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Market Views
Telco
Market Views

## Highlights

- OTTs’ growing share of industry value chain revenues
- Network equipment hindering innovation time-to-market
- The industry will continue to consolidate through M&A transactions
- Regulatory uncertainties continue to unsettle the industry
- Global mobile subscriptions will grow to 8.5bn by 2019
- Mobile service revenues will reach $1.1tn by 2019
- By 2017, half the world’s population will be mobile Internet subscribers
- M2M connections are forecast to reach 1bn by 2020

## Digital Journey

CUSTOMER EXPERIENCE
  Telcos must ensure their products and services make customers’ lives better and easier while delivering on service availability, latency and jitter, performance and security guarantees. They must offer customers access to the services they need on-demand, when they need them.
BUSINESS REINVENTION
  The Telco climate continues to be as volatile as ever. In response, Telcos must continually create new business openings, new streams of sustainable revenue and novel go-to-market modes. This may mean fundamentally changing the nature of their business and of the services they provide.
OPERATIONAL EXCELLENCE
  Agility and effective, resilient and scalable operations will be vital in tomorrow’s volatile landscape. But real excellence will depend on a Telco’s ability to understand and exploit relationships between commercial and operational information sources, and to compete with over-the- top providers.
TRUST AND COMPLIANCE
  The phone has become the most personal of all possessions. For every Telco, reputation rests on respect and private value for customer data at a time when that data is more valuable than ever before. Telcos must give their customers absolute transparency about what is being done with their data.

#### Oliver Kleinhenz

Vice President Global Market Telecom & Technology

> Telcos must continually create new business openings, new streams of sustainable revenue and novel go-to-market modes in order to take advantage of the new opportunities in an increasingly connected world. This may mean fundamentally changing the nature of their business and of the services they provide.

