioning the validation of Moore's Law?
We can't speak for others in the industry. Intel recognizes that the continuation of Moore's Law provides us with a competitive differentiator and the ability to bring higher-performance and lower-cost technologies to market quicker than our competition. Over the last several decades, we've said that we can see Moore's Law continuing for the next 10 years, and that is still the case.
Faced with these difficulties, what are the various alternative options (3-tier architecture, superconductivity technologies, biochips...) that researchers are working on? Which ones do you find the most promising?
In addition to making the features on a chip smaller, Intel is exploring numerous technologies, including:
1) Heterogeneous integration in which elements such as radios and sensors are integrated onto one piece of silicone or package;
2) Three-dimensional manufacturing with multiple layers of transistors;
3) Approaches beyond traditional CMOS including high mobility materials and new transistor structures with improved electrostatics;
4) New ways of computing including neuromorphic, or brain-inspired, computing and in-memory computing.
In 1966, the cost of constructing a plant for a new chip was $14 million. In 1995, it took $1.5 billion. Today we talk in terms of $10 billion… What is the justification for this cost explosion? Will the trend become established? What impact will this have on the price of components?
Pursuing Moore's Law is getting more expensive in part because the job is getting more difficult. For Intel, the fundamental rationale of Moore's Law continues – even though it's more expensive overall, the price-per-transistor for Intel continues to decrease with each new generation. Intel will continue investing as long as we see a positive return and a competitive advantage.
Intel and some other U.S. firms dominate the microprocessor industry… how do you explain the continued U.S. leadership in this area?
The semiconductor industry started in the U.S. but it certainly isn't a U.S.-only industry today. Intel's chip-making plants can be found in the U.S., Europe, Israel and China and large manufacturers – Samsung and TSMC – are headquartered in Asia. It's a competitive industry, and we're proud that Intel is the world's largest chip company by revenue and is recognized as the leader in the pursuit of Moore's Law.
Mark T. BOHR is an Intel Senior Fellow and director of Process Architecture and Integration at Intel Corporation. He is a member of Intel's Logic Technology Development group located in Hillsboro, Oregon, where he is responsible for directing process development activities for Intel's advanced logic technologies. He joined Intel in 1978 and has been responsible for process integration and device design on a variety of process technologies for memory and microprocessor products. He is currently directing development activities for Intel's 7 nm logic technology. BOHR is a Fellow of the Institute of Electrical and Electronics Engineers and was the recipient of the 2012 IEEE Jun-ichi Nishizawa Medal and 2003 IEEE Andrew S. Grove award. In 2005 he was elected to the National Academy of Engineering. He holds 73 patents in the area of integrated circuit processing and has authored or co-authored 49 published papers.
More information on DigiWorld Economic Journal No. 100 "Digital innovation vs. secular stagnation?" on our website :
Director of Studies, IDATE DigiWorld
IDATE has just released its latest market report on connected cars, which is part of its ongoing series on the Internet of Things and M2M. The report provides an opportunity to take stock of a major market whose rate of development appears to be accelerating, with a series of announcements, veteran industry leaders such as Mercedes talking about driverless cars, the rise of newcomers such as Tesla, and connected car projects coming out of China, as foreshadowed by the new joint-venture between Internet giant, Alibaba and one of China’s first car-makers, SAIC Motors.
This is a market that every stakeholder along the value chain is gearing up for.
The strategy of most manufacturers is to make their cars connected. The main driver here is based on the regulation related to safety issues in Europe and the underlying revenue opportunity for them. In the USA, the recent GM announcement to embed 4G modules in all new cars is seen as a key trigger for market take-off. For telcos, the revenue opportunity could be interesting as the connected car will generate traffic that telcos will charge for indirectly (through the automobile manufacturer).
All main M2M mobile carriers are involved in the connected car space, as the connected car represents one of the major markets in volume. In a context where their traditional mobile revenues are flat and even declining in some regions, providing mobile connectivity in cars is a key business opportunity for telcos. Beyond car-related applications in driver assistance, from the perspective of a telco, the car can be seen as an additional cellular device, with a potential high-consumption service profile with such usage as the mobile Internet, entertainment on demand and mobile hotspot features. The prime business model remains the traditional wholesale relationship (B2B2C), even though some telcos like AT&T try to address end users directly through B2C models (through a retail data plan) and the integration of an automotive into the mobile share plan.
