Deloitte: Seven Telecommunications Predictions for 2010

Deloitte 2010 Telcom Predictions My last two posts provided a summary of technology predictions and media predictions from Deloitte’s Technology, Media & Telecommunications (TMT) Industry group.  In this post I will provide a summary of Deloitte’s predictions for the Telecommunications Industry.

The topics covered in this year's report include the growing importance of mobile search for smartphones, changes in network technologies and pricing plans to cope with the explosion of data, and changes in the scale of wireless contracts both in terms of up-time and duration.

Here’s my summary of Deloitte’s telecommunications predictions for 2010

  1. The smartphone becomes a search-phone.  Mobile search will most certainly become one of the hottest mobile apps and it will be a critical part of any future mobile platform.  The next few years will be exciting and first mover advantage will be critical.
  2. Mobile VoIP becomes a social network.  Deloitte says that 2010 could be an inflection year for mobile VoIP.   However, I won’t be holding my breath.  I think its still a few years away….but I do agree it will be driven by Facebook (and perhaps Twitter) users.
  3. Widening the bottleneck. Telecom technology helps decongest the mobile network.  Deloitte says technologies that help speed up wireless networks should experience healthy growth in 2010.  With all the millions of devices accessing networks, there’s bound to be congestion problems.
  4. Paying for what we eat. Carriers change data pricing and make regulators happy.  Similar to trends we are seeing in highway congestion charging, Deloitte says to expect carriers to start billing customers based on how much data they use, when they use it, and also what kind of data is being used.
  5. Nixing the nines:  reliability redefined and reassessed.  Deloitte says since enterprises are exploring ways to save money, they will begin to tolerate lower service levels on non-priority services and applications.
  6. Contract 2.0: long-term solutions shorten and multiply.  Deloitte says that while demand for telco solutions will increase, the continued enterprise focus on cost savings will drive shorter contract terms.
  7. The line goes leaner. And greener.   Expect a focus by the telecommunications industry on reducing C02 emissions, with the main driver for that focus being cost savings (rather than a desire to improve the environment).

For more information and detail, check out the 28 page report Deloitte 2010 Global Telecommunications Predictions or you could also listen to the Deloitte Telecommunications Predictions podcast

Accenture: Future of the Communications Industry

I saw that Accenture recently released a report titled “Communications Industry Trajectory:  On Track for High Performance?”.  The report discusses the blurred boundaries of the telecommunications industry as technology, business and consumer trends redefine the digital services marketplace.  

There is no doubt that convergence is now an accurate description of the current business model of the communications services industry.   Carriers, software companies, high-tech firms, media enterprises, entertainment conglomerates all may find themselves collaborating and partnering one day and competing against each other the next.

Accenture reports that industry executives they talked to for this research report indicate that the future of the communications industry has many opportunities and possibilities.  Future competition will be fierce and most companies will look quite different 10 years from now.   Accenture expects a number of significant mergers, acquisitions and alliances are on the horizon that will change the terms of the playing field in dramatic ways.

Some of the themes that emerged from the research Accenture conducted for the report.

  • Carriers are confident, but their vision may be insufficiently transformative
  • Seamless delivery of content across multiple platforms will be crucial
  • Other players are looking to leverage the distinctive strengths of service providers
  • Carriers must learn to use their brand in the right way
  • Support for open innovation and collaboration is critical to achieving high performance

According to the report there are potential weaknesses in the carriers' current approach: 

  • lack of a powerful vision for managing the customer experience,
  • some softness in overall brand value, and
  • an inadequate support structure for planning and managing the collaborative and partnering relationships necessary to spur innovation and improve time to market.

For more information, you can read the report or listen to an 8 minute Podcast

Primer on Unified Communications

What do we expect in 2009 for UC? A merged market between UC and collaboration, even more trial activity, business executives getting more involved with UC selections and deployments, IT managers continuing to demand interoperability based on standards, and UC managed service adoption. All these elements support growth to a $2.8 billion market by the end of 2009 — even amid economic uncertainty.Forrester , Jan 2009

Many organizations are starting to see the potential value of Unified Communications both to their staff and to their business processes.  Investing in UC can lead to reduced operational expenses.  I’m expecting that 2009 will bring increased focus on integrating the matrix of different communication types within an organization in order to provide a seamless communication system across multiple networks, applications and devices.

Enterprises will increasingly realize that they have multiple products and vendors performing the same communications functions, and that this redundancy creates additional expense (both for licenses, operations), makes it more difficult for users to learn, and increases the complexity of integration.  Vendors should realize the potential for convergence of these markets and work to accelerate the trend.

According to Gartner, during the next five years, the number of different communications vendors companies may be reduced by at least 50%.  Gartner says this change is driven by increases in the capability of application servers and the general shift of communication applications to common off-the-shelf servers and operating systems.  As this occurs, formerly distinct markets, each with distinct vendors, converge, resulting in massive consolidation in the communications industry.

Internally, most large enterprises have separate organizations managing the discrete communications tasks are generally separate today.  For example, the telephony department is separate from the storage networking team, which is separate from the data network team, which operates independently of the e-mail team, and the list goes on.  While the technologies, products and even vendors converge, users must work hard to converge their management teams and, more importantly, their business processes.

