Telecoms Research Agenda 2011

Advising you on
industry transformation
OVUM TELECOMS
2011

Research Agenda

What’s new in 2011

Welcome to Ovum’s telecoms research agenda, which we ■ Ensured that our analysts are available
hope you’ll find valuable in providing the market perspective to you. We recognize that you want to discuss our
you need to drive growth in 2011. research and the market with our analysts, which is why
we have made it easier for you to make enquiries.
As always, we will ensure that you are best placed to
maximize value from new and existing markets and will work ■ Broadened the research scope of many
alongside your teams to provide research and analysis that practices. We are intensifying our efforts with deeper
supports your decision making, no matter where you sit country profiles, a renewed focus on new media, content
within the industry. and gaming, and country-level analysis on fixed and
mobile access services. You will also see more pricing
Our research in 2011, which comes from some of the information and converged analysis across the telecoms
industry’s leading analysts, will be as stimulating as ever and and IT teams within Ovum.
founded on robust market data. However, there are some
key changes as we improve our service. After all, it follows This year we are also introducing the concept of
Signature Research, which represents the best of what
that as our customers’ markets expand, we too broaden
our analysts produce in each of our practices.
our horizons.
We have laid out the key themes of our 2011 research
For 2011, we have:
agenda in the pages that follow. Combined with our
commitment to service that gives you access to expertise,
■ Expanded our primary research. We will produce
real-world experience, and market insight when you need it
more primary research, growing the amount of customer
– we believe you’ll find this a compelling package.
insight research by 20%. You will see more customer
and enterprise surveys and we will continue with our Thank you for your business and I look forward to
wholesale customer survey. working with you in 2011.

■ Invested in our quality process. To ensure that
you can make business decisions with confidence,
RICHARD MAHONY
everything we publish goes through three stages of
DIRECTOR, TELECOMS RESEARCH & ANALYSIS
quality review – a standard that we believe is the most
stringent in the industry.

■ Invested in new research methodologies,
which will mean that our research is not just founded
on reliable data, but unique methodologies designed to
provide market clarity.

■ Invested in new geographies, with new offices
in China and Brazil and expanded operations in Japan,
South Africa, and the US. We now offer the broadest
geographic reach and the deepest telecoms focus in
the industry.

2 | OVUM TELECOMS RESEARCH AGENDA 2011

OVUM TELECOMS
2011

Research Agenda

Telecoms at a crossroads 4 Telco Operations me
24

Key research themes 6 Telco Strategy 26

Practice coverage of
Wholesale 28
(C
key research themes 8

Components 10 REPORT Research portfolio 30

Consumer 12 EXPERTISE Key benefits
DECISION MAK 32
IN

e
Devices and Platforms 14 Global ive
Telecoms Analyzer 33
I

sa
Emerging Markets 16 Knowledge Center 34

Enterprise 18 Research Store 36

da abas ks
37
Network Infrastructure 20 Consulting

Policy and Regulation 22

CONTENTS | 3

2011

Telecoms at a crossroads

Telcos need to
“ find ways to
tap into the
emerging revenue
streams which
take advantage of
their networks
”

JAN DAWSON
CHIEF TELECOMS ANALYST

The evolving telecoms ecosystem
demands new business models
The telecoms industry is at a crossroads. Saturation and
market maturity are driving down prices and causing revenues
to stagnate and decline. Meanwhile, telecoms operators, which
have always held the pre-eminent position in the market, are
losing power to new players from the online, software and
consumer electronics markets. Large European and North
American equipment vendors, which once provided telcos
with all the technology behind their products and services, are
threatened both by surging competitors from Asia and by a new
breed of applications and services not rooted in switches and
routers but in software in the cloud. Device vendors, once
clearly telco partners with interests aligned with theirs, have
now become competitors in content and service provision.

All these changes require a fundamental rethinking of the
business models which used to generate substantial revenue
growth and fat margins but now threaten to produce only
stagnation and decline. Telcos need to find ways to tap into
the emerging revenue streams which take advantage of their
networks without generating any revenue for them. Network
equipment vendors need to develop new software-centric,
developer-friendly business models. Device vendors need
to wa k a thin line between partnership and competition.
Regulators, too, need to evolve in their evaluation of and
responses to the market to include new players and
business models.

In emerging markets, many telcos have found a way to
effectively go back in time and participate in rapidly growing
markets again. But there, too, some of the same trends will occur
over the coming years, and telcos will face similar challenges.
But there are also important differences and special challenges
in emerging markets, not least how to maintain margins when
disposable income and therefore ARPU are much lower.

TELECOMS AT A CROSSROADS | 5

2011

Key research themes

In 2011, we’ll be focusing on seven key research themes to help industry players overcome foreseeable challenges and make
the changes necessary to succeed. Each of Ovum’s 10 research practices will tackle the topic areas most relevant to their particular
coverage area while the following big picture themes will cut across much of our telecoms research portfolio.

1 THE ROAD TO 2020

Ovum’s Telecoms 2020 report series described a new type of service provider which
will emerge in the next ten years: the SMART player. The disruptive competitors which
have entered the telecoms market in recent years have largely been platform players,
which is to say that they own and operate software platforms which cross the traditional
boundaries between fixed and mobile, between computers and televisions, and between
voice and data. In addition, they have created interfaces to allow third-party developers
to create value on top of their platforms in a way that increases the value of the platform
to users and generates revenue and stickiness. SMART players will emerge from among
these companies, but telcos also have an opportunity to evolve into SMART players, if
they begin taking the first steps now. We will continue our coverage of platform providers
such as Google, Apple, Microsoft and others, but will also address the key strategic issue
of how telcos can begin to develop their own platforms as a first step on the road to 2020.

