2006 Global Telecoms Analyses and Forecasts

Publication Date	November 2006
Publisher	BuddeComm
Product Type	Report
Pages	175
ISBN Number	not applicable
Product Code	BUD00069

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Summary

The year 2007 will see a further increase in the convergence of telecoms, media and IT, which started to become more visible in 2006. With the telecoms industry rapidly changing from being telephone-focused to application-focused, the convergence that Paul Budde has been talking about for more than a decade is slowly becoming a reality. The first results have been witnessed with the arrival of Digital Media, led by the Internet.

People are quickly adopting Digital Media because it offers new multimedia formats that enhance the Internet users' experience. Everybody is talking about Google, Yahoo, YouTube, eBay, Amazon and so on. Google Earth, MySpace, Flickr and many more services in which millions of people have become involved with were unheard of as little as five years ago. This renewed interest in the Internet is stimulating other industry sectors to change their business models in order to align themselves with the developing Internet economy.

Digital Media also brings with it a second trend that lies in the advancement of digitalised television/entertainment. This at first will lead to an increase in the number of channels and new interactive formats and from 2007 onwards traditional broadcasting will increasingly become a subset of broadband.

Digital Media however can only be fully developed once there are wide spread high-speed broadband networks available. This demand for broadband will lead to the further development of fibre networks, as the current copper-based networks simply cannot handle the increased capacities required.

Over the next 12 to 18 months, we will see a continuation of large scale fibre announcements from the various incumbent telcos around the globe. Key leaders include the telcos in Japan, Korea, USA, Netherlands, Germany, Switzerland, Belgium, France and the Scandinavian countries.

Fixed-line voice will probably be with us forever, but it will also become a subset of broadband, instead of the other way around. Despite retaining its role as cash cows for incumbent operators; fixed and mobile voice services are progressively being overtaken by broadband. In the western world, wireless broadband offers new opportunities as a competitor for DSL in some niche markets.

2007 will see a further increase in the emergence of triple play business models and while VoIP will be a key element in triple play packages - it is broadband video (IPTV) that will make the products viable.

VoIP is already becoming more prominent in corporate and government markets, because of the Next Generation/broadband corporate networks. In the residential market it is still largely a 'hobby' product linked to the Internet, and the quality remains questionable. Large scale implementation will occur however, once wide spread broadband networks are in place, and it is incorporated into the triple play business models. Wireless VoIP could also challenge 3G towards the end of the decade. The development of VoIP will further reduce the telcos' revenues and add additional pressure on them to adopt more of a wholesaling rather than a retailing business model.

The operational separation of BT is reverberating throughout the global industry, with several European telcos already 'voluntarily' moving in the direction of transparent and equivalent wholesale services. The convergence of telecoms and broadcasting infrastructures will produce some major battles in the telco/media space in the years to come.

This report provides a high-level analysis and overview of the various developments occuring in the telecoms industry around the world. Topics covered include convergence and digital media, VoIP, 3G and mobile data, fixed wireless and WiMAX, interactive TV and broadband. The report includes Paul Budde's forecasts for the industry in five and ten year's time. Also described is Paul's approach to forecasting; where the uncertainties of short-term forecasting due to fluctuations in markets and economies are met by the use of scenarios, or 'what-ifs'. Included is analysis of revenue trends by market segment, the factors that will influence them, and the extent of that influence.

