Sergey Nichiporuk is Head of Strategy at MTS Ukraine. Here he gives his thoughts on how the telecommuncations industry is evolving, ahead of his participation as a speaker at EurasiaCom in Istanbul on 25th March.
"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.