2 PLANNING FOR NEXT-
GENERATION FIXED AND
MOBILE ACCESS

As telcos invest in fiber-based local access networks and 4G mobile networks, they
are by default locked in to the DSL and 3G business models they have relied on in the
past. New strategies and business models are required to fund the investment in next-
generation access, and to more closely align costs with revenues. Network equipment
vendors and others in the value chain will need to support these changes as they work
with service providers. And regulators will need to adapt their market analysis and
remedies to next-generation access to incentivize investment while ensuring a level
playing field.

COST AND PROCESS
3
OPTIMIZATION STRATEGIES

Cost reduction is nothing new to telcos, but efforts to cut costs continue, and as the
low-hanging fruit has mostly been picked, they must find more sophisticated ways to
improve efficiency. This involves transformation of many core operational functions,
but it also means making smart decisions about network investments to support
burgeoning bandwidth requirements. Equipment vendors will be key to transforming
the cost structure of deploying networks, and they and their suppliers including
component vendors will need to transform their own businesses to maintain their
margins and remain competitive.


PROFITING FROM NEW
4
REVENUE OPPORTUNITIES

While cost reduction plays a part in protecting margins, telcos need new sources
of revenue in order to cover the shortfall caused by declining fixed revenues and
stagnating mobile revenues. But there is no single obvious new revenue opportunity to
pursue. Rather, telcos must find a slew of new opportunities and focus on those most
likely to generate profitable revenue growth in the coming years, across all segments,
from consumer to enterprise to wholesale.

THE IMPACT OF CLOUD
5
BUSINESS MODELS

The technology world is abuzz with ta k of the ‘cloud’, and it has become the latest
term to suffer from over-application to products and services from a range of providers.
But beneath the ‘cloud-washing’ there remains a real shift in business models which
has the power to fundamentally impact the telecoms market. Not only is there an
opportunity for telcos to become cloud providers in the enterprise market, but telcos
will also want to make use of cloud services and architectures internally to deliver
their services to all segments. Meanwhile, telcos will have to respond intelligently to
competitors using cloud business models.

LEVERAGING CUSTOMER
6
INSIGHTS

What separates the most successful companies from their less successful competitors
is often the ability to intuit what customers want and when. Achieving this goal requires
a combination of insights into what customers say they want and detailed analysis of
customer behavior. Telcos hold much of the data they need to make very good guesses
at what customers want, but are often poor at making sense of that data. In addition,
their own efforts to approach customers directly about their plans and preferences often
fall short either because customers don’t want to share that detail with their provider or
because telcos ask the wrong questions. A strategy that combines effective mining of the
data telcos already have with insightful analysis of customers’ stated preferences is key
to success.

UNDERSTANDING
7
COMPETITORS AND PEERS

In addition to the established competitors from within the telecoms market itself,
telcos face an emerging threat from new disruptive competitors with radically
different business models. These competitors are not subject to regulation, may offer
advertising-funded services for free to end users, and may be much more dynamic and
flexible than telcos can be. Holding ground against existing competitors while adjusting
to and either working with or battling against new competitors is key to success. In
addition, learning from peer best practice is crucial to staying ahead of the game.

KEY RESEARCH THEMES | 7

2011

Practice coverage of key research themes

The following pages illustrate how our key research themes will spread across our practice areas in 2011.

Devices and
Components Consumer Emerging Markets Ente
Platforms

The road to 2020

Planning for next-generation
fixed and mobile access

Cost and process
optimization strategies

Profiting from new revenue
opportunities

The impact of cloud
business models

Leveraging customer
insights

Understanding competitors
and peers


Network Policy and Telco Telco Wholesale
rprise Infrastructure Regulation Operations Strategy

PRACTICE COVERAGE OF KEY RESEARCH THEMES | 9

2011

Components

DARYL INNISS
PRACTICE LEADER

Optical components quarterly
market share report
Market context
Revenues are segmented by transceivers (long
Wireline and wireless network operators continue to experience distance – mostly used in the core network,
high bandwidth demand, a trend that is expected to continue medium – mostly used in access networks, and
for the foreseeable future. In their efforts to improve margins, short – mostly used in datacom), transmission
operators need to decrease the cost of bandwidth while offering discretes, amplifiers, and ROADM components.
new services. They are therefore demanding higher capacity at
smaller size, lower power consumption, and lower cost per bit. Optical component forecast
Component suppliers provide technical innovations and new
The forecast includes volumes, prices, and revenues
product development that serve as key ingredients to helping
of modules and discrete components. It represents
operators meet these needs.
optical components used in the network core, metro,
access, and enterprise-based networks.
Our coverage

Ovum’s Component research analyses the communications
market to identify the ‘real’ growth opportunities in components.
Optical components market
It provides insight into opportunities for transceivers, ROADMs,
Representing a $4.7 billion market on a rolling 4Q basis through 2Q10
amplifiers, and discrete transmission components in core
networks where the availability of new products is often the
gating item. It analyzes cost of components and equipment
used in core and next-generation access including FTTx 17%
19%
and 4G wireless. The research also identifies opportunities
for component vendors in enterprise (eg. storage and local
area networks).
13% 23%

