13 Jan 2011

Should the economic recession still be affecting the Eurasian Telecommunications market?

The Economic Recession: Implanting a Global Mindset of Panic
Following the events of 2007, the phrase ‘economic downturn’ resonates strongly in the hearts of individuals all over the globe. With the macroeconomic environment having falling into significant decline and being shadowed in great uncertainty following the global economic recession, it is no wonder that its impacts echo considerably into daily life years into its aftermath. My view however is that the impacts of the recession have escalated far beyond the extent of its reality. It is the ‘global mindset of panic’ embodied almost universally which has triggered the escalation of the recession from an epidemic into a global pandemic. I believe that to recover, one must look forward. To grow, one must spend. And this thinking is of paramount importance to the business world. Positivity not only in thinking, but in spending, is crucial if we are to grow out of this ghost of recession which continues to haunt the public mind.

Is the recession still truly affecting the Eurasian Telecommunications market?
The telecommunications market has no less been threatened by the deepest post-war recession to date. With reduced consumer spending and volatility in the markets of operations, there has been a negative impact on financial and operational performance. In Eurasia, many of the leading operators of the region have stated that ‘global difficulties within the financial sector make it difficult to attract additional financing’ (MTS) whilst ‘inflationary pressures on daily necessities are hitting peoples wallets leading to cautiousness when it comes to consumption’ (Telenor).

But what have been the actualities of the market through this recessive period? Subscription growth for telecommunications has in fact steadily grown from prior to 2007. Penetration of mobile broadband is currently at 74% and is forecast to reach an impressive 97% by the end of 2012 (Informa Telecoms & Media). Thus evidence shows consumers are consuming and growth will continue. And with the increasing opportunities given by evolving telecommunication technology, epitomised by mobile tv and videos, gaming, multiple applications and healthcare, this is set to grow further. Additionally, with the release of new spectrum at 2.5Ghz in accordance with the digital dividend, mobile broadband services are set to become truly pervasive. The necessity for communication is constant, which alongside the multidimensionality of the telecoms markets, leaves a picture which is predominantly positive.

So what should Eurasian Telcos be concentrating on to maximise their ROI?
A seemingly relatively easy question becomes much more difficult in the aftermath of a destabilising economic recession. Is it right to increase expenditure now to prepare for forecasted growth or to limit expenditures considering the instability of a recovering market?

Personally, I feel that now is the time to get ready for the next stage of growth. In order for telco businesses to stay at the cutting edge of the market, now is the time to start investing in the technologies of the future and shed this mindset that has been so detrimental to the economy of the present day. So what way can telecos do that, you may ask? Let’s take LTE. Having now been tested, trialled and commercially announced by over 100 manufacturers, surely the migration to LTE from 3G is the future of the networks, addressing market needs for the foreseeable future. The idea of investing in new LTE architecture, rather than building upon existing infrastructure, although expensive now, seems like the right thing to do.

Other big earners for the market in my opinion must be value-added content, crucial in keeping the ever-demanding customer happy. Loyalty schemes, similarly, will surely benefit operators in retaining their highest-value customers. The opportunities for growth are endless in such a multi-dimensional arena, as long as thinking and spending remain positive.

Discussion and Debate: Determining the Direction of Development
I am sure my view is one that will not be unopposed. Even the world’s leading economists disagree on what are the optimal business models for moving out of a recession. This unsettling fact leaves the industry in a predicament on the best way forward. So what to do?

We need to talk through these issues in depth and detail, with advice from the regions’ key leaders. Platforms are needed to resolve queries of the future of the Eurasian telecoms market: how can we capitalise on new revenue streams and constant broadband developments? How can businesses be revolutionised to boost their development? Do the answers lie in LTE, IPTV and seamless fixed-mobile convergence? The answers are far from clear-cut but dedicated discussion and debate holds the key for finding the right path.


Where can the right level of discussion and debate be found? Where is there dedication to a focus on the Eurasian teleco market specifically? Where can you proactively join in these discussions? To find out more about such a forum that initiates truly topical discussion, click here...

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