A new report from Paul Budde Communication (an independent telecommunications research and consultancy company based in Australia) was released today. The report, Global Telecoms Analyses and Forecasts for 2006 and Beyond takes a look at the telecom industry and comes with several interesting observations.
Budde believes that incumbents will continue to dominate the industry, and that we will see a series of very interesting mergers and acquisitions in the period 2005-2008.
According to the report, incumbent carriers are in no rush to embrace new technologies and new ways of doing business:
Most incumbent telecommunications carriers are slow to adjust to this new situation. They are primarily interested in maintaining the status quo and milking their existing assets for as long as possible.
Monopolies remain strong and are even increasing, but disruptive technologies and regulations are slowly eroding the incumbents power base and allowing some competitors to succeed. However, their defensive delaying tactics and denials are as prevalent as they were 10 years ago, accompanied by a continuing lack of vision, infrastructure development and care for their customers.
The fact remains that in order to compete in the new world carriers simply must evolve and open up to next-generation networks and business models. This will most likely involve partnering and merging to acquire the pieces of the puzzle that would allow them to thrive in any future environment. In fact, Budde tells us that:
Telcos will have to totally re-engineer their companies; upgrade infrastructure; dismantle silos (and the personal egos attached to the models) and integrate them into one NGN vision. They will also have to unravel complex constructions that made it impossible for regulators to get a transparent view of what is happening between retail and wholesale - and the lists goes in.
These changes will inevitably lead to operational and eventual structural separation of infrastructure businesses and retail service businesses. This will lead to a period of very interesting mergers and acquisitions. While progress has been relatively slow to date, the combination of DSL, VoIP, wireless broadband, better wholesale conditions and a more effective regulatory environment are going to produce significant changes in the period 2005-2008.
Carriers are also in good position to thwart the efforts of smaller, up and coming competitors, even in the VoIP space. While it is true that VoIP is a disruptive technology, and disruptive to the carriers traditional way of doing business, in the end all it does is spur the carriers to drag their feet, until they are ready to adapt, to offer their own VoIP services. And once a major carrier decides to enter a market, its difficult to compete with the sheer market weight they can throw around.
Voice services are under pressure from VoIP, and these new voice platforms are going to have a major impact in the future. But, here too, the incumbents are successfully undermining development. Although a good quality network is needed to deliver good quality voice, they are reluctant to grant access to that network on economic viable wholesale terms. At the same time, they simply reduce their POTS prices to provide rates that are equal to or better than those provided by VoIP operators. And, once they are ready, they will provide their own triple play models over high-speed networks with their own low costs VoIP bundled into that.
Speaking of triple play, the report maintains that with the evolution of triple play services, fixed-line voice will become a subset of broadband, and will also serve as an incentive to develop new broadband infrastructure. Budde firmly believes that the service that will make triple play ultimately successful is broadband TV, and that this is starting to influence the broadcasting industry.
Regarding the future of broadband TV, the report tells us that:
Looking forward to 2006, the most important issues will be the triple-play business model, the demise of the VCR and the birth of the DVR, increased demand for better user experiences in the presentation of these new services, away from PCs towards plasma screens and HDTV. The convergence of the telecoms and broadcasting infrastructures will produce some major battles in the telco/media space.
The report, Global Telecoms Analyses and Forecasts for 2006 and Beyond is approximately 150 pages long and covers the following topics:
- Telecoms growth strategies 2005
- New look Telcos
- The FttH market in 2005
- VoIP in 2005
- NGN moving into 2006
- Wireless Personal Area Networks
- The Digital TV market in 2005
- High level strategic thinking
- Structural separation
- Forecasts for 2006
- Telecom predictions 2010-2015
The report can be purchased from the firms Web site. The cost for a single-user pdf license is US$895.00.
Greg Galitzine is Editorial Director for INTERNET TELEPHONY magazine.