Technologies in the Digital Journey
Technology | x | y | x (phone) | y (phone) | Impact | Range | Section | Keys | Description
--- | --- | --- | --- | --- | --- | --- | --- | --- | ---
Augmented reality | 88 | 31 | 85 | 54 | Early Adoption | 2017 | Low | experience | Out in the field engineers access vital information hands-free through modern wearables, improving productivity and safety. Augmented reality provides step-by-step instructions on equipment maintenance or performance histories or even details on how to unlock a secure cabin. Embedded cameras relay pictures back to base to record activities or tap into the insight of a specialist engineer.
eSIM | 85 | 26 | 83 | 33 | Early Adoption | 2017 | Medium | experience | Whether man or machine, they can access online resources, communicate and share their insight wherever and whenever they need to – without ever needing to switch between Wi-Fi and mobile networks as they move location. The embedded SIM (eSIM), which allows customers to manage multiple mobile network operator subscriptions, is easily integrated into any ‘thing’.
Cloud Service Integration | 63 | 49 | 64 | 64 | Adolescent | 2018 | Medium | experience,excellence,trust | As customer demands for an end-to-end landscape of cloud-based functions rises, Cloud Service Integration allows IT and business processes to be seamlessly connected. Telcos are increasingly acting as service brokers, either complementing their own cloud services with third-party services or providing an amalgamation of third-party services to offer an active product catalog comprising of bundled offers.
Context-rich systems | 60 | 28 | 81 | 18 | Early Adoption | 2018 | High | experience,business | Behind the scenes context-rich systems combine network diagnostics with real-time customer intelligence and contextual information to proactively anticipate individual customer’s needs while promoting operational excellence. Take a customer whose network has dropped five calls in the last week; the system will proactively send an apologetic text and appraise the call center of the situation. Take another customer who regularly connects to the Wi-Fi network in a specific coffee shop; the system sends him a coupon to encourage him to download the operator’s Wi-Fi calling app.
5G networks | 22 | 14 | 41 | 20 | Adolescent | 2019+ | Transformational | experience,business,excellence | Today’s innovations are increasingly dependent on IP connectivity and IT-based software delivery across personal area networks, local area networks, metropolitan area networks and wide area networks. Tomorrow’s innovations will be dependent on the low latency offered by 5G networks. The combination of SDN and NFV is levelling the path for the introduction for 5G, which will also enable dynamic network reconfiguration based on analytics.
DevOps | 89 | 12 | 78 | 37 | Mainstream | 2016 | Medium | trust,excellence | Software-defined networking (SDN) means Telcos can introduce the DevOps approach they use for development into their network layers. By enhancing collaboration between software developers and IT operations, the DevOps approach reduces time-to-market and cost while improving quality.
High performance computing | 56 | 21 | 76 | 18 | Early Adoption | 2018 | High | business | To deliver the coverage and service performance of fixed, mobile and cable TV networks customers expected today while, at the same time, offering meaningful customer service, Telcos must tie network data with customer information in real time. Firstly, network data is processed in an instant through streaming analytics supported by high performance computing, automatically alerting support teams to any network issues. Prescriptive analytics are then deployed to provide service performance details for individual customers and identify the course of action that will minimize disruption for each.
Hybrid cloud | 91 | 25 | 89 | 34 | Mainstream | 2017 | Low | experience,business,trust | Telco operators are offering enterprises a hybrid cloud desktop environment that not only connects to the Telco network, but also to the enterprise network and cloud-based productivity tools offered by third-party providers. Telcos are responsible for provisioning and activating the machines, along with enabling user credentials, connectivity, routing and firewalls at the enterprise customer’s site.
Innovation value webs | 82 | 52 | 86 | 51 | Adolescent | 2018 | Low | business,excellence | With the Telco network a core enabler of many of the technological innovations we’re seeing today – from smart cities to mobile commerce and banking – operators are building partnerships and alliances beyond traditional borders to exploit these new opportunities. Innovation value webs are helping Telcos enhance collaboration and communication across the wider partner ecosystem. Their new agile and smart business platform that goes beyond elastic connectivity and transport capacity encourages the open and participatory approach to innovation that is crucial to building a marketplace of new ideas.
Internet of Things | 69 | 15 | 59 | 26 | Early Adoption | 2017 | High | experience,business,trust | Besides serving end users, networks need to cope with the billions of connected devices that will share information seamlessly across the Internet of Things (IoT). IoT business opportunities for Telcos and their partners are many and varied: from environmental, health or traffic monitoring to improving comfort in buildings or managing energy demand, for example. Their success will depend on improved flexibility and quality enabled by smarter networks with increased programmability.
LPWAN | 81 | 23 | 79 | 29 | Early Adoption | 2017 | Medium | experience,business,excellence | Businesses, consumers and ‘things’ are better connected and better informed than ever before. Future IoTs will see data sent over a combination of the pervasive 5G and IoT-optimized low power wide-area (LPWAN) networks.
Mobile edge computing | 66 | 43 | 72 | 41 | Adolescent | 2018 | Medium | experience | Mobile edge computing (MEC) has introduced computer processing and storage capabilities into the cellular base-station. In doing so, it provides Telcos with a new ecosystem and value chain, opening up their networks to authorized third- parties to deploy innovative applications and services towards mobile subscribers, enterprises and vertical segments.
Network Function Virtualization | 79 | 5 | 28 | 14 | Early Adoption | 2016 | Transformational | business,excellence,trust | Telcos are already adopting Network Function Virtualization (NFV) to cut cost, improve agility and accelerate the deployment of new applications and services. NFV replaces aging monolithic appliances provided by telecommunication equipment manufacturers with open source software running on commodity servers.
Pattern-matching technologies | 72 | 29 | 55 | 61 | Adolescent | 2017 | Medium | experience,excellence | With cyber and communications security climbing ever higher on the world’s agenda, streaming analytics combined with pattern-matching technologies are helping Telcos identify and address unusual behavior patterns – particularly those that may result in a distributed denial of service attack.
Prescriptive analytics | 77 | 27 | 72 | 53 | Adolescent | 2017 | Medium | experience,excellence,trust | Whereas previously predictive modeling helped Telcos plan for the future by forecasting churn and acquisition; today Telcos are leveraging prescriptive analytics to ensure they offer the right product to the right customer segment at the right time. Prescriptive analytics go beyond predictive modelling by accurately predicting how customer segments will response to new products or service changes and prescribing the optimal course of action.
Self-adaptive security | 70 | 47 | 77 | 47 | Adolescent | 2018 | Medium | excellence,trust | Consumers now see the cloud as the place to store their ever-growing digital histories, appreciating that they can now access that content from anywhere and on any device, whenever they need it. With consumers, companies and machines sharing sensitive and personal information over today’s the ubiquitous networks that provide access to cloud environments, operators must ensure high levels of security and privacy protection. Contextual dynamic access control provides access to information and systems only when they’re needed.
Sentiment analytics | 93 | 14 | 89 | 36 | Mainstream | 2016 | Low | experience | Social media, with its continuous narrative of emotion, has long been somewhere Telco customers can call for help or simply discuss their issues and experiences with their friends and family. Telcos are employing social media and network analytics not only to understand general customer issues and desires, but also to identify network outages and gather intelligence on individual customers. Its sentiment analytics allows them to quickly identify and respond to individual customer’s gripes and any other reputation-damaging sentiment.
Software-defined networking | 83 | 5 | 45 | 15 | Early Adoption | 2016 | Transformational | business,excellence,trust | Software-defined networking (SDN) makes the network more programmable and easier to manage, enabling cost reductions and new features. Its multi- tenancy capabilities allow Telcos to offer policy-driven and virtualized network ‘slices’ to customers according to their business requirements. Telcos can, for example, provide high quality network services directly to one customer for their network streaming and a lower quality of service to another customer who is using the network to connect sensors.
Streaming analytics | 73 | 15 | 67 | 26 | Early Adoption | 2017 | High | experience,excellence | Advanced Big Data analytics are helping Telcos retain customers and enable growth in both saturated and emerging markets. To gain the complete customer picture vital for delivering a truly personalized omni- channel experience, Telcos are making use of real time streaming analytics to derive customer intelligence from their multitude of diverse systems.

Radar View

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Key Market Challenges
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