Key Highlights

Revenue from broadband, both fixed and wireless, will steadily increase as the market moves towards 2015, whilst revenues from mobile voice and revenue from narrowband Internet will decline.
Key developments for 2007 and beyond lie with social networking and broadband e-health, namely in home care services for our aging populations.
For various reasons, fixed-line operators have not introduced enough significant new products, services or cost-saving technologies in the same way that mobile operators have, and it is now that they need to take a holistic view of the market.
In most countries, the number of mobile subscriptions has now well and truly overtaken the number of fixed lines. However, in some countries, traffic over the mobile networks has remained relative low due to the high call charges. Slowly but steadily the mobile network is taking traffic away from the fixed network.
By now it has become clear that 3G is simply going to cannibalise 2G. The mobile trend in this market is very much about substitution, and that is where the new battleground is.
3G's contribution to the mobile industry will be to facilitate effective and efficient network management. This will allow prices to come down, and mobile data traffic might increase to approx 15% of all revenue.
The role for WiMAX in the overall personal wireless broadband market will be limited; however WiMAX will find its niche in certain markets. There will be room for the technology to complement fixed broadband services, where the coverage is poor or non-existent.
The major missing element in our communication mix to date, has been video; and yet this is perhaps the most important form of communication. Broadband now enables us to add this element and it will become the number one killer application of the future.
It is estimated that, during this decade, demand for bandwidth will grow by 1,000% and more.
Continued growth in this market, stimulated by triple play models, will see the development of Very High Data Rate Digital Subscriber Line (VDSL) and eventually Fibre-to-the-Home (FTTH) networks, a process that, in the western world, will be largely completed by 2015.
A range of new Internet devices that can be connected to the TV will be launched over the next few years.
There will be more than 135 million residential and virtual office VoIP subscribers worldwide by 2009.

