Telecommunication Sector in Coming Decade?

Next monday, 17 May is the “World Telecommunication Day”. World Telecommunication Day has been celebrated annually on 17 May since 1969, marking the founding of International Telecommunication Union and the signing of the first International Telegraph Convention in 1865.

Although ITU Council adopted the theme “Better city, better life with ICTs” to mark World Telecommunication and Information Society Day in 2010, Talking about the “Better City, Better life with ICTs” is not so interesting to me (I may write  about it later). Since 17 May is world telecommunication day, let me take this opportunity to write about telecommunications sector (from perspective of telecommunication operators / vendors) and then information society (user rights in the digital world? ACTA?). At first, telecommunication sector.

Is Telco sector turning into a lower margin basic utility sector?

Magic word : change. Last decade was a time frame that technology, society and business evolved and changed faster than ever before and we -all- know that today’s technology and business environment is evolving and changing faster and faster than last decade. No one can claim that technology and business environment in coming decade will not evolve and change faster than today’s environment in the light of the experiences we had during the last decade. In this fast-changing world, nothing survives over the long term if it resists the change, (if) it can not change itself, (if) it can not adopt itself to the changing world or (if) it can not change itself at the same pace of “change”.

All we know is that “change” comes not only with “new things” but also with a more complex and networked things, more complex society and with more information.( sometimes, change comes with a recession or bad effects, yeah, dark side of the moon). As a result of this fast changing environment, none of us, none of the societies and none of the enterprises including telco players can survive in this environment by standing out of this change and evolution.

The question is not about the change, but about telco operators / vendors. Are they ready? Are they adopting themselves to this ever changing world?

Some facts:

  • 10 years ago, less than one in six people in the world had access to a telephone of any kind. By 2009, mobile phone was accessible for seven out of ten people worldwide.(Source: ITU ICT Statistics Database,
  • Internet access shifted from dial-up to broadband (see the image file : fixed broadband subscribers in 2008) (Source : ITU ICT Statistics Database, )
  • Phenomenal growth of mobile broadband.(3G, HSPA, HSPDA etc.)
  • Telecom becomes more data/connectivity-centric instead of voice.

Some other facts :

  • End of a decade of golden age? Mobile market is loosing steam. Mobile ARPU (Avearge Revenue Per User) is declining. (DigiWorld Summit 2009,
  • Telcos are grappling with falling margins across the mature markets. British Telecom, France Telecom, KPN (Netherlands) and Telefonica (Spain) are struggling to cope with revenue declines in the range of 3-9%. (for some other telcos, 5-15% revenue decline)
  • North American telecommunication operators are facing increasing difficulties in assuring revenues from bundled services.(Source: Revenue Assurance Strategies for Recession and Recovery, 22 April 2010, Ovum Research,
  • Other services including IPTV can not afford declining voice revenues.

New technologies like Digital Subscriber Line – DSL, fiber access etc are changing the face of communication. Users are communicating in different ways like VoIP, Instant Messaging, Social Networks, blogs, twitter etc and they will use them more and more.

Number of subscribers are increasing however voice revenues are declining? Telecom becomes more data/connectivity-centric but data data revenue can not afford declining voice revenues? So far, they can provide some growth from mobile broadband but is it sustainable in long-run? Some markets are mature and saturated? Some other markets have not been saturated but they will.  So, what is the future of telco?

Since that question is so comprehensive question, I can not answer this question on my own, either but there is an interesting report focusing on the future of telco. We are going to look at that report on sunday or monday.

Update – May 17, 2010

Sorry but I did not have time for another blog entry on this subject. You can find the reports which I mentioned earlier.

Telecoms 2015: New Game, New Players, but Who Wins?

Telco 2015 :  Five Telling Years, Four future scenarios

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