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Telecommunication trends for 2009

Telecommunication predictions from TMT Trends 2009 series


„The telecommunications sector is unlikely to remain unscathed by the global economy. But while global growth may be cyclical, the need for telecommunications is and will remain fundamental.“

2009 is likely to challenge all of us. The telecommunications sector is unlikely to remain unscathed by the global economy. But we should not forget that the reliance on the telecommunications sector to keep the businesses and the people of the world connected remains as critical as ever. In short, while global growth may be cyclical, the need for telecommunications is and will remain, fundamental.

Smart phones: how to stay clever in a downturn

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A continued economic downturn in 2009 may buffet the smart phone's fortunes. In an effort to reduce costs, mobile operators, the main channel to market for smart phones, may start reviewing handset subsidies, which the industry invests tens of billions of dollars in each year. Mobile phone manufacturers need to show mobile operators how their smart phone could provide a superior return on investment compared with both their competitors and with other, cheaper types of phone. They should focus on developing and marketing smart phones whose features consumers are willing to pay for despite tough times. For business users, they could even position devices as replacements for laptops. Handset manufacturers should pass on some of the downward pricing pressure to mobile component manufacturers, who, in turn, may need to cut costs. As for mobile operators—they should reduce smart phone subsidies with care: these devices generate over 25 percent of mobile data traffic.

The joys of disintermediation: why operators should embrace the application store

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Mobile operators have long been concerned by disintermediation: the intrusion by third parties into the originally closed relationship between operator and customer. But in 2009, mobile phone users are expected to download over 10 billion applications to their mobile phones—the majority from sites managed by mobile device manufacturers, consumer electronics firms, and software houses. Although operators are unlikely to earn any direct revenue from third-party application downloads, there are several options for them to generate income from downloads, including device back up; management of application transfers; and specialized services provided to third-party stores. Operators may be able to earn revenues from developers and consumers by wholesaling presence and location-sensitivity into services. Consumers will benefit from application stores, but should be mindful of the seemingly inexorable risk that some applications may be contaminated by viruses.

Mobile termination rates in Europe: a cut too far or a cut too fast?

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Mobile termination rates (MTR) in Europe have historically been higher than equivalent fixed charges. During 2008, the spread of MTRs in Europe was between €0.02 and €0.18 per minute. This compares to typical fixed termination charges of €0.01. But in June 2008, the European Commission (EC) recommended that the asymmetry between mobile and fixed be reduced, proposing that MTRs fall by 70 percent over three years. Mobile operators likely to be adversely affected by MTR cuts should suggest alternative approaches to the EC proposals. But operators should avoid over-stating the impact of MTR cuts. Exaggerated claims may not help negotiations with regulators, and may even heighten the concerns of investors. The fact remains, however, that MTR declines are likely to accelerate, and operators must gauge the impact on profitability, perhaps looking at data services to offset falling voice revenues. Likewise, mobile operators who stand to gain from MTR cuts should also consider the broader impact: consumers are likely to expect lower bills from all operators.

Other telecommunications trends

Data ascends from the basement to the boardroom
Customer information has long been part of telecommunications operators' asset base, but thus far, collection has outweighed insight. Given the economic outlook, however, better customer information may help operators retain and gain customers.
Digital communication loses its message
In many businesses, the efficiency of digital communications has been increasingly blunted by overuse. During 2009, average office workers are expected to dedicate up to two hours a day to email, with an estimated 20 megabytes per employee, per day. Organizations need to help users regain discipline, encouraging them to focus on quality, not quantity.
Integration unleashes mobile phone convergence, finally
The promise of mobile phone convergence remained largely unfulfilled in recent years, requiring consumers seeking top-of-the-range performance little alternative but to carry multiple devices. But in 2009, the convergence compromise may be overcome.
Farewell mobile phone, welcome the wireless device
The mobile phone will evolve from being a device dedicated to cellular mobile networks, into a truly wireless device.
The mobile broadband accident in slow motion
Global sales of mobile broadband “dongles” exceeded four million per month during 2008, and are expected to more than double in 2009. The resultant stress on networks, particularly backhaul connections, could be significant.
The third screen goes dark: mobile television loses its reception
With mobile television logging a disappointing 2008, its temporary demise may only accelerate in the economic downturn expected in 2009. Tightening liquidity may make investments in digital video broadcasting unlikely.
One for all and all for one: fiber networks change the shape of competition
As pressure mounts on fixed operators to upgrade copper networks to fiber, the continuing viability of infrastructure-based competition is likely to be debated. While this approach can benefit consumers, it can result in a large-scale duplication of assets.
  Telecommunication Predictions. TMT Trends 2009

About the research

The 2009 series of predictions has drawn on internal and external inputs from conversations with member firm clients, contributions from DTT member firms’ 6,000 partners and practitioners specializing in TMT, discussions with financial and industry analysts, and conversations with trade bodies.

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