Paul Budde’s analyses of the telecommunications industry and market are cited in the leading business press around the world. His comments and views are sought by government authorities, large corporate organisations and telecoms users, as well as by telcos, ISPs, vendors and their financial and management advisors.
The analyses and business forecasts cover:
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.
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.
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