trends in telecommunications: global &...
TRANSCRIPT
Trends in Telecommunications:
Global & Local
September 2012
Agenda
Global Telco trends
Fixed Communications – Global
Mobile Communications - Global
Mobile Communications – Hong Kong
Source: The Mobile Internet Report, Morgan Stanley, December 15, 2009
Mobile Computing – 5th Major Computing Cycle
(2009) Mobile Internet larger than Fixed Internet in next 2 years…
Source: The Mobile Internet Report, Morgan Stanley, December 15, 2009
Google Predicts Mobile Web traffic to exceed PC Web traffic
by end 2012
Most IP Traffic growth in the next 3 years will result from Internet
Traffic, predominantly Fixed Internet Traffic. Major growth driver
being video traffic.
Source: Cisco VNI, 2011 Exabyte = 1 Bn Terabytes
Bandwidth Drivers
• User behaviour shifts to multi-media streaming, cloud applications, online storage etc
• Proliferation of connected devices e.g. tablets, smartphones, Smart TVs, cameras etc
• Resolution of media content continues to enhance and viewing experience keeps improving, e.g. HD, 3D, UHD – 4K
Agenda
Global Telco trends
Fixed Communications – Global
Mobile Communications - Global
Mobile Communications – Hong Kong
Fixed Line Substitution – After 125 Years, Landlines
were surpassed by Mobiles in 2002
Source: KPCB, ITU – International Telecommunications Union
Landline Office Phones to be obsolete by 2017…
Source: Virgin Media Business UK CIO Poll, Aug 2012
• Smartphones set to become the primary
business tool for communication by 2017,
particularly bring your own devices (BYOD)
• Paying line rental seen as a waste of expenditure.
Don’t right off Fixed Network Operators just yet…
Source: PCCW
FTTH in high demand worldwide
Source: ITU
Hong Kong’s global FTTH/FTTB ranking
Source: Fibre to the Home Council
Ull
What’s driving FTTH/FTTB demand?
Source: PCCW
Ultra Fast Broadband demands for Intelligent Homes
• Future TV all IP based
• Entertainment devices – large screen, high definition
Agenda
Global Telco trends
Fixed Communications – Global
Mobile Communications - Global
Mobile Communications – Hong Kong
Who is using a Mobile Device today….
6.1Bn
services
87%
Global pop’n
Practically Everyone!
How often are they using their mobile device?
Mobile users are now transacting on their devices
Mobile Commerce expected to grow from $8.8Bn in 2012 to $28.7Bn in 2015 (US)
Source: Barclays Capital.
Mobile commerce, including banking, payments, coupons and ticketing
Tablets accelerating the Mobile Commerce trend
Source: e-Tailing Group
68% of tablet owners say they have used
their tablet to make a purchase
• Of the 6.1 Bn Mobile Subscribers, China makes 1.05 Billion. (17%)
• Penetration of Mobile services in Asia Pacific - from just 12 per cent in 2002 to 78 per cent by end 2011
• Mobile operators in Asia Pac investing ave of 16.3 per cent of CapEx to Income ratio
• Pre-paid services still dominate in Asia Pac (84 percent) versus 66 percent in Europe and 15 per cent in USA/Canada
Source: GSMA, Facebook
Some Fast Facts
• 27% of U.S. Households are now mobile only (not
fixed line connection) • Ericsson expects there to be 5Bn Mobile Broadband
connections by 2015 • Facebook – 2x traffic on mobile vs. web • Social Networking becoming the primary
communication hub (FB – 500 Bn mins/mth, Voice 160-200 Bn mins/mth)
Source: GSMA,,Facebook
Some Fast Facts (continued)
Still in the early days with Smartphone adoption
Source: Business Insider
Apple – Increased sales QoQ
Source: Asymco
Quarterly Sales of iPhone
2007-2011
iPhone, iPhone3, iPhone3GS, iPhone4
Android Phone sales have ramped even faster – 4x
Source: KPCB, Gartner, Morgan Stanley Research
2 million iPhone 5 pre-orders in first 24 hours
Source: Asymco 33 million sales in first quarter
Mobile OS – Down to a two horse race…
Source: Statcounter Global Stats
Source: McKinsey Future Devices article Nov 2011
How to Win Conditions required
Device Centric Win End to End Device Producers
dominate the converged market
and own the end-user
relationship
One or a few device vendors
dominate
Controlled E2E environment
acceptable to users
Platforms Win Players such as Google or
Microsoft dominate by controlling
the OS across Mobile, TV & PCs.
OS is Mobile or TV dominated by
one to two players
iTunes CDP loses dominant
position
Social Networks Win SN platforms such as Facebook
control comms, gaming and UGC
SN becomes leading and
unifying platform
SN breaks cyclical pattern –
longer term stickiness
Mobile Operators Win Operators control the user
experience, content & services
aggregation space
Operators maintain tight value
chain thru customisation
Operators extend into TV,
Devices etc
Content Providers Win Media conglomerates & content
players control media & content
aggregation and owning key
apps and services
Global consolidation in media
and content
Content remains core revenue
generator
The Battle for Control of the Convergence
Ecosystem: 5 Potential scenarios
Source: McKinsey Future Devices article Nov 2011
How to Win Conditions required
Device Centric Wins
“Apple Wins”
End to End Device Producers
dominate the converged market
and own the end-user
relationship
One or a few device vendors
dominate
Controlled E2E environment
acceptable to users
Platforms Win
“Google or MS Wins”
Players such as Google or
Microsoft dominate by controlling
the OS across Mobile, TV & PCs.
OS is Mobile or TV dominated by
one to two players
iTunes CDP loses dominant
position
Social Networks Win
“Facebook Wins”
SN platforms such as Facebook
control comms, gaming and UGC
SN becomes leading and
unifying platform
SN breaks cyclical pattern –
longer term stickiness
Mobile Operators Win
“? Wins”
Operators control the user
experience, content & services
aggregation space
Operators maintain tight value
chain thru customisation
Operators extend into TV,
Devices etc
Content Providers Win
“Amazon Wins”
Media conglomerates & content
players control media & content
aggregation and owning key
apps and services
Global consolidation in media
and content
Content remains core revenue
generator
The Battle for Control of the Convergence
Ecosystem: 5 Potential scenarios
Agenda
Global Telco trends
Fixed Communications – Global
Mobile Communications - Global
Mobile Communications – Hong Kong
HK – One of the world’s most competitive mobile markets
Source: Merrill Lynch, Wireless Intelligence, OFTA Statistics
High Smartphone penetration
Source: TomiAhonen Consulting & Asymco.com research , Dec 2011
Hong Kong (61%) is the third highest globally.
The mobile data usage explosion (4x YoY)
Major Benefits of LTE
Source: OFTA
Improved spectrum efficiency: 2-4 times better
compared to HSPA
LTE Offers Double Digit Improvement on
cost/performance vs. existing technologies
Much Lower Latency
Spectrum flexibility - deployed on existing mobile
bands e.g. 900, 1800, and 2100 MHz
Lower Network complexity and cost
• Declining EBITDA from 06/07 to 10/11
Three major players: 2.3%, 1.3%, 2.0% decline respectively
Voice Revenue rapid decline
Roaming revenue under pressure – substitute products, price focus
Increased Data Revenue not bridging the gap
• Market saturation – Higher retention and acquisition costs
• Maintaining primacy of the Customer Relationship (from the OTT players)
• Market disruption from network upgrades with LTE etc
• Operating Cost pressures:
Higher Network Utilisation
Retail & Cell Site Rental costs
Systems upgrades to support Customer Centricity
• Mobile Operators need to move up the value chain!
Key Issues for Hong Kong Mobile Operators
The Future is Mobile – Is there any doubt?
