Welcome and introduction: key challenges for operators in the next 5 years

Transcription

1 European Summit 2013: Enabling innovation, driving profitability Welcome and introduction: key challenges for operators in the next 5 years 10 October 2013 Alexandra Rehak EVENT PARTNER:

2 2 Agenda for the day 9:15-9:45 - Welcome and introduction: key challenges for operators in the next five years Presenter: Alexandra Rehak, Head of Telecoms Research 9:45-10:30 - Connected consumers in 2013 and beyond how device takeup and network evolution drives service change Presenters: Ronan de Renesse, Principal Analyst, Consumer Mobile Services and Martin Scott, Principal Analyst, Broadband and Media 10:30-11:15 - Building a profitable wireless network to deliver exceptional customer experience Presenters: Chris Nicoll, Principal Analyst, Wireless Networks and Franck Chevalier, Manager 11:15 11:45 Break 11:45 12:30 - Generating more revenue from value-added services: OTT communications and media strategies Presenters: Stephen Sale, Principal Analyst, Voice and Messaging and Cesar Bachelet, Senior Analyst, Fixed Broadband and Media

3 3 Agenda (continued) 12:30-13:15 - Breakout Streams - Choose one to attend: Apple/Google/Facebook: mobile and OTT strategies and impact Crystal Ballroom Broadband traffic growth and the LTE/fixed access tipping point York Suite The end of M2M and the birth of IoT Windsor Suite 13:15-14:15 Lunch 14:15-15:00 - Industry Panel: The big data business model (and the future of mobile advertising) Moderator: Justin van der Lande, Analytics Software Strategies Industry Panellists: Dr. Simon Thompson, Chief Scientist, Customer Experience, BT Dr. Richard Benjamins, Director of Business Intelligence, Telefόnica Digital Will Cage, Industry Consultant for Communications Sector, Teradata

4 4 Agenda (continued) 15:00-15:45 Enabling digital economy revenue streams what software do service providers really need? Presenter: Larry Goldman, Partner, Head of Telecoms Software Research 15:45 16:15 - Break 16:15-17:00 - Breakout Streams - Choose one to attend: The future of VoIP: VoLTE, RCS, Web RTC and why they matter - Crystal Ballroom Serving SMEs: how operators can move from being comms providers to being technology providers - York Suite Multi-play bundling building successful offerings - Windsor Suite 17:00-17:15 - Round-up: Summary of the day Presenter: Alexandra Rehak 17:15-19:15 Please join us for drinks and canapés

5 5 Global telecoms market outlook Five key challenges for telecoms operators Key implications

6 Retail revenue (USD billion) Welcome and introduction: key challenges for operators in the next 5 years Telecoms revenue will grow more slowly during : fewer expansion opportunities, falling prices Global telecoms retail revenue by service Business network services Fixed broadband and IPTV Fixed voice and narrowband M2M Mobile broadband Mobile handset data Mobile messaging Mobile voice 6

7 Mobile handset data Fixed broadband Mobile broadband BNS* M2M Mobile messaging Mobile voice Fixed voice** Total Welcome and introduction: key challenges for operators in the next 5 years Mobile handset data will drive growth, M2M will grow fastest, core voice and messaging services decline Global telecoms retail revenue growth by service (USD billion),

8 SSA EMAP MENA LATAM Global DVAP NA CEE WE EMAP LATAM MENA SSA DVAP NA CEE WE Global Welcome and introduction: key challenges for operators in the next 5 years Emerging Asia Pacific will overtake Western Europe by 2018, contributing 21% of global revenue Retail revenue CAGRs by region, % 5.9% 4.6% 3.4% 1.5% 0.4% 0.1% 0.6% 1.7% Retail revenue growth by region USD billion,

9 Five key challenges for network operators and the telecoms industry in 2013 and beyond 9 Driving subscriber and revenue growth Innovation strategies: positioning for the digital economy Protecting core service revenue Maximising financial performance Understanding and improving the customer experience