Content

1. Telecoms Developments - Strategic Overview
- 1.1 A rapidly changing global telecoms market
  - 1.1.1 Electronic consumption becomes an economic driver
  - 1.1.2 Incumbents clash with their governments
  - 1.1.3 Pro-active telcos can stay ahead of regulations
  - 1.1.4 Governments will continue to lead telecoms policies
  - 1.1.5 Lack of policies = lack of innovation
  - 1.1.6 Facilities based competition is the way to go
  - 1.1.7 Infrastructure duopolies look like the best option
  - 1.1.8 Unbundling does lead to infrastructure roll out
  - 1.1.9 Telcos that fail to change will go under
  - 1.1.10 Developing world still a long way to go
  - 1.1.11 Key trends and developments
- 1.2 Infrastructure developments
  - 1.2.1 Fibre-to-the-home (FttH) infrastructure
  - 1.2.2 IP-based developments
- 1.3 Rapidly changing voice market
  - 1.3.1 Milking the voice market
  - 1.3.2 Mobile merging with wireless
  - 1.3.3 Fixed-Mobile Conversion (FMC)
  - 1.3.4 Financial outlook for the telco industry
- 1.4 Broadband market
  - 1.4.1 Broadband: a technology concept
  - 1.4.2 Wireless broadband
  - 1.4.3 Broadband over Powerlines (BPL)
  - 1.4.4 Developments will be non-linear
- 1.5 Broadband-based video communications
  - 1.5.1 Tele-presence
  - 1.5.2 Tribes, clans and communities
  - 1.5.3 Broadcasting over IP (BoIP)
  - 1.5.4 IPTV
  - 1.5.5 Hollywood coming to the party
  - 1.5.6 The digital divide
- 1.6 Broadcasting-based developments
  - 1.6.1 Traditional broadcasting
  - 1.6.2 Digital TV
  - 1.6.3 Home media centres
  - 1.6.4 DOCSIS 3.0
- 1.7 Mobility markets
  - 1.7.1 Mobile telecoms
  - 1.7.2 Mobile Virtual Network Operators (MVNOs)
  - 1.7.3 Wireless mobility
  - 1.7.4 Companies rolling out 802.16e
  - 1.7.5 HSDPA and IMS
  - 1.7.6 Fixed-mobile convergence
2. Telecoms Predictions - 2005 - 2015
- 2.1 Paul Budde's approach to forecasting
  - 2.1.1 The use of scenarios
- 2.2 Long-term Telecoms revenue trends - 2010 - 2015
  - 2.2.1 By markets
  - 2.2.2 By products
  - 2.2.3 By industry
- 2.3 Mobile
- 2.4 Broadband
- 2.5 Wireless VS fixed broadband
- 2.6 Regulation - structural changes in the industry
- 2.7 So where to go from here?
3. Forecasting (Qualitative) 2006
- 3.1 The market in ten years time
- 3.2 High-level developments
- 3.3 Short-term developments
- 3.4 Medium-term developments
  - 3.4.1 Key trends
- 3.5 Internet economy
  - 3.5.1 One million companies already depend on the Internet economy
- 3.6 Industry structures
  - 3.6.1 Industry Restructuring
- 3.7 Three distinct segments
  - 3.7.1 Infrastructure
  - 3.7.2 Content
  - 3.7.3 Appliances
  - 3.7.4 Get a 360 degree vision
  - 3.7.5 Separation and integration
  - 3.7.6 The roles of the players
  - 3.7.7 Internet companies might take over the telcos
  - 3.7.8 Media restructuring
  - 3.7.9 Next generation network
  - 3.7.10 To VoIP or not to VoIP?
- 3.8 New business models
  - 3.8.1 After broadband, triple play will be the next battleground
  - 3.8.2 VoIP the key in triple play
  - 3.8.3 Wholesale opportunities
  - 3.8.4 Telcos learning at great cost
- 3.9 My prediction: a golden future ahead of us
- 3.10 China will dominate the industry within 5 years
4. The Future Of Voice (Fixed, Mobile, Voip)
- 4.1 Telephone companies - experts in negative marketing
  - 4.1.1 Don't use the phone
  - 4.1.2 Don't use the mobile phone
  - 4.1.3 Don't use the fixed phone
  - 4.1.4 The IP solution
- 4.2 The future of voice
  - 4.2.1 Market under pressure
  - 4.2.2 Rearguard skirmishes in the voice market
  - 4.2.3 A neglected market
  - 4.2.4 Developments
  - 4.2.5 Fixed-line SMS
  - 4.2.6 Click-to-Talk
- 4.3 The future of mobile
  - 4.3.1 Voice still the killer app
  - 4.3.2 But data is the future
  - 4.3.3 Rebalancing of the industry
  - 4.3.4 Devices-driven developments
