Competition is Top Service Provider Concern
Competition in general, and competition from over the top providers in particular, are the top two challenges global telecom executives say they face.
Fully 73 percent of service provider executives surveyed by E&Y say disruptive competition is the leading industry challenge.
But 64 percent of respondents also say regulatory uncertainty is an issue, as well. No other concerns are cited by more than 45 percent of respondents.
Of regulatory issues, access to new spectrum is cited by 78 percent of executives as the top concern.
OTTs (app providers) represent the chief competitive challenges--even more than traditional firms within the telecom business--the study finds. The reason is that app providers now set pricing environments, cannibalize legacy revenues and create new consumer expectations.
App providers, such as WhatsApp, are viewed as the top driver of new consumer demands by 61 percent of respondents.
In developing regions, 67 percent of executives say device suppliers are likely to be key shapers of end user demand.
Service providers overall get about 55 percent of ecosystem revenue.
Survey respondents believe that app provider share of industry value chain revenues reached the 10 percent mark in just a few years according to EY estimates. That underestimates impact, however.
The challenge is that OTT apps redefine consumer price expectations. So the revenue impact on legacy providers is not so much loss market share but lower profit across the board.