The latest report on the telecommunications market from industry analyst Paul Budde paints a picture of a market characterised by consolidation, as traditional services are being further commoditised – and, traditional telecoms are faced with a declining share of a growing market.
According to Budde, thanks to new video streaming services such as Netflix, and an increased use of mobile broadband for a range of applications, people’s use of broadband has increased – however, he says a squeeze on margins of services such as broadband access doesn’t mean that such increased usage of telecommunications also accounts for any “significant increases in industry revenues.”
Budde suggests the industry will still need to further transform itself in order to be able to handle the dynamics of the market, which include “lower margins, commoditisation, new technologies and competition from outside the traditional market.”
But it’s not all gloom and doom for the established telcos under threat from the digital media players.
According to Budde, there are plenty of new opportunities in the market. “Now that the quality of broadband access is improving – albeit still rather slowly – new markets are opening up in healthcare, education, government services, smart grids, smart cities, connected homes, wearable technologies, IoT and M2M – the list goes on.”
Budde urges the telecommunications companies to take a leadership role in these developments, but he says so far the key developments in these areas come from other organisations.
But, Budde says Telstra is an exception with the leadership role it plays in the development of the e-health market in Australia.
Budde says that for the time being cost-cutting, consolidation and mergers will continue to dominate the telco industry, at the same time an ongoing “barrage of innovations, new technologies, new apps and new services will shape the telecoms market.”
“It is an extremely dynamic market with lots of twists and turns, set to continue into 2016 and beyond.
“While the overall size of the telecommunications (transactions) market keeps growing, the overall share of the traditional telecoms companies in this market is declining.”
On the M2M market and the Internet of Things, Budde says that with the NBN and LTE now well and truly underway it is important to look at what will be the real value of this new infrastructure.
“This ‘Internet of Things’ (M2M, Pervasive Internet and Industrial Internet) is going to be a real “game-changer” according to Budde.
“It will transform every single sector of society and the economy and it will be out of this environment that new businesses – and indeed new industries – will be born.
“This is one of the reasons so many overseas ICT companies are increasing their presence in Australia. The LTE will take a leadership role in the development of M2M but the NBN is also an ideal test-bed for such developments. A great deal of attention is being paid to cloud computing and the NBN can be viewed as one gigantic cloud.”
Budde predicts that the number of connected M2M devices will grow to somewhere between 25 million and 50 million by 2020.
Key highlights of this latest report from Budde are:
• Industry consolidation and cost cutting set to continue
• Video streaming puts pressure on the quality of the NBN
• Mobile broadband traffic explosion driven by transactions initiated by smartphone devices
• Telco industry slow in its transformation
• Winners are assets and people light and use horizontal collaboration and the sharing economy
• New opportunities in: healthcare, education, government services, smart grids, smart cities, connected homes, wearable technologies, IoT and M2M
• Telstra is taking a leadership role in some of these developments, not just here also internationally
• NBN – FttH passed 1 million, FttN roll out start in all earnest after a 3 year delay in 2016
• LTE (4 ½ G) is fuelling developments in IoT and M2M
• Data analytic capabilities are opening up opportunities for new wealth creation and new jobs
• Well connected communities are leading the trend towards smart cities
• Data retention and web blocking laws will not solve the cybercrime problems.