Shocking, Massive Changes Coming for Telecom

Not often is a slow-moving industry confronted by cataclysmic rates of change. But that is precisely what the telecom industry faces now. "Massive consolidation" and "spectacular change" are the ways Capgemini has characterized what is coming.

One example of the rate of change: Where today there are 800 telcos globally, by 2025 only about 105 will still exist, says Bell Labs. So within a decade, the industry will see the most-shocking consolidation in its history.

For most of its history, telecommunications was a monopoly, expensive and used by relatively few people. That meant one set of regulatory and policy issues, mostly centered on how to manage prices in a slow-moving utility industry.

All that changed in the late 1980s, when a global wave of privatization and competition began to take shape. For the first time, the policy framework shifted to ways to dismantle the monopoly regime and replace it with competitive markets.

source: ITU

We are entering another new era, with unprecedented new challenges for policymakers:

• The business model is challenged, and could break
• Some countries might be forced back to “monopoly” facilities
• Revenue growth will come mostly from non-human use cases
• All the old revenue drivers will decline
• Massive industry consolidation is coming
• “Telecom” might not be the way the new industry develops

To prepare telecom professionals for all those changes, the PTC has created a new program called “Industry Transformation Boot Camp,” a week-long program explaining what is coming; why it is coming; what people plan to do about it; and why 5G will play such a prominent role in determining the outcome.

At the same time, as the wisdom of “everyone sells” has proven to be valuable, the next phase of industry transformation will require an “everyone thinks like a CEO” attitude, so fast, and so furious, will the changes be coming.

Created from two elements--Spectrum Futures (5G) and PTC Academy (“think like a CEO”), the boot camp will clearly explain what will happen (massive industry consolidation; business model collapse) and why. More importantly, boot camp attendees will learn why the changes are happening; what can be done to hasten the transformations and where the opportunities and dangers lie.

18–19 SEPTEMBER 2017 PULLMAN BANGKOK GRANDE SUKHUMVIT

"THE INDUSTRY TRANSFORMATION BOOT CAMP" GROUP REGISTRATION AVAILABLE BEST VALUE | LEARN AND LEAD REGISTER ASAP Bring your team to Spectrum Futures 2017, book your registration, and save 20% per person when you register with a group of three or more.* Taking place 18–19 September in Bangkok, Thailand, Spectrum Futures is gearing up for the “Industry Transformation Boot Camp," a new training program coordinated with the PTC Academy, PTC’s training event for Asia telecom professionals. During the "Industry Transformation Boot Camp," invest in two days of in-depth discovery and the latest updates in mobile and 5G, completed by three days of PTC Academy, to master the intelligence and broader strategic context of the telecom industry. Register now for the "Industry Transformation Boot Camp" – Spectrum Futures 2017 and PTC Academy, take advantage of exclusive group discounts available, and leap your career for success. Email spectrumfutures@ptc.org to register your group, and we will assist you with all your attendance requirements. *To qualify for group discounts, all delegates must be from the same company, and must register for the same registrant type and pay at the same time. Groups cannot retrospectively be compiled with delegates that have already registered.

Industry Transformation Boot Camp: Register Now for Group Discount Rates

Bring your team to Spectrum Futures 2017, book your registration, and save 20% per person when you register with a group of three or more.

Taking place 18–19 September in Bangkok, Thailand, Spectrum Futures is gearing up for the “Industry Transformation Boot Camp," a new training program coordinated with the PTC Academy, PTC’s training event for Asia telecom professionals.

During the "Industry Transformation Boot Camp," invest in two days of in-depth discovery and the latest updates in mobile and 5G, completed by three days of PTC Academy, to master the intelligence and broader strategic context of the telecom industry.

Register now for the "Industry Transformation Boot Camp" – Spectrum Futures 2017 and PTC Academy, take advantage of exclusive group discounts available, and leap your career for success.

Email spectrumfutures@ptc.org to register your group, and we will assist you with all your attendance requirements.

Get more details. 

Overbuilder Business Model Still is Tough, Even When You Win

Perhaps few overbuilders have been as optimistic as Google Fiber about prospects for beating cable companies and telcos at the internet access game, but even Google seems to have found out how expensive and difficult the access game can be.

Tucows, an overbuilder constructing gigabit internet access networks in a number of mid-sized towns, believes it eventually will reach 50 percent adoption rates (the adoption, or penetration rate, is the percent of homes in an area that are customers) in its markets after five years, a stunning figure that has been seen once or twice in U.S. overbuilder markets, but an achievement that  remains quite rare.

At that level, an overbuilder would become the likely leader in its market.

Even expectations for the immediate future are healthy. “We expect to see 20 percent adoption among serviceable addresses in a year and 50 percent in five years,” says  Elliot Noss, Tucows CEO. Generally speaking, an overbuilder with 20-percent share and control of its operating costs reasonably can expect to survive.

As was the case for overbuilders in the video entertainment business, and now with triple-play and internet access overbuilders, it has proven difficult to reach 20 percent market share after several years of operation.

As even the most-successful overbuilders have discovered, being the market leader is difficult, as the leader’s market share, in a competitive three-way market, might not exceed 30 percent or so of homes (potential accounts).

EPB in Chattanooga, Tenn., for example, is the poster child for overbuilder hopes, having gotten as much as 45 percent of consumer market share in its service area (with share defined as revenue-generating units, not “accounts” or “homes”).

EPB’s internet access share might be about 27 percent, its video share lower than that. An interesting statistic, in that regard, is that about eight percent of EPB’s internet access customers buy the gigabit service.