Drivers

  • Value of traditional desk phone and desktop PC is diminishing
  • Economic uncertainty as companies look to cut cost, e.g., in travel
  • Cost reductions programs
  • Integrate communication functions directly with business applications.
  • Trend towards convergence of digital content, IP as a common communication protocol, and machine-to-machine communications.

Inhibitors

  • Some technologies (e.g. presence) are not fully understood.  Products are still at an early stage and lack functionality.
  • Best practices are not well-defined: e.g., interaction with other technologies such as SaaS and cloud computing, conflicting standards.
  • Lack of coordination with legacy communication infrastructures
  • Many enterprises have struggled to internally support voice over IP (VoIP). The additional technical challenges of UC will only compound the support problem.
  • Soft ROI difficult in challenging economy

Observations:

Enterprises will look to integrate the matrix of different installed communication types in order to provide a seamless communication system across multiple networks, applications and devices.   Integrating communications and collaboration in a rich, multimedia experience — one that can include unified telephony, voice, video, instant messaging, Web conferencing, e-mail, voice mail, and business processes and applications — enables a whole new way for people, teams and communities to find experts and make faster, better decisions.

Recommendations:

  • Continue researching this important trend and understand its impact on each client’s business processes.
  • Build careful, detailed plans for when each category of communications function is replaced or converged, coupling this step with the prior completion of appropriate administration team convergence.

For More Information:

A Primer on Telepresence

With the economy the shape it is in right now, companies will be looking for an edge in cutting costs.  Watch for more companies to implement telepresence and video collaboration solutions in the effort to reduce corporate travel, improve global operations, and drive remote workforce productivity.

Video technologies and organizational capabilities have improved in the corporate environment.  As a result, companies are finally able to realize strong business benefits to support efforts in business uses as varied as reducing the corporate environmental footprint, promoting globalized workforce collaboration, accelerating complex product development initiatives, and aiding remote talent acquisition.

Telepresence Overview:  Telepresence – a kind of video conference providing the sensation that all participants are actually in the same room – is set for explosive growth.  TelePresence delivers real-time, face-to-face interactions between people and places in their work and personal lives using advanced visual, audio, and collaboration technologies.  These technologies transmit life-size, high-definition images and spatial discrete audio.  Telepresence delivers video that makes it easier than ever to discern facial expressions for those crucial business discussions and negotiations across the "virtual table." The telepresence illusion is so real that many execs forget the person they’re talking to is not really in the same room.  See a video of how this looks.

Opportunity: According to recent research by ABI, the whole market, which includes telepresence equipment, network services and managed services, is forecast to grow from a 2007 level of not quite $126 million to nearly $2.5 billion in 2013.  Telepresence solutions can cost in the neighborhood of $300,000, but many telepresence operations are handled as managed services.  And less expensive “executive” systems designed for one or two people mean that telepresence technology is now migrating down to middle managers, expanding the market.

Driving Forces:

  • The high cost of travel (in money, wasted time, and carbon emissions).
  • Increased need for a remote workforce to participate in time-sensitive collaboration sessions.
  • Demands of worldwide outsourcing
  • Improved and lower cost technologies for video, audio and collaboration

Inhibitors: Videoconferencing has traditionally been a difficult technology to implement in the enterprise, with problems: latency, jitter, poor video equipment, insufficient concern over the videoconferencing environment, lack of business purpose, organizational commitment, and comfort with using this technology.

Segmentation: According to a report by IDC (Worldwide Telepresence 2008–2012 Forecast and Analysis), there are three primary markets for telepresence solutions:

  • CEO and senior executive travel reduction (whether corporate jet or commercial airline travel),
  • Teamwork, and
  • Room rentals for companies unable to afford their own rooms.

Vendor Landscape: According to ABI Research, (see their vendor matrix – registration required) the top five telepresence vendors to watch are:

  1. Cisco Systems – Cisco is positioned very well to participate in the future telepresence market and they are pushing their solutions at this website.
  2. Tandberg – http://www.tandberg.com/totaltelepresence/
  3. Teliris – http://www.teliris.com/
  4. Polycom Incorporated:  http://www.polycom.com/usa/en/products/telepresence_video/telepresence_solutions/index.html
  5. Digital Video Enterprises:  http://www.dvetelepresence.com/

Future Vision: It is easy to imagine a future where we use video conferencing as easy as we use instant messaging today.  The adoption will move from simple employee to employee webcam video calls to social networking and collaborative solutions that connect not only employees to one another, but CEOs to CEOs.  Future business applications will be video conference enabled, allowing businesses to collaborate seamlessly with their vendors, partners, and customers.

Future Challenges: Looking forward to the future, the biggest obstacle facing the mass adoption of telepresence is interoperability.  Although telepresence vendors have begun to broach the issue of interoperability, the market is far from allowing complete federation across all systems to allow for room-to-room calling.  Vendors are pushing forward very slowly interoperability, saying that standards, modularity, and interoperability are at odds with the art and science behind creating telepresence experiences and the potential for continued innovation in this space.  So at least for awhile, interoperability will take a back seat to innovation.

Hungry For more information?