10 Connections (billion) Share of total SIMs Welcome and introduction: key challenges for operators in the next 5 years Active SIMs in personal devices will outstrip the world s population by 2016, and 20% of SIMs will be 4G by 2018 Global mobile connections by technology generation, and 3G and 4G share of total SIMs (excluding M2M) % 35% 30% 25% 20% 15% 10% 5% 0% 2G 3G 4G 3G share of total SIMs 4G share of total SIMs

11 Usage (GB per month per connection) Welcome and introduction: key challenges for operators in the next 5 years Monetising growing demand for fixed broadband usage is a key opportunity for service providers Usage to grow by at least 35% CAGR Drivers: OTT video on primary sets; tablets replacing secondary TVs 2018: tablets approaching 50% of all fixed broadband traffic in richest economies. Lower-income HHs consume more. 11 Average Internet usage on fixed broadband WE CEE NA

12 Five key challenges for the telecoms industry: protecting core service revenue 12 Driving subscriber and revenue growth Innovation strategies: positioning for the digital economy Protecting core service revenue Maximising financial performance Understanding and improving the customer experience

13 In Europe and the USA, fixed mobile bundling appears to be reducing churn Future (6-month) plans for fixed broadband, by combination of services bought from the same provider 13 Triple-play + MV or MBB Triple-play Double-play + MV Double-play Single-play No planned change or unsure Plan to change provider Questions: various; n = 4445; all respondents with a fixed broadband subscription MV = mobile voice; MBB = large-screen mobile broadband; single-play = fixed broadband only, though other services may be bought from another supplier; double-play = a bundle of fixed voice and fixed broadband; triple-play = a bundle of fixed voice, fixed broadband and pay TV. 50% 60% 70% 80% 90% 100% Percentage of respondents Plan to change package Plan to give up fixed broadband

14 Total France Germany Poland Spain UK USA Total France Germany Poland Spain UK USA Welcome and introduction: key challenges for operators in the next 5 years OTT adoption is becoming significant and impacting core revenue particularly in certain markets/age groups 14 VoIP penetration of smartphones 70% IP messaging penetration of smartphones 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0%

15 Five key challenges for the telecoms industry: understanding and improving the customer experience 15 Driving subscriber and revenue growth Innovation strategies: positioning for the digital economy Protecting core service revenue Maximising financial performance Understanding and improving the customer experience

16 Coverage Customer service Reliability Different package Handset Mobile respondents Welcome and introduction: key challenges for operators in the next 5 years Customer preferences shift quickly, and unpredictably if you build it, they will come does not always work 16 Key questions for service providers around customer behaviour include: How consumer usage and attitudes are changing Device evolution and the impact on customer experience Evolving video consumption patterns: multi-screen, TV Everywhere offerings How best to support multi-device usage and OTT What does best-in-class customer care look like Understanding and enabling a smooth shift to cloud and easy integration with mobility: for enterprises, consumers Key reasons for mobile users to want to change network provider in the next 6 months 25% 20% 15% 10% 5% 0% Smartphones Non-smartphones Source: Analysys Mason s Connected Consumer Survey 2013

17 Customers and suppliers perceptions of customer experience may not align Customers form perceptions when interacting with employees, IT systems and services at different lifecycle phases. The complexity of the ecosystem makes it difficult to assess how the customer experience is really playing out Customer experience measurement tools can be: Outside-in: to measure and report perception of products and services. Inside-out: internal performance metrics and subscriber data. The complexity of the customer experience ecosystem Over-thetop (OTT) providers Communications service providers (CSPs) 17 Retail distributors and partners Mobile device manufacturers

18 Five key challenges for the telecoms industry: maximising financial performance 18 Driving subscriber and revenue growth Innovation strategies: positioning for the digital economy Protecting core service revenue Maximising financial performance Understanding and improving the customer experience

19 USD trillion Percentage of revenue Welcome and introduction: key challenges for operators in the next 5 years Operators face increasing pressure on financial performance; bringing down opex is critical 19 Operators must focus on improving their operating margins Operating costs have increased more rapidly than revenue. which in some cases may be helped by increased capex. Disciplined approach to capex over the past 5 years may be holding back operational changes. Focus on incremental changes has delayed transformations (e.g., network and systems consolidation initiatives) that could reverse margin erosion. Opex reduction strategies can be tied in to improved CEM, and to better positioning for the digital economy Telecoms market financials, worldwide, % 60% % % % 20% % 0.0 0% Revenue EBITDA EBITDA margin Opex Opex margin Capex Capex margin