  - 4.3.5 Only option in developing countries
  - 4.3.6 Multimodal services
- 4.4 VOIP
- 4.5 Analysis of vendor merge - the future is IT, not telco
- 4.6 Pricing strategies
  - 4.6.1 Telecoms price developments
  - 4.6.2 From bundling to triple play
  - 4.6.3 New ways to measure ARPUs
- 4.7 Conclusion
5. Ngn
- 5.1 Introduction
  - 5.1.1 Developing from VPNs
  - 5.1.2 Advantages and disadvantages
  - 5.1.3 Simple Network Management Protocol (SNMP)
  - 5.1.4 Advantages of NGNs over leased lines
  - 5.1.5 Advantages of NGNs over traditional remote access
  - 5.1.6 Types of NGN
  - 5.1.7 NGN solutions
- 5.2 Telcos and the nextgen revolution - analysis
  - 5.2.1 Changing telecoms into IT
  - 5.2.2 Nextgen Telcos
  - 5.2.3 Traditional telcos
  - 5.2.4 Ignoring next-gen structures
  - 5.2.5 Choice: protecting the old or embracing the new
  - 5.2.6 Battle between vested interests and nextgen developments
  - 5.2.7 BT - an NGN leader
- 5.3 NGN in action
  - 5.3.1 Drivers of NGNs
  - 5.3.2 Key application is telepresence
  - 5.3.3 The shaky position of 3G
  - 5.3.4 New business models are emerging
  - 5.3.5 Voice remains a killer ap
  - 5.3.6 From vertical to horizontal industry structures
- 5.4 Internet economy requires NGNs - now
  - 5.4.1 Lacklustre beginning by telcos
  - 5.4.2 Businesses start looking at alternatives
  - 5.4.3 NGN requirements
- 5.5 Nextgen investment strategies
  - 5.5.1 Long term investment required
  - 5.5.2 Competition - not NGNs - is driving prices down
  - 5.5.3 Global telecommunications capital expenditure
  - 5.5.4 Regional telecommunications capital expenditure
  - 5.5.5 Are there any broadband write-offs?
  - 5.5.6 Lose-lose-lose strategy
  - 5.5.7 Who is paying for the decrease in values?
- 5.6 Broadband VOIP
- 5.7 Growth of IP-VPN (NGNs)
6. Voip
- 6.1 Statistics and forecasts
  - 6.1.1 IP market statistics and forecasts
  - 6.1.2 VoIP and the business sector
  - 6.1.3 VoIP and consumer awareness
  - 6.1.4 IP Centrex to be popular with SME's
- 6.2 Analysis
  - 6.2.1 The continuing importance of voice
  - 6.2.2 Give VoIP a chance
  - 6.2.3 VoIP service quality
  - 6.2.4 VoIP over hyped
  - 6.2.5 Industry issues
  - 6.2.6 Tips for successful video over IP
  - 6.2.7 Don't over regulate
  - 6.2.8 VOIP needs to be underpinned by NGNS
  - 6.2.9 Corporate markets
  - 6.2.10 VoIP- a case of evolution, rather than revolution
  - 6.2.11 Wireless VoIP
7. The Ftth Market In 2006
- 7.1 FttH analysis - mid 2006
  - 7.1.1 DSL is building the business case for FttH
  - 7.1.2 Growth patterns and predictions
  - 7.1.3 No business case for large-scale deployments
  - 7.1.4 Business drivers
  - 7.1.5 No e-government without fibre
  - 7.1.6 Fibre-to-the-Node and VDSL
- 7.2 Where is the action in FttH?
  - 7.2.1 Who are the leaders and why?
  - 7.2.2 Initial drivers: utilities and local councils
  - 7.2.3 Business market
  - 7.2.4 Infrastructure upgrades
  - 7.2.5 Corporate optical fibre
  - 7.2.6 New housing developments
- 7.3 Different FttH business models
  - 7.3.1 National economy drivers
  - 7.3.2 Social drivers
  - 7.3.3 Entertainment drivers
  - 7.3.4 'Go with the flow' strategies
  - 7.3.5 New housing developments
- 7.4 Telcos still reluctant
  - 7.4.1 Business opportunities for FttH niche telcos
  - 7.4.2 Alternative infrastructure developments
- 7.5 Structural separation a must for FTTH
- 7.6 The costs of FttH
  - 7.6.1 AT&T project estimates
8. 3g
- 8.1 Sorting out the Telstra NEX G confusion
- 8.2 The future of 3G
- 8.3 The time for 3G has arrived, but no cheering from the operators
  - 8.3.1 Where is the business case?
  - 8.3.2 Network costs will be driving 3G?
  - 8.3.3 New business scenarios
  - 8.3.4 Competition from disruptive technologies
- 8.4 The hard realities of the mobile market
  - 8.4.1 The networks simply would not be able to cope
