January 25, 2013
At the beginning of this year, I took the time to sit down with my colleague Dan Bieler, principal analyst on Forrester's Business Technology Futures team and a specialist in the telecom space, to discuss the top trends that will affect the European telco landscape this year.
Although we believe that the business/consumer split is increasingly vanishing, we decided to split the top 10 carrier themes that will matter in the European telco market in 2013 by enterprise and consumer perspectives.
In the enterprise segment, we see five main themes:
- Over the top (OTT) and app-based communication services will become part of the IT landscape. OTT voice, social media, and messaging will spread in the enterprise space at the expense of traditional services. Our research shows that professional workers who travel are the most likely to embrace application-based communication services, often irrespective of what their company’s official IT policy is. Still, 2013 will not be the year (yet) that sees RCSe becoming a B2B2C communications platform.
- Cloud-based enterprise services by carriers will see increasing interest from businesses. Communication-as-a-service will receive increased attention by CIOs as they plan UCC projects. However, as our research shows, carriers will not be perceived as the top choice of providers for cloud-based services. Mobile device management firms like AirWatch and MobileIron will offer reselling opportunities for carriers but limit the carriers’ ability to add value around device and app store management. Business models for cloud-based data analytics of end user demand will grow in importance in 2013, but will begin to materialize on a larger scale only in 2014.
- Carriers will be slow to address wholesale opportunities for embedded connectivity. The spread of smartphones and the end user focus on apps will shift more attention away from carriers. But carriers will waste valuable time to negotiate with device manufacturers and app developers about the possibilities for selling devices and apps with embedded connectivity.
- M2M will be held back by limited sector-specific solutions. Our research shows that attention concerning M2M will focus on asset management, navigation, monitoring, and metering. Carriers will not, however, benefit significantly beyond SIM card sales, as specialized M2M providers like Raco Wireless cater to sector-specific solutions.
- Software-defined networking (SDN) will increasingly affect network infrastructure architecture. Carriers will focus increasingly on SDN in their attempt to migrate to a more cost-efficient and flexible all-IP based network infrastructure. In 2013, carriers will investigate what implications SDN architecture could have on QoS and SLAs.
In the consumer segment, the five main themes are:
- The European carrier market will continue to suffer. Once upon a time, Europe led in telecom innovation and usage via a couple of large carriers and network equipment suppliers. More than 100 carriers in the 27 European countries are after 650 million consumers — less than the installed base of China Mobile alone. Competition will be fierce, especially in France with Free/Iliad's aggressive disruption. Expect regulation, acquisitions, and cost-sharing to be high on the agenda but the number of challenges is to invent a new business model via more strategic partnerships with OTT players.
- Competition on core telco messaging services will intensify. In 2013, operators will accelerate the development of RCS services like Joyn, but they won't get any meaningful traction. Social media giants will further shake up IP-based messaging.
- Quality of networks will start becoming a differentiator again. Most telecom operators in Europe will start rolling out LTE networks commercially in 2013. Just as in the good old 3G days in 2004, carriers will increasingly use coverage and speed to differentiate their offerings. However, neither broad adoption of voice over LTE nor replacement of fixed broadband will happen this year. 4G won't be a game changer and will remain niche in 2013.
- The smartphone OS bloodbath will continue. Android and Apple will dominate the smartphone market. While Android will hold the greatest market share, Apple's customers will remain the more attractive segment for developers and marketers. Telecom operators will try to foster the emergence of a third ecosystem to avoid depending on Apple and Android. We believe that Windows Phone will slowly gain share and establish itself as the No. 3 ecosystem, while RIM will struggle to maintain its existing customer base despite offering a new platform — BB10 — with innovative features. The remaining competitors — Tizen, Sailfish, FirefoxOS, etc. — will simply be unable to muster the investment from developers, content and media partners, OEMs, and carriers that is necessary to become viable.
- NFC contactless services will get more traction than NFC payments. NFC handset shipments will continue to grow significantly, resulting in more than 250 million consumers with an NFC handset in their pocket in 2013. However, despite numerous commercial launches, usage of mobile contactless payments will not take off significantly; use of other contactless services will gain more traction. The real differentiation for mobile payments will come from smarter m-commerce experiences linking loyalty and couponing to payments via mobile digital wallets.
Do you agree? Do you expect other trends to affect telecom operators in Europe?