20 Central and Eastern Europe Developed Asia Pacific Emerging Asia Pacific Latin America Middle East and North Africa North America Sub-Saharan Africa Western Europe Welcome and introduction: key challenges for operators in the next 5 years Capex decisions are becoming more rational: LTE deployments aren t characterised by deployment fever Operational and planned LTE networks, by region, July, Operational Planned Measuring capex efficiency through RoI is a key metric for the industry LTE deployments are generally being driven by clear market and business considerations - unlike the move to 3G, no deployment fever in most countries. Most CSPs want to maximise use of 3G infrastructure, putting in LTE only where required. LTE has some immediate RoI potential: supports multiple technologies and diverse spectrum holdings helps position for technology leadership useful for high-value segments and and possible fixed mobile substitution But longer-term monetisation depends on driving demand more broadly 20

21 Five key challenges for the telecoms industry: innovation strategies positioning for the digital economy 21 Driving subscriber and revenue growth Innovation strategies: positioning for the digital economy Protecting core service revenue Maximising financial performance Understanding and improving the customer experience

22 Innovation strategies: operators are exploring a variety of approaches to finding a niche in the digital economy OTT comms and media initiatives New verticals: M2M, advertising, payments and banking, m-health, security Wholesale + two-sided business models: MVNOs, open APIs Innovation divisions vs innovation islands within existing corporate structure 22 Two-sided operator business model

23 Revenue (EUR billion) Welcome and introduction: key challenges for operators in the next 5 years How large are these opportunities? Telefónica Digital forecasts robust growth from the digital economy Telefónica Digital s revenue targets for 2015 [Source: Telefónica] Minimum Maximum E-health Security and cloud M2M Financial services and advertising Subsidiaries Content distribution 23

24 Third-party players are spreading throughout the telecoms value chain and threaten operator plays Google, Apple, Amazon, Facebook and a host of other players continue to stretch across the telecoms value chain Their advantage: nimble, open to experimentation, no or limited underlying network costs, ecosystem, cash Google s activities across the mobile value chain Advertising Content Google advertising Google Play content and YouTube Third-party content Apps & services 24 Apps and services Google apps and services Third-party apps and services Operating systems Devices Androidpowered devices Devices with other operating systems

25 Third-party players are spreading throughout the telecoms value chain and threaten operator plays Google, Apple, Amazon, Facebook and a host of other players continue to stretch across the telecoms value chain Their advantage: nimble, open to experimentation, no or limited underlying network costs, ecosystem, cash Your advantage: the network, billing relationships, untapped customer data Google s activities across the mobile value chain Advertising Content Apps and services Google advertising Google Play content and YouTube Network Google apps and services Third-party content Third-party apps and services Apps & services 25 Operating systems Devices Androidpowered devices Devices with other operating systems

26 Key implications: to drive profitability in an overall declining market, operators must be efficiently bold Innovation is critical around new services, new pricing structures, new channels, new partnerships, new business models Efficient investment in growth areas, in network deployment, in key enabling systems and software Enabling future differentiation, through: 26 Understanding how customer behaviour and experience are changing Preparing for the impact of technology and device evolution Effective partnering and positioning in the digital economy value chain

27 27 Thank you. Alexandra Rehak Partner Telecoms Research Boston Tel: Fax: Cambridge Tel: +44 (0) Fax: +44 (0) Dubai Tel: +971 (0) Fax: +971 (0) Dublin Tel: +353 (0) Fax: +353 (0) Edinburgh Tel: +44 (0) Fax: +44 (0) London Tel: +44 (0) Fax: +44 (0) Madrid Tel: Fax: Manchester Tel: +44 (0) Fax: +44 (0) Milan Tel: Fax: New Delhi Tel: Paris Tel: +33 (0) Fax: +33 (0) Johannesburg Tel: Fax: Singapore Tel: Fax: