The Future of Telecommunications 2006-2011

The Future Fixed & Mobile:

The Future of Telecommunications 2006-2011

Insight Research
Management Report June 2006

Continuing turmoil throughout the worldwide telecommunications industry warrants a systematic look forward at the possible repercussions of the forces that are now pushing the industry forward: the end user’s demand for more bandwidth; increased reliance on mobility services; and the end users’ assessment of cost versus performance.

In this study, INSIGHT will develop several scenarios to model the future shape of telecommunications. Thus far, the industry has reacted to the forces driving major structural change through consolidation, as carriers merge and equipment suppliers struggle to survive. Both on the domestic level and internationally, regulators and government agencies are struggling to cope with rapid, profound structural change in an industry that had been predictable for more than 100 years.

The technologies spurring the industry’s transformation can be clearly delineated: IP transport’s ability to merge voice, video and data; the long-haul fiber glut and the resulting price wars dropping the cost of bandwidth; the variety of local broadband wired and wireless solutions; increasing security requirements; and the corresponding decrease in the ability to protect users on the Internet.

In this study, INSIGHT will present possible future scenarios for how these forces and technologies will reshape the worldwide telecommunications industry and the impact each scenario will have on the industry’s existing revenue models.

1.1 The Future of Telecommunications: Three Scenarios

After several years of contraction, the telecommunications industry is back, riding the crest of worldwide enthusiasm for new video-enabled services. The emergence of video as a major force is reshaping mobile and fixed line telecommunications by driving billions of dollars into new infrastructure investments—but just what will this new telecommunications landscape look like?

To imagine what the future of the telecommunications industry will look like over the next few years, Insight posited three possible outcomes that appear to bracket the potential of the industry over our forecast period, and developed detailed scenarios for each option:

· networks all continue to evolve, but none are supplanted;

· networks evolve to a global ubiquitous Internet-based solution; or

· networks evolve toward un-tethered ubiquitous wireless connectivity.

We fully recognize that none of the scenarios are likely to develop as a “pure play.” More likely, the three scenarios will evolve with considerable cross-pollination, support, and competition among each of the possible outcomes. Our scenario-building exercise is thus offered as an aid to planning and thinking about the future of telecommunications, and we would not purport that any one of the scenarios will be proven wholly correct in every aspect.

Scenario I: Networks Evolve, None Are Supplanted — In this scenario circuit switched telephony will still be regarded as gold standard, with businesses only using IP telephony for intra-company communications in a managed network environment. Use of the public Internet is found to be too risky to support complex routing of telephone network traffic. Establishing international protocols to use other connections proves to be unsatisfactory. Internet applications continue to demand more bandwidth, but IP telephony remains a niche application found most often in enterprise managed networks and in providing access to the circuit switched network ala cable TV. Broadband fiber connections become pervasive and support all types of communications. Cable TV companies continue to expand their fiber access networks, and use their coax connections into the home more efficiently. At the same time, cable operators begin offering services to businesses. Wireless connections allow wider mobility and increased bandwidth, but still lag behind the wired connection in the bandwidth offered......

Scenario: Current Networks Evolve

By Global Region: Total Worldwide Wireline Subscribers
By Global Region: Narrowband Wireline Revenue
By Global Region: Broadband Wireline Users
By Global Region: Broadband Wireline Revenue
By Global Region: Wireless Subscribers
By Global Region: Narrowband Wireless Revenues
By Global Region: Broadband Wireless Users
By Global Region: Broadband Wireless Revenue

Scenario: Internet Dominates

By Global Region: Total Worldwide Wireline Subscribers by Region
By Global Region: Worldwide Narrowband Wireline Revenue
By Global Region: Worldwide Broadband Wireline Users
By Global Region: Worldwide Broadband Wireline Revenue
By Global Region: Worldwide Wireless Subscribers
By Global Region: Worldwide Narrowband Wireless Revenue
By Global Region: Worldwide Broadband Wireless Users
By Global Region: Worldwide Broadband Wireless Revenue

Scenario: Wireless Dominates

By Global Region: Total Worldwide Wireline Subscribers
By Global Region: Worldwide Narrowband Wireline Revenue
By Global Region: Worldwide Broadband Wireline Users
By Global Region: Worldwide Broadband Wireline Revenue
By Global Region: Worldwide Wireless Subscribers by Region
By Global Region: Worldwide Narrowband Wireless Revenue
By Global Region: Worldwide Broadband Wireless Users
By Global Region: Worldwide Broadband Wireless Revenue

Comparative Performance: Three Scenarios

Worldwide Wireline Subscribers by Scenario,
Worldwide Wireless Subscribers by Scenario,
Worldwide Broadband Wireline Users by Scenario
Worldwide Broadband Wireless Users by Scenario
Worldwide Narrowband Wireline Revenue by Scenario
Worldwide Narrowband Wireless Revenue by Scenario
Worldwide Broadband Wireline Revenue by Scenario
Worldwide Broadband Wireless Revenue by Scenario
Total Wireline and Wireless Broadband and Narrowband
Revenues by Scenario

For full details, please email michellen@cmsinfo.com

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