15%
13%

Transceiver 1
ver
ROADMs
tance distance
Long

Transceiver 2
ver 2 Amplifier
distance distance
Medium

ver 3
Transceiver 3 Discretes
sta ce distance
Short


2011 Coverage Areas

Market assessment and than supply. Hence availability of the datacenter that require analysis
outlook for components in components for 100Gbps will be a key to uncover their long-term roles
optical communications issue. Meanwhile, multi-year revenue and opportunities.
opportunities exist at both 10 and
Component companies in optical 40Gbps. We will provide market data A short list of important questions
communications are on the verge of and intelligence including quarterly includes the following:
posting consistent profitable results. shipment data at 40 and 100Gbps, to
Ovum’s quarterly market share help suppliers, customers, and carriers • Transition to 10Gbps appears to
and biannual forecasts provide a understand the market realities. finally be happening. But the copper
comprehensive market perspective solution is also attractive. How is this
to help understand the competitive market opportunity emerging?
Next-generation wireless
landscape and to separate fool’s
and wireline access • 40Gbps Ethernet and 100Gbps
gold from real opportunities. Ovum’s
technologies cost outlook Ethernet. Where are we, what’s the
market intelligence includes both
bottom-up and top-down analyses. “right” form factor, what’s needed,
DSL cost per port sets the industry
Ovum interviews component and and when will it all be ready?
benchmark for competing access
subcomponent suppliers and technologies, but as fiber is laid in • What are optical engines, who is
corroborates its findings from interviews
access networks, a variety of other developing them, and where are they
with network equipment manufacturers
equipment in use needs to be cost being used?
and network operators. Ovum’s analysis
competitive. And the introduction of 4G
of end market drivers, customer and
wireless provides another competing
competitor positioning, and emerging
technology for some markets, on yet
demand for products and technologies
another cost basis. How does its cost
helps position component suppliers
for success. compare to DSL and FTTx? What
technology advances are needed
Availability of high to help drive the costs down for the
bandwidth transmission different next-generation access
line components for approaches? Our research will
network core include building the bill of materials
for a series of access equipment,
Carriers have crowned 100Gbps analyzing cost, and identifying cost-
as the next-generation backbone
reduction approaches.
transmission rate to help them support
burgeoning bandwidth demand. But
Datacenter transformations
the development cycle will likely be
driving new optical
slow due to the technical challenges
connection demand
involved. And ramping these products
in manufacturing will be monitored A host of new technologies and
carefully since demand is larger approaches are being introduced in

COMPONENTS | 11

2011

Consumer

MICHAEL PHILPOTT
PRACTICE LEADER

Consumer executive briefing
Market context The report provides a key point summary of the
research carried out by Ovum over the last six
Broadband Internet access has changed the way we live our months including forecasts, latest consumer trends,
lives, the way we communicate, and the way we consume market drivers, and core insights about the services
media. The convergence of telecommunications, broadcast, provided to the connected and extended home.
and Internet markets has created a burden of choice for Ovum’s Consumer Research Digests will benefit
consumers – the choice to consume more than ever before, from additional high-level conclusions and forward-
anywhere, anytime, and anyhow. Consequently the consumer’s looking implications.
behavior, needs and desires are changing, and business
models have to change with them if telcos, vendors, and online
service providers are to capture the value resulting from the
consumer’s new demands. The digital consumer opportunity

Our coverage

Ovum’s Consumer practice is focused on this rapidly changing
Digital media

Extended home

Advertising

Integrated services
marketplace. The core of its research will be focused around
the strategies for successfully monetizing online content
services, integrated value-add services, and the connected
home. The research will study the trends across the whole
market, but with a focus on how the broadband, mobile, or
integrated service provider can maximize their opportunities
within that market. To achieve this we will carry out in-depth
research into optimum business models, developer strategies,
and consumer demand trends. In 2011 Ovum will also have a
research theme on social media as it is integrated into other
Broadband service provider opportunity
applications and services such as TV and video.


2011 Coverage Areas

Content services and functionality and value to the end user. Social media
applications Examples of such services include:
Social networking is one of the most
The online content and application • device security mature and popular of all Internet
markets are growing rapidly. However, • content backup
applications. Its familiarity, even within
online and over-the-top players are the mass market, means that it is
• integrated VoIP applications becoming an increasingly important
starting to dominate the markets leaving
tool within other types of media and
little space for the broadband service • payments
communication. Ovum will analyze how
provider. In order to take advantage of
• identity management social networking can be utilized in
this potential revenue stream, service
• personalization. other applications and how players can
providers must continue to innovate and monetize such innovation. Research will
move quickly as end-user trends come Ovum’s research will include reports focus on case studies of leading players
and go. and case studies of the latest and the associated business models.
developments and best-of-breed
Ovum will publish in-depth analyst examples/market leaders. Research
reports, player case studies, forecasts, will also include analysis of non-
and consumer insights reports in a telco service providers that are also
developing such solutions. Consumer
number of key content areas, including:
insight reports will include figures
• TV on consumers’ willingness to pay for
such services, and service provider
• music
positioning.
• gaming
Opportunities in the
• gambling connected and extended
• e-publications.
home

Content and value-added services are a
Integrated value-added big part of the connected and extended
services home. However, there is more to the
connected home than just content.
Much focus today is on the high-end The home network, CPE evolution,
content services. However, there are connected device developments &
a number of opportunities around the adoption, and e-services all contribute
to the wider topic. Working with other
‘connected home’ that service providers
research teams within Ovum and
are in a good position to exploit.
Datamonitor, the Consumer group will
Although not always the case, such look to pull together all aspects of the
services are becoming increasingly topic with an emphasis on the B2C
integrated to provide even greater opportunities for service providers.

