Fundamental stakes of the convergence of telecoms networks. Jahangir Raina ilocus.com

Transcription

1 Fundamental stakes of the convergence of telecoms networks Jahangir Raina ilocus.com 1

2 Agenda Market Trend Challenges Opportunities Solution 2

3 Market Trend 3

4 The Communications Age Networked Economy 4

5 Business Model Moves Into eservices Model Communications Wireless Communications (Free Phone) Cable TVs (Free Setup Box) Applications Hosting (Free Software) Internet Access (Free PCs) 5

6 Attractive International Market Driving Growth in New Entrants >1000 # Int'l Carriers Source: TeleGeography <

7 Deregulation Source: NBI, NTL s Consultants 7

8 As Demand Increases for Remote Working Laptops & PDAs Business Travelers Millions of users % of Total None Laptops 1998 Source:Nokia 8

9 Global Roaming Market 399 M $1.9 B 142 M $460 M Internet Users Source: IDC; The Yankee Group Remote Access Service Revenue 9

10 Internet Telephony Market 135 B $19 B 300 M $100 M Voice Minutes Revenue Source: IDC 10

11 Technology vs Services Technology is global Service is local 11

12 Challenges 12

13 Challenges for Traditional Telcos Legacy Network Infrastructure Numerous, Inflexible Back Office Systems Changing Focus from Regional to International Eroding Prices - Margins Squeezed Aggressive, New Entrants Deregulation High Cost Structure 13

14 Challenges for ISP to Sustain and Grow Their Business Cheap, Moving to Free, Access Difficult to Differentiate Poor Marketing Capabilities High Customer Churn Consolidation Primarily Local/Regional Footprints Stiff Competition 14

15 Economies of Scale Benefit Big ISPs CAGR Tier1 35.8% Revenue ($B) Tier2 28.8% 10 5 Tier3 8.3% Source:IDC 15

16 Service Providers Major Trend Customer Facing Providers - Providers of basic and enhanced communication services to business and residential end-users. Back Office Providers - Providers of communication facilities and services to Customer Facing Providers enabling specialty and focus. Revenue models are traditionally based primarily on subscriptions s and/or per minute pricing, although advertising and pipe usage pricing are rapidly emerging as the new models. Source: Pipper Jaffray 16

17 The Service Creation &Value Chain Backbone Networks Access Networks Managed Network Services Service Application Creation Managed Services/ Applications Aggregation of Services/ Applications Optical, ATM FR V.90, ISDN DSL, Cable Modem, Wireless LAN, WAN QoS Wholesale Commerce Content Delivery Multimedia Facilitation Outsource Management Communities Backbone Providers ISPs, Carriers Network Service Providers Broadband Service Providers Application Service Providers Portal/ Aggregators 17

18 Opportunities 18

19 Value-Added Services the Key to Future Growth Annual Revenue Growth (%) Source:IDC Value Added Services Corporate Access Wholesales Individual Access 19

20 Higher Margins and Complexity Higher Margin Value-Added Services Corporate Access Bandwidth Wholesale Individual Access Higher Complexity 20

21 Growth in Revenues Will Come From VA Services & Corporate Focus... CAGR % of Total Revenues 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Value Added Services 34.0% Wholesale 25.2% Corporate Access Individual Access 32.5% 21.4% Source:IDC 21

22 Current Value-Added Services Web hosting DSL Global Roaming VPN E-commerce IP Telephony 22

23 Future Value-Added Services Unified Messaging Enhanced Voice Services Wireless Internet Fixed Mobile Service Bundling 23

24 Solution 24

25 Implementation of Value- Added Services Speed - first to market advantage Ease of Implementation - Integrated Cost of Implementation Immediate Global Reach Scalability Customer Transparency - Single Bill 25

26 After Toll Avoidance, Value-Added Services will Drive Industry in the Future The immediate driver (of IP Telephony) has been, and continues to be toll avoidance. In that the gateway. is becoming a commodity, toll avoidance will decline as a driver of the industry going forward. Replacing this driver will be the services and applications. Piper Jaffray Inc, February 1999 The use of IP telephony will be spurred not by simple cost savings, but by the implementation of innovative new services. This in turn will encourage new, not replacement communications, and create incredible business opportunities for the carriers. Vint Cerf, Senior VP MCI,

27 Summary: Enabling the Global Internet Economy Internet End-User Applications will Drive the Internet Economy Applications IP OSS Network Equipment Value Added IP Services Global Service Coverage Service Provider Revenue Opportunities Service Provider Differentiation Single Bill for Multiple Services Infrastructure 27