"Each industry undergoes different stages in its evolution and development, which transform the value chain and business models of its participants.
Despite the fact that voice remains one of the most effective means of communication, the era of traditional fixed voice telephony is over. In various geographical markets revenues from fixed telephony and volume of consumed services are steadily decreasing year over year due to the onslaught of different substitutes (wireless mobile telephony, VoIP applications and etc.).
At the moment the Telecom Industry has fully entered the era of data services. The expansion of population coverage by high-speed 3G and 4G wireless and up-to date fixed optical networks, the growth of connected devices volume (smartphones, PC, tablets, Smart-TV, Set-top-boxes, game consoles, media-players) as well as the emergence of traffic consuming on-line services and applications (games, video and audio content, cloud services and online data storage) have led to a surge in consumer demand and stimulated rapid growth of fixed and wireless Internet broadband access penetration levels all over the world.
The volume of services, quantities of subscribers and operators’ revenues from fixed and wireless broadband in most of the markets (developed and emerging) have tripled and still continue to demonstrate double digit growth rates.
The lifestyle and consumers and their preferences are gradually changing. Customers use smartphones and tablets for various applications, social networking, on-line gaming, multi-media messaging, data storage, streaming of audio and video content.
On the one part the proliferation of data leads to cannibalization of traditional telecom services. However on the other hand it creates opportunities for growth of operators’ revenues in mature and saturated markets at the same time creating an opportunity for introduction of new technologies and rapid development of the industry.
In future, at the time when the data market will reach saturation the growth of revenue from internet access will also eventually decelerate.
The next stage that telecom industry is about to enter is the era of OTT (over-the-top) services and All-IP communications that will allow to process traffic flexibly and provide subscribers with various portfolios of services incl. dynamic connection of customer fixed or wireless access points to services of various companies.
With theincrease of IPTV and HD content popularity (3DTV, 4K, 8K) the traffic is expected to grow by 10 times and even more, that will impose greater requirements for telecom providers’ networks capacity and throughput.
Telecom operators will have to invest large amounts in modernization of infrastructure to cope with the market requirements, while the main beneficiaries of traffic growth will become mainly OTT-players.
In the era of all-IP communications Telecom players will face a non-trivial challenge how to transform their business models to save and capture value and obtain payback from investments in networks development.
Pure fixed telephony operators will either disappear or transform themselves via modernization of infrastructure in fixed internet access providers, to offer subscribers individual bundles of different IP-services. Even now in some of developed markets operators like AT&T already consider abandonment of legacy PSTN networks and full transition to Internet based protocol services starting since 2018.
Cable TV operators will also become extinct or forced to transform their business models, to turn into either online content aggregators or Internet-access providers, since neither customers nor content producers will require them to distribute or deliver the content the final consumer.
In future the challenge for connectivity providers can be overcome only via transformation of pricing model for Internet access services as well as reconsideration of commercial relationship between Telco and Internet-players to redistribute the pile of revenue (i.e. both-sided charge of data consumers and content providers for quality, speed of access, data volumes and extra services). "
Sergey Nichiporuk is a keynote panellist at EurasiaCom, in the session on 'Meeting broadband needs across Eurasia'. Click here to find out more.