Deloitte analyses top telecoms trends for 2013
15 January 2013
The technology, media and telecommunications (TMT) practice at Deloitte today announces its predictions for the telecoms sector in 2013.
Jolyon Barker, global lead for Deloitte's technology, media and telecommunications industry, comments: “This year’s predictions cover a range of topics, highlighting developments around Long Term Evolution (LTE), access to data, and smartphones.
“There will be an upsurge in momentum behind Long Term Evolution (LTE), known as 4G in the UK, with the first operator launching late last year and the other major operators due to follow this year. The ability of LTE to deliver more data at faster speeds suggests the service will thrive in 2013. LTE subscriber numbers are likely to triple, reaching around 200 million globally, as customers take advantage of improved performance in existing 3G services, such as email, multimedia messaging and browsing.
“In response to higher demand, and falling prices of chipsets with LTE, the number of LTE devices will rise fast. The lower cost of pre-pay handsets, including devices retailing for under £60, should also encourage adoption. Revenues from LTE are likely to reach £60 billion by 2014, with more than 200 operators running networks in 75 countries.”
Simon Kerton-Johnson, lead telecoms partner at Deloitte, adds: “We predict that in 2013 between 50 and 100 mobile operators will offer all-you-can-eat services with unlimited access to specific apps. All-you-can-app (AYCA) will, for a fixed monthly subscription, offer unrestricted use of each service’s content, with connectivity charges bundled in.
“While more smartphones will be shipped than ever in 2013, their use will diversify. For example, usage may not necessarily be ‘smart’, given that 20 per cent of owners may never or rarely connect to the web. Many will not subscribe to unlimited data packages, due to a lack of interest or knowledge or because network provision is not in place. Understanding the diversity of smartphones and their owners is critical to any company adopting a mobile strategy.”
The benefits of LTE are widely recognised and include the ability to handle more traffic at faster speeds and with more efficient use of a finite spectrum. However, LTE comes at a significant price: network upgrades, spectrum purchases, marketing and LTE handset subsidies are all potential constraints on the pace of roll out.
Customers love all-you-can-eat data (unlimited downloads) and some smartphone users regard it as an essential element of subscription. Many operators, on the other hand, regard it as unappetising because of the cost implications.
There is a potential middle ground: all-you-can-eat per app, which has been successfully employed in pay TV. Offering unlimited access according to genres such as sports and movies has been shown to satisfy TV customers’ desire for charging predictability and offers potential segmentation possibilities for providers. The model could be used in mobile, for example to provide unlimited access to social networks at a fixed price. Pricing can be adjusted to reflect bandwidth usage, with applications such as video priced higher.
With the majority of mobile customers yet to move to mobile data, now is the right time to promote all-you-can-eat per app. As of Q3 2012, just one-seventh of mobile users owned a smartphone. All-you-can-eat per app would be a way to encourage non-data users to try mobile data apps, without worrying about runaway costs.
A record one billion smartphones will be shipped in 2013. One in every five smartphone owners may never or rarely connect to the web. Technology offerings will vary widely, with smartphones costing from less than £30 to more than £400. Low-cost iterations, potentially offering less attractive download experiences, are likely to expand. Smartphone vendors should determine how best to differentiate products with clients unlikely to use data services, for example by pre-loading offline apps.
While metered voice services remain a relatively high margin business, a key recommendation for operators is to use tariff schemes and education to encourage those not using data services to give them a try.
Smartphone owners should not be considered homogenous. Even across the same model, usage is likely to vary considerably. UK retailers and content companies should determine how their addressable market may vary by phone model or operating system. Just because someone owns a smartphone does not necessarily mean that they will often or ever access a mobile website.
Notes to editors
For a full copy of the report (launched on Tuesday 15th January) with all of the Deloitte predictions please email: Selina Abbiss or Christina Underwood visit www.deloitte.co.uk/tmtpredictions.
The 2013 series of Predictions has drawn on internal and external inputs from conversations with Deloitte’s clients globally, contributions from Deloitte member firms’ 7,000 partners and managers specialising in TMT, and discussions with industry analysts as well as interviews with leading executives from around the world.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
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