  - 8.4.2 As usual, over-promising and under-delivering
- 8.5 Slow start so far
- 8.6 Will 3G survive as a separate business model?
  - 8.6.1 3G cannibalising 2G
  - 8.6.2 2G is fighting back
  - 8.6.3 Data moving to wireless broadband
  - 8.6.4 3G for voice and enhanced voice applications
  - 8.6.5 Mobile operators absorbed by voice competition
  - 8.6.6 Mobile, wireless convergence
  - 8.6.7 Fixed operators have the upper hand
- 8.7 Is Super 3G WiMAX?
  - 8.7.1 Prediction dilemmas
  - 8.7.2 The future is broadband
  - 8.7.3 What went wrong with mobile data?
  - 8.7.4 Demand is there, supply is failing
  - 8.7.5 Super 3G vs WiMAX
  - 8.7.6 3G Long-Term Evolution (LTE)
  - 8.7.7 Mobile technology not well-suited
- 8.8 Vindicated: 4G is arriving earlier
9. Mobile Content - Industry And Market Analyses
- 9.1 A market still kept hostage - analysis 2006
  - 9.1.1 Not much progress in almost a decade
  - 9.1.2 Still no open networks
  - 9.1.3 Untapped potential
  - 9.1.4 We are a telecoms industry
  - 9.1.5 3G is still a voice-driven development
  - 9.1.6 What do you mean - customer service?
  - 9.1.7 All we need is competition
- 9.2 New marketing and distribution models
  - 9.2.1 Content providers giving up hope
  - 9.2.2 Manufacturers supporting bypass solutions
  - 9.2.3 The race for content
  - 9.2.4 Branding with partners
  - 9.2.5 The future: value-chain-based scenarios
  - 9.2.6 IPX takes on the walled mobile gardens
- 9.3 Digital Rights Management (DRM)
  - 9.3.1 The Open Mobile Alliance (OMA)
10. Wimax
- 10.1 Fixed wireless analyses - 2006
  - 10.1.1 The promises of fixed wireless
  - 10.1.2 The problems of fixed wireless
  - 10.1.3 Opportunities of fixed wireless
  - 10.1.4 Fixed Wireless Broadband developments - mid-2006
  - 10.1.5 Repositioning
  - 10.1.6 Wireless broadband in telemetry
  - 10.1.7 Mobile TV and WiMAX could be a good match
  - 10.1.8 Spectrum developments
  - 10.1.9 WiMAX and BPL
  - 10.1.10 The WiMAX backbone alternative
- 10.2 Mobility analyses 2006
  - 10.2.1 Personal wireless broadband
  - 10.2.2 The new and the old WiMAX
  - 10.2.3 From WiMAX and 3G to 4G Mobile - Analysis mid-2006
11. Broadcasting - Interactive Tv - Overview And Analysis
- 11.1 Introduction
  - 11.1.1 Definitions
  - 11.1.2 Interactive TV to generate billions
  - 11.1.3 First interactions with TV
  - 11.1.4 Personal TV (choose and control)
  - 11.1.5 Broadband or IPTV
- 11.2 Market analysis 2006
  - 11.2.1 iTV - 35 years on
  - 11.2.2 Snail pace progress
  - 11.2.3 Digital TV (DTV) 2nd Internet platform
  - 11.2.4 Shock to the 'couch potato' syndrome
  - 11.2.5 Innovation required
- 11.3 i-Advertising - analysis
  - 11.3.1 Individually addressed advertisements
  - 11.3.2 And again...permission-based models
  - 11.3.3 Revenue opportunities
- 11.4 Statistics and forecasts
  - 11.4.1 Forecasts beyond 2006
  - 11.4.2 Reports for USA from 2005
- 11.5 Business modelling
  - 11.5.1 Real-time or non-real-time
  - 11.5.2 Permission-based through SMS
  - 11.5.3 Subscription or itinerary?
  - 11.5.4 Technology issues
12. Transitions To A Digital Industry
- 12.1 Introduction
- 12.2 The most important telecoms transition issues appearing from our models and scenarios
  - 12.2.1 Horizontal value chains
  - 12.2.2 The value chains are no longer in one direction: from supplier to consumer
  - 12.2.3 Bandwidth demand will continue to go up
  - 12.2.4 'Services' are not a separate layer but are part of every layer
  - 12.2.5 Because of more intelligence in devices the 'place' of services is shifting
  - 12.2.6 Another big sudden jump-transition, in fact two at the same time is to G4 mobile &FttH
- 12.3 New kinds of innovations
- 12.4 What may be next after WMesh+fiberMAN
- 12.5 Postsciptum
- 12.6 References
