Technology | Media | Telecommunications

Thursday, January 03, 2013

The Top Ten Telecom and Media Trends for 2013

Informa Telecoms & Media released its top ten trends for 2013. Five of their predictions relate directly to telecom service providers and the other five address the pay-TV, digital media and Over-the-Top (OTT) communications sector.

1. Wi-Fi Will Become a Victim of its Own Success
There will be a shift in operator sentiment away from public Wi-Fi as it becomes evident that the growing availability of free-to-end-user Wi-Fi devalues the mobile-broadband business model.

Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of Wi-Fi.

2. Facebook Goes all in On Mobile
Facebook is having a tough time translating its popularity on mobile devices into revenues. Although its most recent financial results at last showed some improvement in mobile advertising revenues, Informa doesn't believe that this alone will be enough to sustain and grow its mobile business.

There are three new monetization strategies currently available to Facebook: 1) develop new premium services to sell to its existing customers; 2) take a share of revenues from third-party content providers that develop services on its platform; or 3) expand into the device or device software business.

3. Other Apps Build Upon WhatsApp Success
The hype bubble around WhatsApp and other OTT messaging services will continue to expand in 2013, especially driven by frequent acquisition rumors.

However, the emergence of early anecdotal evidence that some consumer segments are starting to migrate their attention and usage to alternative services, both old and new, will start to dampen expectations and highlight the fickle and fragmented nature of consumer behavior.

4. Digital Services: an Ongoing Quest for Profits
Investors will demand a clear path to revenue from investments into digital services before network operators begin to feel any share-price benefit from initiatives. PR-friendly they may be, but demands and expectations from shareholders will grow that they are also friendly to the bottom line.

It will become apparent to many operators that material revenue streams that can shift the dial of group-level revenues will be very hard to come by.

5. Content Providers Continue Spending on Infrastructure
The leading online content providers -- such as Google, Netflix -- will continue to invest heavily in extending their infrastructure closer to their service users in 2013.

Informa recommends that network operators consider these proposals carefully and recognize where they are likely to gain more from reduced costs and increased network efficiency than lose out in terms of uncertain revenues from so-called two-sided business models.

6. Mobile Handset Subsidies are Under Review
Handset-financing models established themselves in Europe in 2012 and will continue to spread globally in 2013. But a reduction in subsidies and changes to traditional ways of retailing devices will come at a cost to operators.

Physical and online retailers, such as Amazon, as well as device-platform owners -- such as Apple or Google -- will accelerate their own initiatives to disrupt traditional device distribution models.

7. Shared Network, or Shared Pain?
The logic of network-sharing will increasingly be questioned by the industry given the core strategic importance of a differentiated network platform. In Europe, especially, Informa expects more network operators to forsake dividends and free cash-flow in order to ramp up investments into network infrastructure.

They do this in the hope of establishing a competitive advantage that's built upon network quality of experience. However, despite this reversal of attitude by some, network-sharing and operator consolidation will sweep through emerging markets, especially in Africa.

8. Voice over LTE: Only Fools Rush In
Boosted by a lack of any negative customer feedback about interim voice for LTE solutions (such as falling back to circuit-switched 2G and 3G networks), more operators will join Verizon Wireless and EE in pushing out their timelines for the commercial deployment of VoLTE.

A business case that looks to be based solely on spectrum efficiency will struggle to gain enough executive support to justify a rushed investment plan.

9. APIs: The New Currency of the Digital Economy
APIs will become the leading currency of the digital economy – speeding service activation, configuration, customer experience management and time to revenue. Whether directly monetized or not, APIs are the new interconnect standard among digital service stakeholders.

10. Netflix will Have a Breakout TV Hit in 2013
In 2012, a previously niche channel player, AMC, owned the most popular show on U.S. TV – "Breaking Bad". In 2013, it will be the turn of an OTT provider to break through – perhaps with "House of Cards".

Informa believes that pay-TV operators should respond by looking at how they might partner with Netflix, rather than seeing it only as a threat.