When we started talking about the competitive landscape of telecommunications and on reading some of what emerged from TLC 2025 (the forward-looking research sponsored by the Engineering Group*), it became clear that the landscape of competition in the telecommunications industry will have changed in a very profound way by 2025. Even speaking of the TLC sector will have lost the meaning it has today.
In fact, the telecommunications environment – once easy to describe and outline within a specified boundary – will be increasingly fluid, without boundaries: telecommunications will be TV, energy, security and surveillance services, sensors, traffic information, geolocation and smart cities. In Italy there will also be a transition from the current model in which synergies take place in a vertical manner only within individual distribution sectors (telecommunications, energy, gas) to the model adopted in some northern European countries based on incentives for infrastructure sharing horizontally between telecommunications, energy, heating/cogeneration, gas, water, etc.
Moreover, between now and 2025, the telecommunications landscape will be subject to a strong process of concentration. In Europe, after years of uncertainty and indetermination, strong consolidation will be achieved among traditional operators, which will have produced a number of players that are absolutely significant at global level. In Europe, as in the United States, there will be a maximum of four operators. In northern Europe/Scandinavia, there will be a single integrated operator. Telefonica will have spread in much of South America. Italian operators will have subordinates roles in the process of consolidation of European operators.
The adjustment of telecommunications infrastructures will continue to be driven by the business models of operators in adjacent markets (starting, in particular, with media companies). Furthermore, in advertising, the role of OTT will become more pervasive, as it gradually gain market shares at the expense of media operators. In addition, at the level of services, the role of OTT will have become much more important in 2025 than it is now. Google will be providing interpersonal communication, with a focus on innovative capacity based on cognitive technologies and Big Data, such as instant multilingual translation. Being within the ICT sector, Amazon will be the undisputed world leader for cloud services. OTT will be critical for attracting and retaining customers on networks, even if will lead to constant imbalances in the business of Telcos. In addition, in the mobile sphere, the advent of “soft SIM” will further change the balances among various market players (mainly operators and OTT).
Harmful and indispensable
The role of OTT in Italy will remain as it is in almost all countries in which strong local OTT has not developed: monopolists or oligopolists, based abroad. OTT will be indispensable for the economic development of the country, but will have negative effects at national level in terms of lack of economic exploitation of Big Data acquired in exchange for services offered. In the next nine years, despite awareness at governmental level of the problems generated by the position of OTT compared with authorised telephone operators, the country will fail to acquire a sufficiently widespread sensitivity to permit legislative intervention aimed at reducing this asymmetry. Moreover, despite being severely detrimental to national interests, this will remain widely accepted in exchange for (only apparently) anonymous and free access to the so-called “social” networks.
In the coming years, telephone operators, which would be able to assemble very different kinds of data, thus realising precisely the operation that represents the added value of the logic of Big Data, will remain blocked by national and international regulations. Evolution on this terrain will be modest, due both to the overall slowness of institutional decisions and to low pressure in this sense from the market. Thus, for Telcos, Big Data will remain a line of revenue line of minor importance by 2025: instead, the main development guideline will concern the offer of content.
* Following are the 10 Managers participating the seminars: Gian Paolo Balboni (Tim), Alessandro Casacchia (Agid), Andrea Casalegno (Top-Ix), Gianni Dominici (Forum PA), Paolo Nuti (Mc Link), Fabio Panunzi (Linkem), Francesco Pirro (Agid), Giovanni Sabadini (Engineering), Roberto Vicentini (Engineering), Ezio Zerbini (Ericsson).