Product substitution is among the major underlying trends affecting the global telecommunications business.
Substitution of mobile voice for fixed; mobile internet for fixed; streaming video for linear; over the top apps for managed services; text communications instead of voice and private networking for use of public networks all are examples of the substitution trend.
Consider the wide area networks (WAN) business. In the 21st century, WAN traffic has moved steadily in the direction of carriage on private networks owned and operated by major application providers, and away from the public networks offering internet backbone carriage.
By 2016, more than 70 percent of all internet traffic across the Atlantic was carried over private networks, not on public WAN networks. Obviously, that also means no revenue was earned directly by public service providers for carrying that traffic.
On intra-Asian routes, private networks in 2016 carried 60 percent of all traffic. On trans-Pacific routes, private networks carried about 58 percent of traffic.
In other words, far less traffic now moves over public networks than once was the case, a development with important revenue and business model implications. To a growing extent, private networks are displacing WAN services.
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