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Back to the Future of Telecoms

May 7, 2014

Back in 2008, following a project for the City of London, SAMI worked with NetStrategics to develop scenarios for the Future of Telecoms in 2015. So it seemed like a good time to review how things had turned out, and how we saw the future now.

In the original work, we had first identified a wide range of issues we saw emerging in the telecoms market.  Leo Borwick had then taken these away and produced influence diagrams , or “cognitive maps”, following the methodology of Prof Colin Eden. (Software called “Decision Explorer” is now available to assist with this approach).

This identified two clusters of uncertainty:  the intensity of investment, and the extent of fragmentation or consolidation in the industry, which then generated four scenarios.

06May

Reviewing what had happened since, Leo concluded that investment had slowed significantly, though not as much as after the 2001 dot com bubble. Revenues had fallen and not yet recovered.  Fragmentation/Consolidation was harder to determine because different outcomes had occurred at different levels of the value chain. There are a plethora of companies at the applications layer (though a few huge behemoths – Google, Facebook, Twitter); there is some consolidation in networks; at the device level, Apple and Samsung have taken over from Nortel, Motorola, Nokia and Blackberry, with the Chinese coming up strongly.  Overall broadly a “return to bolt holes”.

Other continuing issues included:

  • malware and cyber-crime where the “White Hat”/”Black Hat” battle continues, and the repercussion of the Snowden revelations are still unclear
  • the rise of third world networks – this is where market growth is
  • the continued challenge of traffic growth vs network investment in an era of flat revenues (Skype now accounts for more international calls than all carriers)

Looking forward, using a tool called Verge, and taking the more optimistic scenario of “Rising Tide”, we see a new concept of the communication industry. Connectivity is taken as given, the world is a micro-second away and machine-to-machine communication (“the internet of things”) is generating vast amounts of traffic.  Value now rests in relationships, which can develop into global empathy or self-confirming cliques.  Relationships can be physical, purely virtual or a hybrid. Aspirations are fuelled by wider visibility of the possessions and lifestyles of others.

The pervasive availability of information about everyone means no-one (even Governments) can keep secrets for long – yet also enables repressive regimes to track emergent subversion.  Just as consumers accept the trade-off of supermarkets knowing their shopping habits in return for special offers, citizens may come to accept surveillance in the cause of security.

Physical money may be fading away (see the new mobile phone payment systems), soldiers replaced by drones and cyber-warfare and increasingly automation of not just manual labour but a wide range of white-collar work such as accountancy, diagnostics, and market research.

Throughout all this, however, fundamental human drives, such as for power, relationships and self-esteem will remain – it’s the speed of communication and change that is accelerated by new technologies.

 

Written by Huw Williams

 

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2 Comments leave one →
  1. huww permalink
    May 8, 2014 11:24 am

    A tweet from @EUtelecoms asked about Cable TV consolidation as outlined in an A D LIttle article bit.ly/RmERjw. I’d agree with them that the pressures of flat revenues and increasing investment are leading to consolidation in networks. One way out of that is shown by BT who with BT Sport are broadening their offering. Pure network plays will continue to lose out to OTT services (Skype carries more international traffic than all carriers put together!)

    There is pressure to consolidate on the TV side as well as the network side, because multi-channel is no longer much of a differentiator in itself and access to exclusive (and widely attractive) content is expensive and so requires scale. Much of that exclusive content is fairly international (mainstream sports, movies), so consolidating across national boundaries makes sense.

    Huw/Leo

  2. huww permalink
    May 13, 2014 11:32 am

    Our point about international consolidation on the TV side has already been picked up by Sky, who are negotiating to integrate the UK, German and Italian operations

    http://www.telecompaper.com/news/bskyb-starts-talks-to-buy-sky-italia-deutschland–1012997?utm_source=headlines_-_english&utm_medium=email&utm_campaign=12-05-2014&utm_content=textlink

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