For Internet players, the strategy here is clear: the automobile is an additional connected device just as smartphones, tablets and laptops and needs to be addressed. However, Apple and Google do not have really the same approach. Indeed, whereas Apple aims to introduce its technology to interface with its products, Google is promoting the embedment of its technology into the car as a regular device. Google also wants to collect data to provide the most accurate advertising as possible, such as a related point-of-interest, based mainly on location.
A market that is starting to take off
On the market side, according to IDATE, in 2020, 420 million automobiles will be connected, representing a 34% CAGR on the 74 million connected vehicles in 2014. Nevertheless, this growth is not homogeneous for each category of connected cars. The embedded systems will lead the market by 2020.
Asia will lead the connected car market in 2020. Europe benefits from a 39% CAGR by 2020, mainly thanks to eCall regulation, entering onto market by end-2018.
In 2020, connectivity revenue for connected cars will exceed 9 billion EUR. In value, North America will be the leading zone, mainly due to higher ARPU than anywhere else in the world both for telematics and infotainment offerings. This encompasses direct connectivity through embedded systems but also indirect revenue related to smartphone usage. The major issues to be raised here are on the real willingness of the user to pay for such services. To encourage users to subscribe, telcos and manufacturers are already contemplating different revenue models including share plans. All the same, adoption is likely to remain limited over the next five years.
Forecast for connected car evolution, by implementation technique
worldwide, 2020 (%, Million units)
The headlines are full of the self-driving vehicle, which is on everyone’s lips in the industry. Automation could be framed at six levels, ranging from zero autonomy to fully automated. The leading manufacturers are, at the first steps, mainly luxury car providers. The traditional car manufacturers are focused on the semi-autonomous route, but the ‘upstarts’ from the realm of the Internet, such as Google and Apple, are straightaway testing the waters of the fully autonomous car. Nevertheless, many issues need to be removed to see the self-driving car market take off. Currently, they are legal (on how to handle accident responsibility), cultural (seeing no real demand from end users) and economical (on who will fund the infrastructure).
Find out more information on "Content economics market" in our dedicated market report
CEO, IDATE DigiWorld
IDATE DigiWorld kicked off the year by renewing its Board. Many thanks to the outgoing members of the Board who have been at our side these past three years, to those who have agreed to stay on for another term, starting with our Chair, François Barrault, and to all the new members who have done us the honour of putting their trust in us. (New Board appointees)
At the meeting in January, IDATE DigiWorld corporate members were also invited to discuss the topics that would be addressed during the coming year, and particularly the one that would serve as the central theme for the 2016 DigiWorld Summit on 15 to 17 November in Montpellier. The majority voted for the topic of trust in the digital world.
The latest headlines no doubt had something to do with it, including the especially difficult transatlantic negotiations seeking to reach an agreement over the Privacy Shield which is to replace the Safe Harbor agreement signed in July 2000. As of this writing, we still do not know if the agreement will be ratified by US and European authorities, and whether it will provide a response to the criticisms that led the European Court of Justice to declare it invalid last October. We have already seen that the lack of an agreement between two such closely bound economies puts not only platforms such as Facebook at odds with European regulation, but also the data circulation and storage practices associated with trade, which are businesses’ lifeblood.
It was nevertheless explained to us that even with a redeployment of cloud architectures inside the EU, European users would not necessarily have the full assurance of being able to rely on European laws to protect their private data. So there needs to be a convergence of the legal environments that govern privacy guarantees. The situation is naturally complicated by terrorism (including cyber-terrorism) which is pushing States to demand access to networks and platforms, which they believe is vital to enabling them to carry out their responsibilities as a policing force.
But digital trust is also a multifaceted issue that extends well beyond these transatlantic negotiations. Below are just a few of the topics that could be explored at the upcoming DigiWorld Summit (for a detailed presentation go to):
• The privacy paradox: big traffic, little trust
• What are some of the more innovative security solutions today (biometrics, abacus, etc.)?