CONSUMER | 13

2011

Devices and Platforms

ADAM LEACH
PRACTICE LEADER

Developer insights: a survey into
the future of Smartphone and
Market context
multiscreen applications
Connected devices, whether mobile phones, tablets, set-top Understanding the level of developer support
boxes, games consoles, PCs or others, form the focal point among device platforms is critical to evaluate the
for the delivery and consumption of telecoms and Internet future success of a given platform. Only the best-
services, content, and applications. supported platforms will ultimately attract the best
developers, including major content providers,
However, the core value in these devices lies less and less in media companies, and brands. Not all will flourish.
the physical device itself and more and more in the software
platforms that run on these devices. To obtain a comprehensive, unbiased view we
survey 300 developers across a range of vertical
A number of major industry players are competing for market sectors with the objective of building a deep
share in this space – including Apple, Google, Microsoft, Nokia, understanding of their mobile strategy.
RIM, and Samsung – for dominance in the home and personal
device markets.

Our coverage Devices vs. platforms

The Devices and Platforms practice addresses the key
competitive dynamics in this space by analyzing the major
players and their strategies, the threats and opportunities Samsung
presented to existing players, as well as future impacts. Android
We provide player analysis, forecasts, and tracking of HTC
RIM
specific device types and platforms to help operators, device LG
manufacturers, platform vendors, enterprises, and application DEVICES Nokia PLATFORMS
developers make sense of this rapidly changing market. Apple
Sony Ericsson
Windows Phone
Motorola


2011 Coverage Areas

The evolution of the disruptive business models, strong The opportunities and
smartphone market consumer branding, and existing business cases for
relationships into direct competition multi-screen application
Over the last two years smartphone with telcos. deployment
sales have consistently outperformed
the sales of traditional mobile phones, We will provide regular profiles of Managed device platforms are
and during the global recession were the major adjacent players, including increasingly becoming multi-device and

the only part of the mobile phone Google, Facebook, Apple, Microsoft, multi-screen platforms, crossing the
and Nokia. We will evaluate these traditional divide between computers
market that grew at all.
players’ strategies and ambitions, and and televisions, and between home-
Ovum will focus on mobile operators’ identify the threats they represent for based devices and mobile devices.

strategies to bring the economics telcos. But we will also examine the
We will examine the process involved
of smartphones (with their ecosystem opportunities for partnerships with
in creating and developing multi-
of applications and monetization these players. screen applications and services,
through app stores) to the mass market from conception to deployment. In
Opportunities in the
of subscribers. particular, we will focus on the ‘Four Ds’:
connected and extended
devices, development, deployment, and
home
Ovum will continue to comprehensively distribution of applications, content,
cover the smartphone market by The range of devices which are and services.
forecasting smartphone shipments, connected is now extending far beyond
tracking new device capabilities, This multi-screen development will
home computers and mobile phones.
rely increasingly on web technologies
profiling the main players, and tracking Games consoles, tablet computers
including HTML5, Adobe Flash
changes in developer strategies. and netbooks, connected televisions
and other rich internet application
and set-top boxes, plus other devices frameworks – areas where Ovum has
Adjacent players:
such as in-car systems – often driven well-established expertise.
opportunities and threats
by the same technologies that underlie
for telcos
smartphones – are increasingly With a focus on specific requirements
Telecoms operators face significant connected not only to the Internet but and differences among vertical
competition from other telcos and also to each other. markets, this work will provide valuable
guidance to developers and value
cable companies, but they are
We will be revisiting the concept of system players of all types seeking to
increasingly having to battle against
the connected and extended home prioritize development.
disruptive competitors coming from
during 2011. We will examine how the
adjacent industries, most notably
platforms and technologies deployed
online service providers and consumer
on these devices can both help and
electronics vendors.
hinder telcos and other players in
These players represent a significant their attempts to gain control in this
threat to telcos, as they often bring important space.

DEVICES AND PLATFORMS | 15

2011

Emerging Markets

ANGEL DOBARDZIEV
PRACTICE LEADER

Mobile data in the emerging
markets: a regional analysis
Market context
This study examines the opportunity and the
Growth in the mature markets of Asia, Europe, and North best practice service provider strategies in data,
America has slowed amid market saturation in many service communications, and applications services in the
areas. As a result, many service providers and equipment emerging markets on a regional basis, including
vendors continue to look at the emerging economies of separate analysis of Asia, Eastern Europe, Middle
Africa, Asia, Eastern Europe, the Middle East, and South and East and Africa, and South and Central America.
Central America for customer and revenue growth. In such
geographies, large swathes of the population are either un-
served, or have very basic communications services.
Emerging markets coverage
Our coverage
Central and South America Eastern Europe, Russia and CIS
The Emerging Markets practice highlights the key product and Coverage anchored around Coverage anchored around
geographic growth opportunities in the growth economies, and Argentine, Brazil, Chile Russia, Poland and Ukraine
and Mexico
provides deep insight on the emerging players and markets
we evaluate. In doing so, our central focus is on distilling the
best practice strategies that will assist service providers and
vendors to succeed and prosper in what are often unique and
challenging market environments.

