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Telco 2015 Five Telling Years, Four Future Scenarios

Telco 2015 Five Telling Years, Four Future Scenarios

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Published by Gavin Roach
Despite the run-up in mobile revenues over the last few years, communications revenue growth is beginning to falter as voice markets in developing countries saturate. Unfortunately, content and connectivity revenues have not risen quickly enough to offset these declines. Facing this dilemma, how will the industry evolve over the next five years? Our research suggests four plausible scenarios and the events that would signal their unfolding. More important, we outline the characteristics of companies most likely to succeed in each of these possible futures.
Despite the run-up in mobile revenues over the last few years, communications revenue growth is beginning to falter as voice markets in developing countries saturate. Unfortunately, content and connectivity revenues have not risen quickly enough to offset these declines. Facing this dilemma, how will the industry evolve over the next five years? Our research suggests four plausible scenarios and the events that would signal their unfolding. More important, we outline the characteristics of companies most likely to succeed in each of these possible futures.

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Published by: Gavin Roach on Jul 28, 2010
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10/25/2012

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IBM Global Business Services
Executive Report
IBM Institute for Business Value
 Telecommunications
Telco 2015
 Five telling years, our uture scenarios 
 
IBM Institute for Business Value
IBM Global Business Services, through the IBM Institute or Business Value, developsact-based strategic insights or senior executives around critical public and privatesector issues. This executive report is based on an in-depth study by the Institute’sresearch team. It is part o an ongoing commitment by IBM Global Business Services toprovide analysis and viewpoints that help companies realize business value. You may contact the authors or send an e-mail to iibv@us.ibm.com or more inormation. Additional studies rom the IBM Institute or Business Value can be ound atibm.com/iibv 
 
Introduction
Despite the run-up
 in mobile revenues over the last ew years,communications revenue growth is beginning to alter as voice markets in developingcountries saturate. While the global digital renaissance has yielded pockets o success andopportunity or telecom providers, content and connectivity revenues have not oset thedeclines. How will the industry evolve over the next ve years? Will provider strategies beproactive or protective? Our research suggests our plausible scenarios and the events that would signal their unolding. More important, we outline the characteristics o companiesmost likely to succeed in each o these possible utures.
 The telecommunications industry has experienced morechange in the last decade than in its entire history. In 1999,only 15 percent o the world’s population had access to atelephone; by 2009, nearly 70 percent had mobile phones. Inaddition to this phenomenal growth in mobile communica-tions, the past decade also brought steep declines in publicswitched telephone network (PSTN) voice revenues, anexplosion o over-the-top (OTT) communication services andglobal industry consolidation (see page 27 or a glossary o common telecommunications terms and abbreviations). There were even ground-breaking decisions by some Telcos tooutsource unctions as core to their business as their physicalnetworks.Fueled by rapid growth in developing countries, mobilecommunications have propped up the industry’s top line. Butnow with these markets saturating, communications revenuegrowth is stalling. Expected content and connectivity-relatedrevenues have not risen quickly enough to compensate. Although increases in mobile Internet usage oer a glimmer o hope – along with a host o operational challenges – thetelecom industry aces some serious questions: Where willuture growth come rom? How will the industry evolve?
By Ekow Nelson and Rob van den Dam
IBM research suggests that the outcomes or several importantindustry trends are highly predictable.
1
Conversely, we haveidentied 13 signicant variables rom a larger pool o unknowns that will also have signicant impact on the industry. The outcomes o the 13 variables are ar rom certain and allinto two main categories: potential areas o growth and thecompetitive structure o the industry. Mapping the extremes o the possible outcomes related to these uncertainties revealsour contrasting scenarios depicting what the industry couldlook like ve years rom now.
Four future scenarios
Survivor Consolidation:
Reduced consumer spending leads torevenue stagnation or decline. Service providers in developedmarkets have not signicantly changed their voice communica-tions/closed-connectivity service portolio and have notexpanded horizontally or into new verticals. Investors’ loss o condence in the sector produces a cash crisis and elicitsindustry consolidation.

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