13. Digital Media - Analyses, Issues, Developments
- 13.1 The rise and rise of the Internet economy
- 13.2 The future is digital people, not digital media
- 13.3 The Internet
  - 13.3.1 The killer app
  - 13.3.2 High-speed, always-on Internet
- 13.4 It's worthwhile fighting for open networks
  - 13.4.1 Structural changes to the industry are overdue
  - 13.4.2 The farce of infrastructure-based competition
  - 13.4.3 We should stand firm on open networks
  - 13.4.4 The telcos failed for 30 years - Internet succeeded in 10
  - 13.4.5 Open networks engine for innovation and growth
  - 13.4.6 Large economic benefits
  - 13.4.7 BT leading the way
  - 13.4.8 Safe harbours undermine the Internet economy
  - 13.4.9 Bill of Internet Rights
  - 13.4.10 Telcos hampering growth of Internet economy
  - 13.4.11 IP is upsetting the telcos
  - 13.4.12 Dutch cable operators obliged to open networks
  - 13.4.13 Global cities declare open networks
  - 13.4.14 INEC Declaration on Open Networks
- 13.5 Digital content
  - 13.5.1 Introduction
  - 13.5.2 Watch out for the Internet media companies
  - 13.5.3 Internet media companies -vs- telcos
- 13.6 Other interesting developments
  - 13.6.1 Skype SMS
  - 13.6.2 Videoconferencing in telepresence
  - 13.6.3 Bittorrent in digital media devices
- 13.7 The disruptive effects of digital media
14. Glossary Of Abbreviations
List Of Exhibits
- Exhibit 1 - Key revenue trends - period to 2015
- Exhibit 2 - A changing industry structure - 2005 - 2010
- Exhibit 3 - Massive restructuring is now overdue
- Exhibit 4 - New public network concept
- Exhibit 5 - Triple play pricing examples
- Exhibit 6 - Triple play pricing examples
- Exhibit 7 - Nextgen telecoms
- Exhibit 8 - Verizon vs Skype
- Exhibit 9 - The role of voice
- Exhibit 10 - Global outsource market services
- Exhibit 11 - BuddeComm VoIP quality survey
- Exhibit 12 - Teen pop singer launches own VoIP service
- Exhibit 13 - Residential Broadband (BB) - growth predictions - next ten years
- Exhibit 14 - FttH costings per home connected
- Exhibit 15 - Mobile facts and figures
- Exhibit 16 - What users want
- Exhibit 17 - Tillevision Model for ICT infrastructure
- Exhibit 18 - Tillevision Model
- Exhibit 19 - Conjecture Subsidiarty
- Exhibit 20 - Fractal repetition of the Internet paradigm
- Exhibit 21 - Rural Tellet mobile voice-mail devices
- Exhibit 22 - Some application bit rates
- Exhibit 23 - Drivers of high-speed Internet
List Of Tables
- Table 1 - Predicted global m-commerce revenues - 2003 - 2005; 2009 - 2010
- Table 2 - Telecommunications services revenue share by market - 2005; 2010; 2015
- Table 3 - Telecommunications services revenue share by product - 2005; 2010; 2015
- Table 4 - Telecommunications services revenue share by industry group - 2005; 2010; 2015
- Table 5 - Mobile data revenue as % of total mobile revenue forecast - 2005 - 2015
- Table 6 - Mobile penetration in developed and developing markets - 2005 - 2015
- Table 7 - Forecasting costs broadband over a 10-year period
- Table 8 - Residential Broadband (BB) - growth predictions - next ten years
- Table 9 - Wireless as % of fixed broadband forecast - 2005; 2010; 2015
- Table 10 - Global telecoms investments - 2005; 2010; 2015
- Table 11 - Capital expenditure by region - 2005, 2006
- Table 12 - Regional residential and SOHO VoIP subscribers - 2006; 2009
- Table 13 - Estimated growth of inbound VoIP traffic - Africa, Latin America, Asia-Pacific, Middle East, Eastern Europe - 2005
- Table 14 - VoIP subscribers - Skype, Vonage, France Telecom, Time Warner
- Table 15 - VoIP access lines in US - 1999 - 2007
- Table 16 - Global wireless broadband market subscribers - 2003 - 2008
- Table 17 - Wireless broadband market share by region - 2005
- Table 18 - DSL, 1Gb/s, DWDM transmission speeds - what does it mean?