Middle East and Africa Emerging Asia
Coverage anchored Coverage
around GCC countries, anchored
South Africa, Nigeria around China,
and Egypt India, Malaysia,
Indonesia,
Thailand and
Vietnam


2011 Coverage Areas

Emerging market service among consumers and enterprise
provider strategies and customers in the emerging markets.
business models This will include insights into hot
consumer trends, changes in enterprise
The focus of this research theme
communications spending priorities,
will be to provide deep insight into
and analysis of SMEs in the emerging
the strategy direction, challenges,
markets. The research under this theme
execution, operations, and business
will be delivered through in-depth
models of the service providers in the
studies and surveys.
emerging markets. This will be achieved
through case study analysis into
Local market analysis:
innovative/best practice strategies,
industry insights, challenges,
as well as cross-player, primary
and opportunities
research-led, in-depth analysis of
key strategy topics. This theme will focus on drawing
deep insight from select fast-growing
Service and marketing
or innovative local markets. This will
innovation in the emerging
include both local market case studies,
markets
as well as cross-country analysis of
select market segments (e.g. consumer
Within this theme we will drill
down into the innovative services broadband, enterprise mobility)
and marketing approaches in the
Communications technology
emerging markets (e.g. content and
direction and adoption in
applications); pricing innovation (e.g.
the emerging markets
dynamic pricing); channel management
(e.g. SME channel strategies), and Here we will assess the pace and
communications services for users
nature of changes in technology
at the bottom of the socio-economic
adoption in the emerging markets
pyramid. This research will be
by both users and service providers.
delivered through case studies
Issues covered will include the adoption
and focused briefs.
of WiMAX versus LTE, shifts in the
mobile device mix in the emerging
Communications users
markets as well as adoption of IP
in the emerging markets:
services among emerging market
trends and insights
enterprises. The research here will be
The focus of this theme will be to delivered through in-depth studies and
provide analysis of the demand patterns focused briefs.

EMERGING MARKETS | 17

2011

Enterprise

EVAN KIRCHHEIMER
PRACTICE LEADER

Global services deals analysis
Market context Over 15 leading global telcos now supply us
with anonymized detailed contract information,
More than ever, enterprise communications is a market in flux: allowing us to build twice-yearly Global Services
traditional suppliers face challenges ranging from new delivery Deals Analysis studies. Every six months we plot
models, such as cloud, to increasing competition from both new key contracts for major global telcos, highlight
upstarts and established service providers with an IT heritage. successes in multinational deals, compare and
Unified communications has evolved to include immersive rank operators for MNC market impact, identify
video, and service providers are moving up the value chain strategic developments and trends in verticals or
to provide application services on top of the networks they geographies, map telco capabilities against MNC
already manage. In such a dynamic environment, how can requirements, and identify future market trends.
opportunity be distinguished from threat, or indeed, threat be
turned into opportunity?

Our coverage Enterprise value proposition

Ovum’s Enterprise practice covers how businesses interact
ve r s
dr i Evo
with each other, with their employees, and with customers.
et l ve
rk
This includes managed and hosted communications services,
a pr
evolving communications networks, technologies, applications, omp e tito
ack c
m

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op
te

and professional services. With this as our remit, in 2011 we
os
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will focus on unified communications for B2C and business
itio

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to employee (B2E) environments, service management and l ie
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ed

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delivery (from formulating, selling, pricing and delivering,
alua
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rs
s tomer n

through to support), and convergence (including voice/data, Enterprise
te new mar k

fixed/mobile, and public/private) – all within a framework of communications
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geographic and industry-specific insight.
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ev
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wr
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Suppo

Suppliers: • Vendors • Global telcos • Regional telcos • Sls

Buyers: • CIO/IT directors • Customer service directors
• Telecoms directors
From SME to MNC and across key industry verticals

Users: • Employees • Customers


2011 Coverage Areas

Service evolution obsolescence of legacy fixed telephony Changing telco service
platforms, and the changing needs of delivery models
Managed service evolution is at the enterprises and operators?
heart of large telco strategies. In this Ovum will focus on collaboration,
• Ovum will cover vendor strategies for
theme we will focus on three key areas: software-as-a-service, and nascent
incorporating social media and video
managed mobility, the provision of IT federated services, extending our
as a service, and the evolution of telco
into enterprise communications. coverage of hosted and cloud-based
professional services capabilities.
What positions will UC vendors find services to cover a broader range of
themselves in if and when social applications that fall within the scope of
media turns the customer into their collaboration as a service. We will also
• Our managed mobility research looks
own service agent, and the employee investigate the end-user interest in and
at the evolving managed mobility
into a knowledge hub? And which impact on telcos for federated services
services market. It tracks and rates
video-based business applications (business to business peering) for voice
the development of the major
will strike a chord in the market? and UC applications. In particular we will
international providers’ service
focus on SaaS (software as a service)
portfolios, their approach to service Evolution of business- including services targeted primarily at
improvement, organizational changes, to-customer (B2C) the SME market for business productivity
partnerships, and the growing role
communications applications and virtual desktop.
of the systems integrators.