EPB’s market share is highly unusual in most overbuilder markets, as EPB arguably competes with Comcast, not AT&T, which has negligible video share in Chattanooga.

In a triple-play market, that is important. Comcast might have 61 percent video share, while EPB might have 36 percent share, leaving only three percent video share held by AT&T. Essentially, EPB has become the number-two provider, relegating AT&T to third place, something that is not the case in most other U.S. markets where three mass market fixed network suppliers compete.

AS well as EPB arguably has done, the overbuilder business model remains challenging. That is why fixed networks in many markets essentially remain monopolies at worst, despite deregulation,  or at best oligopolies.

An important test is coming for overbuilder Ting in its south metro Denver markets, as it will face entrenched competition from both CenturyLink and Comcast, in an area where both those incumbents will be able to offer gigabit per second speeds to consumers.

Enterprise Customers More Satisfied than Small Business Customers (No Surprise)

Small businesses are significantly less satisfied with their telecom providers than large enterprise customers, the J.D. Power 2017 U.S. Business Wireline Satisfaction Study reports.

Small business customers face longer customer service wait times, lower problem resolution rates and less dedicated account support, all of which contribute to lower overall satisfaction with their telecom providers, J.D. Power says.

“Dedicated account support,” as many of you would guess, is part of the reason. Customers who have an account representative assigned to their business have notably higher levels of overall satisfaction  (834) than those who contact a general call center (751).

Customers with a representative also have a more positive brand image of their provider and are more likely to characterize their telecom company as customer focused. Large enterprise customers are most likely to have an account representative (61 percent), of course.

The widest gaps in satisfaction between large enterprise businesses and very small businesses are in communication (804 vs. 701, respectively); cost of service (789 vs. 672); and customer service (818 vs. 695).

The average customer service hold time is 5.3 minutes for large enterprise customers; 5.9 minutes for small/midsize business customers; and 8.9 minutes for very small business customers.

“The small business telecom customer experience is very similar to the residential customer experience vs. large enterprise customers who are receiving a much higher level of dedicated service,” said Peter Cunningham, technology, media & telecommunications practice lead at J.D. Power.

China Targets $150 Billion Artificial Intelligence Ecosystem by 2030

Governmental policies designed to foster a particular industry are not unusual in East Asia or elsewhere, so it is not too surprising that artificial intelligence (AI) now is the target for China, as the State Council has set a goal of becoming a “global innovation center” for AI  by 2030.

The value of artificial intelligence industries should surpass 1 trillion yuan ($147.80 billion) by that point, the State Council says. That is an ambitious goal, given some current projections of total market size by 2024, if only AI software and systems are counted.

But the State Council forecast clearly includes the value of all economic output driven by AI, not just the value of AI itself. That is akin to valuing the impact of e-commerce by adding up the retail value of all products and goods moved through that channel. You can get big numbers pretty quickly.

https://www.techemergence.com/valuing-the-artificial-intelligence-market-graphs-and-predictions/

By 2020, almost every new software product and service will incorporate artificial intelligence features, Gartner predicts.

Though it remains unclear how much business impact might eventually be derived, some early adopters already find AI contributes.

Amazon uses robotics to automate “picking and packing” activities in its warehouses, McKinsey notes. The “click to ship” cycle time, which ranged from 60 to 75 minutes with humans, fell to 15 minutes after applying robotics, while inventory capacity increased by 50 percent. Operating costs fell an estimated 20 percent, McKinsey argues.

Netflix uses AI to personalize recommendations. Netflix found that customers, on average, give up 90 seconds after searching for a movie. By improving search results, Netflix projects that they have avoided canceled subscriptions that would reduce its revenue by $1 billion annually.

Baidu and Google spent between $20 billion to $30 billion on AI in 2016, McKinsey says.

Healthcare, financial services, and professional services are seeing the greatest increase in their profit margins as a result of AI adoption, McKinsey argues.

The McKinsey Global Institute Study on Artificial Intelligence, The Next Digital Frontier also estimates that total annual external investment in AI at between $8 billion to $12 billion in 2016, with machine learning attracting nearly 60 percent of that investment.

Robotics and speech recognition are two of the most popular investment areas.

source: McKinsey

An Industry You Might Not Recognize is Coming

A world and an industry you might not recognize is coming.

New Censtorship Threats to Internet

Though the relationship is not entirely linear or always obvious, commercial freedom is related to political freedom.

Consider network neutrality. The original thinking by the U.S. Federal Communications Commission was that internet freedom (commercial freedom of app and content providers) required “no blocking” of all lawful content.

Ironically, some might argue, later extensions of network neutrality actually work to suppress the commercial freedom of some entities to promote the “freedom” of others (app providers “win,” access providers “lose”)

Now court decisions are highlighting another problem: actual blocking of content that might be lawful in one country, because it is unlawful in another (or potentially in another country).

The Google v. Equustek Solutions case in Canada started out as a “simple” trademark case, in which Equustek claimed that another company was infringing on its trademarks online.

But a Canadian court ruled that Google (not a direct party in the case) had to block entire sites worldwide, even if some content is, in fact, not unlawful in Canada.

In 2015, an appeals court upheld that decision, and earlier today the Canadian Supreme Court agreed with both lower courts.

Now a similar issue is arising in the European Union, where a French court has aid Google has to  censor content links globally, to follow French law.

The larger point is that threats to content or app freedom can come from multiple sources. Some seem to worry most about potential danger from commercial sources (zero rating, toll-free service, quality of service mechanisms).

But the biggest danger will always be action by governments, either in the form of governments outlawing whole apps and types of content, or governments outlawing apps or content in one country because some other government has done so.