• Technology and the value chain: what are the true prospects offered by blockchains and permissionless distributed databases?
• New business models: real time bidding and programmatic ad buying vs. ad-blocking
• Telcos’ dilemma: monetise data or become trusted third parties?
As always, the plenary sessions devoted to these questions will be completed by high-level thematic forums that explore the ins and outs of hot topics such as ultra-fast access, 5G, the IoT, new TV and video behaviours, FinTech and more!
So mark your calendars for November in Montpellier. In the meantime, enjoy this issue of our Newsletter, and be sure to check out the latest news from IDATE DigiWorld and find out what our teams are up to!
Debate over the crucial role that trust will play in the digital economy’s future
The 38th annual DigiWorld Summit will run from 15 – 17 November 2016, and have as its central theme: The Internet of Trust. It will be an opportunity to engage in a meaningful international debate over digital trust issues – starting with security and privacy – which have become major sources of concern for all of the ecosystem’s stakeholders.
As the number of reported cyber-attacks worldwide is growing by close to 40% a year, we expect that upcoming stages in digital technologies’ evolution will only amplify the phenomenon. And this to such an extent that any future scenario is possible: from a continuation of the current chaos to a breakdown in trust that would lead to the construction of a new digital economy, which will no doubt differ in many respects from the one we know today.=
• Are we reaching a tolerance threshold for online trust?
• How can veteran digital industry players (equipment suppliers, telcos, IT companies) capitalise on the current climate?
• Are verticals threatened by the situation or, on the contrary, on the winning side of trust and security issues?
• Do we need a new regulatory framework to govern, or reassure, market players and consumers?
The need for a profound reassessment of security and trust issues seems inevitable: massive increases in spending on security solutions, rise in protectionist behaviour (use of ad-blockers, battle against botnets, etc.), avoidance tactics (piracy and circumvention), clarification of the terms governing access to private data and the management of digital identities and online reputation… There is no shortage of issues and threats affecting the rate of adoption of digital technologies, but which could also prove to be opportunities for all market players.
> Use and misuse of trust
Will trust be a key parameter in tomorrow’s Internet?
• The privacy paradox: Usage is high, trust is low: Are we reaching a tolerance threshold for online trust?
• Digital trust at the heart of customer relations? How do Internet companies and verticals gain their customers’ trust?
• Can we trust digital world players? Can the Internet giants continue to be both the arbiters and targets of their users’ trust issues?
• Can the digital world trust us? Focus on piracy: Can businesses trust their customers?
> Trust technologies
A broad field of innovation for market leaders and start-ups
• Innovative security solutions: biometrics, etc.: What can we expect from the next wave of innovations in the arena of cyber security and data control?
• Blockchains and decentralized trust: Will today’s trusted third parties be cut out of the loop?
> Trust altering the digital value chain
Will trust be a game-changer?
• Trusted third parties & digital coaches: Will we see new trusted third parties emerge (banking, post, health…)
• Do we need more secure enablers? New growth enablers for telecom and IT industry leaders?
• What role for telcos? Monetise data or become trusted third parties?
> Business model crash test
Will the current and future business models for trust-sensitive advertising and IoT markets be suited to the new climate?
• Real time biding and programmatic ad buying: Can online advertising survive and adapt to the loss of trust?
• Big Data and the Internet of Things: Will successful trust management be key to the future of IoT and monetisation initiatives?
> Regulation of trust, and trust in regulation
How can regulation stimulate usage and innovation while also safeguarding against threats and transgressions in the digital economy?
• Trust and anti-trust: what about platforms? Can and must online platforms be regulated?
• Safe Harbor and Privacy Shield – the new deal: Can a balance be struck between conflicting European and US positions?
• Cybersecurity and terrorism: Are the future credibility of and trust in the digital economy bound up with the fight against global threats?
A unique international forum for debate and networking
> Thematic Forums
> DigiWorld Week
A full week of symposiums and partner events (13 – 21 November 2016)
> The DigiWorld Awards
Recognising the best digital start-ups created by French entrepreneurs abroad
Key facts & figures
Europe’s trailblazing conference on the digital economy
The DigiWorld Summit is an annual event organised and hosted by IDATE experts, with the support of DigiWorld Institute members. Every year it holds ultra high-level international debates on the core issues shaping the digital economy, with the finest speakers and industry insiders.