• While there is by no means any
Ovum will examine emerging Regional views, with a
consensus on what IT services
technologies which help enterprises specific focus on BRIC and
in their quest to provide improved
capabilities the major telco should broader APAC dynamics
service, with a focus on two key
have or be able to deliver, we will
areas: the impact of mobility on In this theme, we bring an enterprise
cover how operators can position
provision of customer service, and new angle to our analysis of BRIC countries.
themselves to win more deals for personalization technologies. Specifically, we will profile the MNC
IT-centric services.
strategies of major global telcos with
• Ovum will investigate the major An increasingly mobile customer base respect to their ability to serve Asia-
operators’ and vendors’ professional has translated into a requirement Pacific clients. With a focus on China,
for companies to provide service to
services teams, existing professional our mainland-based analysts will shed
customers who are no longer tied to a
services investments and future plans. light on regulatory constraints, cultural
desk phone or PC. We will cover video
barriers, the role of local partners, and
Vendor UC and mobility and MMS applications for mobile service,
the needs of both Chinese enterprises
the impact of 4G, and mobile device
strategies and international businesses seeking
strategies for customer care.
to establish a mainland presence. And
In 2011 we will turn to focus on the finally, we will combine our enterprise
Proliferation of consumer touchpoints
vendor, and in particular on mobility, mobility expertise with Ovum’s
and strengthening networks have created
social media, and video. emerging markets practice analysis
a dilemma for customer-service centers
that want to maintain personalized to explore major business mobility
• Many UC and applications vendors automated service. We will investigate trends in the Asia-Pacific region, and
have long-held mobility portfolios. how technology providers are developing in emerging markets such as India and
But how are these evolving given new solutions to provide more natural, Brazil, based on our understanding of
the increasing demand for managed personalized conversations in a both operator strategies and enterprise
services, the advent of 3G, the customer-service context. buyer behavior in the relevant countries.

ENTERPRISE | 19

2011

Network Infrastructure

DANA COOPERSON
PRACTICE LEADER

Quarterly market share reports
Market context This report gathers and analyzes revenue and
trend information from more than 30 infrastructure
The crossroads where the telecoms industry stands is crowded system vendors. We step beyond the numbers to
with players unsure of which direction to take. Networks and provide customers with insight based on in-depth
partner ecosystems are evolving to support the massive analysis of competitive and market trends by
changes in the ways people and organizations communicate. segment and region/country.
Because the exact timing and character of industry evolution is
unknowable, infrastructure flexibility is critical.

Our coverage Networks and the powerful forces reshaping
the telecoms landscape
The Network Infrastructure practice provides vendor, financial,
and network operator customers with a comprehensive
Disruptive
view of the trends – including architecture, technology, and competitors
product evolution; shifts in buyer requirements; and spending Industry
shifts – that affect critical business strategies as networks structural change

evolve to support operators’ twin goals of cost reduction and Macroeconomic
volatility
new revenue growth. Our experienced team builds on a data Ne t wo
b ile rk
foundation compiled over almost two decades. We offer solid Mo s
research and logical analysis to provide customers with critical
Diverse
guidance so they can step away from the crossroads confident customer
that they’re headed in the right direction. needs and
expecations Regularatory
obligations

New service
requirements Fix
e d Ne t wor k s Investment
environment

Disruptive Disruptive
customers technology


2011 Coverage Areas

Networks as cost-reduction Ovum will address the theme of Networks as enablers of
enablers: improving network networks as enablers of cost reduction globalization: supporting
efficiency through regular reports on technology emerging vs. developed
trends, vendor strategies, and markets
Telecoms service providers have had opportunity analyses that focus on the
a difficult time growing revenues and Over the past 5–10 years there has been
above network topics.
a dramatic shift in the size and growth of
profits due to competitive pressures
Networks as new services network infrastructure equipment markets
and the growing costs associated around the world. Some emerging
with explosive traffic growth. As a enablers: supporting new
markets, including India and China,
consequence, network operators
revenue generation have rapidly grown their use of newer
have rightly looked to networks to technologies such as HSPA+, PON,
While new network technologies
be more efficient in terms of cost ROADM, and 40G, while spending in
have been used to lower the cost of traditionally higher-growth, developed
per bit per kilometre in the core and communicating even as bandwidth has markets in North America or Western
cost per subscriber at the edge. New grown, the network’s role as a platform Europe has cooled down for a host of
technologies such as 40G and 100G, to support and enable new services reasons. Western European markets,
coherent detection, and electronic and business models is just starting for example, have been slow to adopt
dispersion compensation make optical to be discussed. The network’s role PON- and ROADM-based WDM networks
and packet networks more efficient is expanding beyond simply providing due to unclear or unfavorable regulatory
regimes and the willingness to wait for
as they improve scalability, while new scalable bandwidth and connectivity
a next generation of even more flexible
PON- and DSL-based technologies over a wide range of media to collecting,
network elements, respectively. Mobile
and WiMAX and LTE do the same storing, managing, and acting on crucial networks, meanwhile, from the RAN
for fixed and mobile broadband, information on users’ devices, locations, through backhaul and the core, show
respectively. The expanding role of IP, preferences, and privileges. This regional and country variations based on a
Ethernet, MPLS, and control planes network-based intelligence should be combination of demographic, geography,
usable by network operators to enhance GDP, 2G/3G penetration, protectionism,
coupled with software-configurable
users’ communications experiences, and other factors. These differences in
and programmable capabilities in growth rates and technology preferences
fixed and mobile networks improve and their own financial rewards for
create volatile market dynamics.
providing a superior experience.
operators’ flexibility while maintaining
Ovum will analyze the shift of network
carrier-class manageability and Ovum will explore the network’s role equipment procurements and deployments
lowering operations costs. Optical in enhancing operators’ top lines to emerging markets and the impact this
switching and OTN (optical transport through mobile and fixed network shift has on buyer behaviour, product
networking) add further flexibility opportunity analyses, including requirements, and infrastructure vendor
and manageability in the network. carrier Ethernet services analysis competitive dynamics. We pay particular
New flat network architectures and attention to comparing and contrasting
and forecasts; enterprise vertical
country markets within Asia-Pacific and
underlying technologies will further market private and managed network subregions within EMEA and how a
help operators lower network power research; infrastructure as a service vendor’s strengths and weaknesses in one
consumption, leading to greener, less (IaaS) research; and subscriber region or country might affect its ability to
costly operations. management research. compete in another region or country.

