Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011)

© Copyright Ovum. All rights reserved. Ovum is part of the Datamonitor Group.2

Telecoms in 2020: a vision of the future

Jan DawsonChief Telecoms Analyst

@janovum

27 June 2011


Agenda

1. Looking over the horizon

2. The trends that will shape the next ten years

3. Two sets of players: SMART and LEAN

4. Operator strategies

5. Conclusions / Q&A


Ovum’s Telecoms 2020 research series

1. LOOKING OVER THE HORIZON


In 2001…


Major trends in the next ten years

2. THE TRENDS THAT WILL SHAPE THE NEXT 10 YEARS


Managed device platforms as a major force

The last several years have seen the rise of device platforms – notably from Apple, RIM, Palm, Microsoft and Google – which go considerably further than the traditional model

Under this model, the platform vendor (not the mobile operator) controls and supplies:

the operating system

some or all of the pre-installed applications

a developer platform for creating applications to run on the device

a mechanism for procuring those applications (an ‘app store’)

Roles traditionally held by the operator are being usurped by these platform vendors, which we refer to as managed device platforms



MDPs in the wireline market

The same trend is emerging in the wireline market

A range of players, including some of the same as in the mobile arena – are developing platform plays for the home device market

Notable examples are Google and Apple, with their respective TV offerings

Interestingly, these are tied into mobile platforms – Android and iOS as operating systems for STBs

Amazon’s Kindle strategy is another interesting example

This means what we’re really looking at over time is the emergence of integrated MDP players combining fixed and mobile platforms



Apple as a platform provider



Google as a platform provider



Amazon as a platform provider



Consumer – SMART players versus LEAN operators

In 2020, there will be two main player types in the broader market of which telecoms will be part:

LEAN operators – focused on infrastructure ownership and wholesaling services to other operators who serve retail customers (possibly including their own retail arms)

SMART players – operators and other players (primarily CE vendors) who offer a managed broadband experience including device management, technical support, backup/security/storage etc., for the whole home – these grow out of today’s managed device platforms

Some operators may combine 1 and 2 through netcos / servicecos

Many operators will instinctively flock towards 2, but there will be limited room in all categories leading to more consolidation

3. TWO SETS OF PLAYERS: SMART AND LEAN


Consumers in 2020 – mature markets

Digital citizens – by far the largest group (perhaps around 60%) - seek safety, ease of use, and predictable spend commitment through a relationship with a SMART vendor, which provides a bundle including devices, configuration and ongoing management, applications, content and connectivity – for a fixed one-off fee or a leasing arrangement.

Digital adventurers – A small minority – perhaps 5-10% of users – continue to value fully open platforms, self-configuration and management, and unmediated access to free content on the web, via P2P and rogue servers

Digital ‘metics’ – A larger group (perhaps 25-30% of users) are resigned to limited low-cost devices, direct contracts for connectivity, and simplified access to minimal transaction-oriented content and applications (ticketing, banking, etc)



Consumers in 2020 – emerging markets

Digital citizens – The ‘digital citizen’ type of consumer will account for only around 30% of the users in the emerging markets in 2020. These will be in the upper tiers of the customer pyramid, and like their mature market counterparts, will seek the safety, ease of use and predictable spend commitment of a relationship with a SMART provider, which will provide them with a bundle including device, management / configuration, applications, content and connectivity. High speed, high capacity broadband will be at the centre of the service bundle for these consumers.

Digital adventurers – Most of the youthful segments will be digital adventurers (30% of the total) which will continue with the practice of self- configuration and management, as well as unmediated access to content on the web

Digital ‘metics’ – The largest group (40%) will be digital metics who will remain limited to low cost devices and simplified access to basic content and applications (e.g. mobile money, health, education, commerce).



SMART players

Likely heritage

Consumer electronics vendors

Software vendors and online service providers

Operators

Services provided

Connectivity

Content, applications, services

Management, care, sales & billing

All of the above bundled

Assets and skills required

Branding, marketing, charging

Service provision, management, care

Content creation and/or aggregation, devices, and platforms

Customers

Mainstream end user consumers (“digital citizens”)



LEAN operators

Likely heritage

Operators

Equipment vendors

Services provided

Low-cost, interconnected bandwidth

Network management

Application performance management

Assets and skills required

Efficient network management

Application performance management

Interoperability with other systems

Customers

SMART players

Some consumers (a portion of “digital adventurers”, “digital metics”



Telcos need to be very clear about which strategy they want to pursue

There are dramatic differences between the SMART and LEAN models, in terms of:

the skillset required

the revenue mix (see next slide)

the investments that need to be made

the relationships with platform vendors, device vendors, content providers

Decisions need to be made now in order to start down one of these two paths, including investment, acquisition, partnering decisions

Interestingly, elements of LEANness and SMARTness are useful steps on both paths

4. OPERATOR STRATEGIES


Future revenue mix for fixed telcos

2010 LEAN – 2020 SMART – 2020

Consumer, of which: 50% 20% 60%

- Voice 33% 5% 10%

- Broadband 16% 15% 25%

- Content 1% 0% 25%

Business 30% 30% 25%

Wholesale 20% 50% 15%

Relative size of total revenue

100 60 120



Future revenue mix for mobile operators

2010 LEAN – 2020 SMART – 2020

Consumer, of which: 60% 20% 70%

- Voice 40% 5% 15%

- Broadband 15% 15% 30%

- Content 5% 0% 25%

Business 20% 20% 20%

Wholesale 20% 50% 10%

Relative size of total revenue

100 60 120



Advice for operators

Two initiatives are key for both paths:

Maximizing efficiency

Enabling third party value creation

Beyond that:

SMART players will need deep content, device, service management, service creation strengths

LEAN operators will need application performance management, high-quality interconnection, QoS / CoS capability

These efforts need to start now even if the 2020 vision takes a number of years to develop in its entirety



Orange vision for multi-screen content



Verizon as a platform provider



Verizon provides several useful lessons

Using the home TV service as a gateway to owning TV/video on the mobile, or vice versa

Opening the TV platform to third party innovation is much easier than the telco platform

A platform doesn’t have to be an OS, and in fact in many cases won’t be – rather, a set of apps on various operating system

Porting to other platforms provides a beachhead there too, and creates stickiness – much more compelling than mere bundling

If operators don’t do this, others will – need to take the first steps now



But platforms are broader than just devices

Building an operator platform means exposing the core operator asset – the network – to third parties

This is done through carefully controlled, secured and monetised APIs and other interfaces

It has two major benefits:

Outsources a measure of innovation along with the risk

Enables a much better experience for consumers and content partners when using “over the top” content

Overall, it turns the network into an asset multiple parties can innovate on, not just the operator



Building a platform useful for both paths

Telcos

LEAN Operator

SMART player

Smart Enabler

2015

Pos

ition

in v

alue

cha

in

2010 2020

End states for telcos



Conclusions

“Telecoms” as a discrete market will be hard to identify in 2020

It will have become part of a larger, content-centric ecosystem

There will be two major roles for operators to fill – SMART players, and LEAN operators

There will be plenty of competition for both roles, with operators only one of the groups pursuing them

Maximizing efficiency and enabling third party value creation are key to both paths

Beyond that, they require different skillsets, which operators have to start building now

5. CONCLUSIONS / Q&A

Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011)

Technology

Transcript of Jan Dawson - Presentation at Emerging Communications Conference & Awards (eComm 2011)