• Participants: 1,200 participants at the DigiWorld Summit and more than 5,000 at DigiWorld Week
• Speakers: 120 speakers from around the world; 400 at DigiWorld Week
• Partners and sponsors: over 100 partners and sponsors (businesses, public sector, media…)
• Social media: 15,000 tweets (trending topics) and 2,000 live followers
Speakers in 2015 included: Jimmy WALES, Founder, Wikipedia – Peter VERHOEVEN, Managing Director EMEA, Booking.com – Alex SCHLEIFER, Head of Design, Airbnb – Eric DENOYER, CEO, Numericable-SFR – Dan JUDKINS, Head of Global Design and Development, Hasbro Inc. – Carlo d’ASARO BIONDO, President EMEA strategic relationships, Google – WEN Rui, Director of national Business Development, Youku Tudou – Sebastien SORIANO, Chairman, ARCEP – Bruno LASSERRE, Chair, French Competition Authority… > for more, go to www.digiworldsummit.com
Director of Studies, IDATE DigiWorld
A Eur 30 billion worldwide market driven by automotive, consumer electronics & utilities
This IDATE DigiWorld report, published along a worldwide database, analyses the overriding trends and changes taking place in the M2M market around the globe. It explores the driving forces behind the market's growth and transformation, including an examination of major market trends, plus volume and value forecasts up to 2019 by geographical area and 25 countries.
Over the next few years, the M2M market will clearly be driven by three key verticals: automotive, consumer electronics and utilities.
• In recent years, the market has been driven by a few major verticals like Fleet management, Industrial asset management and Security. But the overall market in volume remains small, with potential for each market in tens of millions.
• In the upcoming years, there will be new major verticals (including Automotive, Connected consumer electronics and Utilities). Potential volume is definitely higher by expanding towards consumer objects (billions) rather than industrial objects only. Moreover, regulations will stimulate automotive in Europe and utilities though public policies in some regions worldwide. However, while they will theoretically drive the market, certain barriers could obstruct growth in these sectors. In the short term, some applications in these key verticals are recurrently delayed (as with the eCall regulation in Europe which is now expected to be rolled out from October 2018) and have a potential impact on the traditional M2M market. Moreover, the utilities market is seen as less attractive with business opportunity being somewhat limited for Telcos (concentrator will only be cellular connected). UK is a key exception as a cellular concentrator will be installed in almost all households (in two main regions out of the three).
• In the future, the market will be focused on emerging segments like healthcare with remote patient monitoring and smart homes.
The M2M market is still growing very fast
In 2014, the number of active M2M modules (all technologies included) reached 1.2 billion units. They will top over 4.1 billion by 2019 with a 29% CAGR.
• In 2015, the cellular market is expected to represent 290 million modules worldwide for a total market of 30 billion EUR. The annual growth of the M2M market is around 10% in value and 26% in volume, compared with 2014. Most revenues will come from software and IT services.
• Asia-Pacific will dominate Europe and North America in volume only. Europe will still lead in value, followed by Asia-Pacific. Since 2012, China has led the M2M world and has overtaken the USA in terms of cellular modules installed.
M2M players seeking business opportunities beyond their core expertise
M2M offers them attractive opportunities for Telcos, as, despite low and declining ARPU, projects offer high lifetime value, reduced churn rate and average deals representing thousands of SIM cards. Connectivity alone should represent more than 20% of total SIM cards for European telcos. Telcos are also trying to consolidate and reinforce their position on connectivity by looking at partnerships with LPWA providers, allowing them to address emerging applications.
Representing two thirds of the market, IT services are key in M2M and all players along the value chain are therefore attempting to position themselves by grabbing a piece of this lucrative market. Main players are looking at new services based on the cloud and Big Data (though analytics mainly), allowing them new business opportunities.
Finally, module providers are also challenged to break even in a market where unit prices are falling. In addition to services, they also attempt to offer connectivity services helping them provide end-to-end offering (MVNO acquisitions by Sierra and Neul purchased by Huawei).
Find out more details regarding market M2M in our dedicated market report