NETWORK INFRASTRUCTURE | 21

2011

Policy and Regulation

MATTHEW HOWETT
LEAD ANALYST

Global interconnect benchmarks
Market context Ovum’s tried and tested interconnect benchmarking
model and methodology are internationally accepted
The development of regulation shapes the future of the and provide you with the most authoritative
marketplace. As regulators intervene in markets, they comparison and analysis of interconnect charges in
advantage or disadvantage specific players and change market the industry. Our quarterly benchmarks cover fixed
dynamics. In addition, as they set rates for interconnection, origination, fixed termination, mobile termination,
local loop unbundling and other forms of network access, local loop unbundling, shared access, and a retail/
they directly impact operator revenues. Understanding current wholesale comparison for Europe, the Americas,
developments and future directions in regulation is critical for Asia-Pacific and Middle East & Africa. Raw
success in today’s market. interconnect charge data is also provided to
enable you to make your own calculations, as
Our coverage well as substantial historical trend analysis.
Data is presented in easy-to-use charts and
Ovum’s Regulation research provides you with a deep
Excel spreadsheets.
understanding of the impact of regulatory issues that shape
the future of the telecoms marketplace and the effect these
Regulatory scorecard
have on strategies and revenues. Our regulation research and
analysis team has a global track record of providing policy and From 2011, Ovum will develop an annual
regulatory advice in telecommunications. Our experts follow regulatory scorecard to benchmark the telecoms
the world’s key market regulatory developments and assess regulatory framework in a number of ‘best practice’
their relevance at a regional and local level. We undertake countries around the world to compare the cost and
quarterly benchmarking, country profiling, and cross country effectiveness of regulatory activity. It will be produced
in consultation with NRAs and telecoms operators
regulatory analysis.
and compare the institutional and legislative
environment affecting the sector as well as the
application of regulation by NRAs in key wholesale
access and retail markets.


2011 Coverage Areas

Next-generation access Our analysis will focus on where and Interconnect
(NGA) how regulators are making spectrum
available. A particular focus will be on For many operators interconnect has
NGA continues to dominate regulatory traditionally accounted for a sizeable
the award of the digital dividend and the
debate as significant investments proportion of revenues. However,
2.6GHz bands which are most likely to
are being made by the public and be jointly utilized for deploying mobile
the use of standardized costing
private sectors. How to incentivize methodologies looks set to exacerbate
broadband. Through developing an
investment is still a challenge for the already downward trend in mobile
internal database of spectrum awards
many governments looking to bring termination rates, and some NRAs
benchmarks can be made based on the
broadband to all of the population. One will be considering what alternative
type of award, and by using population
charging principles could be used once
of the key challenges facing NRAs is data we can make comparisons
rates fall to fixed call termination levels.
how to strike the appropriate balance between countries and regions.
between creating competition and Our core tracking of interconnect will
supporting investment. Determining Regulating for tomorrow be through our quarterly interconnect
how access will be granted to benchmarking. We will add new
Introducing rules to ensure net neutrality,
alternative operators and on what basis countries and regions over the course
tackling illegal peer-to-peer file sharing
is central to this. of the year to ensure a robust set of
and extending the scope of the universal
data exists from which international
We will look at how the migration from service obligation to include more than
comparisons can be made.
copper to fiber is being managed, what functional internet access are all topics
access obligations are being imposed, which have made the headlines recently. Aside from the actual charges, we will
and what regulated pricing exists. Working out the details remains the also look in depth at how the rates
Working collaboratively with other challenge and some difficult decisions were determined by the NRA and steps
practice areas we will also address the need to be taken in the very near that are being taken to reduce and
role of government in facilitating and future. Regulators will need to take a harmonize termination rates between
financing rollout. new approach to tackle the regulatory countries. We will also focus on what
challenges of tomorrow. future charging principles such as
Spectrum policy bill and keep might look like once the
Our analysis will focus on how regulators current regimes expires.
Spectrum is a finite resource which are approaching these issues by
must be allocated and managed comparing country case studies
appropriately. Significant amounts of from around the world. Analyzing the
spectrum will become available over implementation of regulatory frameworks
the next 12 months as operators look will be central to this. How regulators
to launch next-generation mobile engage with stakeholders and the
networks. How regulators award this effectiveness of regulatory activity will
spectrum and what obligations they also be explored through a regulatory
place on license holders are key scorecard we will develop over the
regulatory issues. course of the year.

POLICY AND REGULATION | 23

2011

Telco Operations

CLARE MCCARTHY
LEAD ANALYST

Telco customer service insights
Market context We will survey operators about their customer
care operations and evaluate their responses to
The telco business has changed dramatically over the last five customers contacting them for support, changes in
years. Previously technology reigned supreme, but now the service, or information.
customer is the focus of all activities. With cheap credit and
debt no longer available, telcos need realistic business cases to
justify heavily scrutinized investment decisions. This has called
for a comprehensive review of how telcos operate and requires
the consolidation and rationalization of people, platforms, and
processes. The resulting lean and cost efficient infrastructure
should help fixed, mobile, and integrated operators respond
more quickly to market and customer demands.

Our coverage

Many tier-1 operators in mature markets are addressing these
issues, but it is likely to be a work in progress for most telcos
over the next 10 years. The Telco Operations practice reviews
telcos’ operational and transformation strategies and how these
strategies are implemented internally. We identify the current
challenges and areas of business pain, the future business
objectives and activities required to achieve those objectives.

Change in emphasis for the telco
business metrics

Traditional telco metrics Today’s telco metrics
Balanced scorecards
Financial metrics - capex related Greater weighting on: • Process efficiency - increased RFT & reduced cycle time
Operational data - calls & lines Customer satisfaction
• Business models - measuring integration & automation
5 year business plan Flexibility of business
Product profitability Time to market • Lifetime value of customer
Network efficiency Sustainability
Share price & generation of shareholder value • Integrated operational efficiency


2011 Coverage Areas

Transformation and Telco Operations identifies the We will continue to look at activities
operational strategy review various business pain points, the where telcos can make a difference
areas for improvements, and the to both sides of the equation with
The economic and competitive actions telcos can take to improve research on revenue management
pressure on telcos means that their customer offers and support and service assurance. For example
they must review their operating to more satisfactory levels. effective revenue management
model, and how they respond activities will address billing
and deliver to customers. Next- Customer centricity accuracy and fraud. This will ensure
generation network programs have that the telco receives payment
been under way for some time, Lack of customer focus is one of for the services it provides. More
but implementing the NGN or NGA the root causes of failure in the timely service assurance will ensure
strategy and addressing the impact customer experience. It sounds that potential network or service
this has on the company structure, obvious, but it is only now that we faults are effectively managed out
platforms, and business processes see telcos revisiting their product of the business before they cause
are all linked decisions. development and management problems, and more informed policy
process and putting the customer management can also improve
We will continue to look at how at the center of process. This telcos’ revenue recognition.
telcos are responding to these process can draw on the databases
requirements, as well as holding information on the
responding to the demands of customer, product, usage, pricing
the cloud and social networks. data and so forth, but to date,
telcos have been incredibly bad
Customer experience
at organizing that data for
In these highly competitive times, commercial gain.
a good customer experience is
We investigate the changes
essential to keeping customers
telcos have made to organizing
satisfied and loyal. Most customers
their customer data and product
form their opinion of the service
development processes, which
they receive from the telcos’ front
in turn feed in to an overall
line call centers for customer
improvement in the customer
service and technical support or
experience.
through their direct sales outlets.
However, the back-office systems, Efficiency and optimization
the operational and business
support systems, which assure Getting more out of existing assets
the order fulfillment, activation, and expecting more from new
billing and fault reporting assets are prerequisites for growing
processes, play an increasingly margins. Telcos need to grow
important role in delivering revenues as well as manage the cost
good service and reinforcing the base in order to present themselves
customer relationship. as viable ongoing concerns.

TELCO OPERATIONS | 25

2011

Telco Strategy

JEREMY GREEN
PRACTICE LEADER

The global mobile and fixed market
outlooks
Market context
These reports provide Ovum’s perspective on
Today’s telecoms operators inhabit an increasingly complex market trends that will shape the mobile industry
and challenging environment. They must deal with an explosion to 2016. They are intended as an accompaniment
of data traffic (driven by the growth in video and multimedia to our mobile and fixed forecasts, containing
applications) and with the introduction of new technologies analysis of the drivers shaping the mobile and fixed
that are intended to allow them to carry this traffic profitably. 8 2009 2010 2011 20 2 2
telecoms industries – and our forecasts.
At the same time, they must integrate disparate fixed, mobile,
and broadband services – both to meet enhanced customer
demands and satisfy investor, internal, and operational
efficiency imperatives. Moreover, they must do this in the face Global mobile connections by technology,
of a slew of new competitors, potential partners, and potentially 2008-2015
disruptive technologies.
9,000,000
Our coverage 8,000,000

7,000,000
Ovum’s Telecoms Strategy Practice provides a perspective
Connections (000s)

6,000,000
across the entire fixed, mobile, and integrated communications
5 000 000
marketplace, offering a converged view of the future. Our remit 6 0
4 000 000
5 0
is to provide clients with insight, across the strategic horizon,
3 000 000
40 0
into the strategic challenges facing operators; how we see 2,000 000
000 000
these market forces will evolve; and our advice to operators on 1 2 000 000
000 000
how they should respond. 0
00
2008 2009 2010 2011 2012 2013 2014 2015

2G GSM LTE

HSPA CDMA 1XEV-DO

CDMA2000 1XRTT TD-SCDMA (incl. TD-HSPA)

WCDMA Mobile WIMAX


Telecoms Research Agenda 2011

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