The rapid growth of IP services, the success of over-the-top (OTT) players in providing services, content and applications and the explosion of data, cloud and smartphones have radically altered the realities of the telco sector. Access to the network is now the basic product, rather than voice – and the timescales for traditional business models, regulatory frameworks and infrastructure investment are dangerously out of sync with the fast pace of Internet application and service development.

  • OTTs and operators are locked in mutual dependence: service providers drive usage over operator networks by offering content and services to the end-user free of charge – monetizing through exploitation of end-user data. Operators are losing revenue yet facing costly investments in next-generation networks (fixed and mobile) and quality infrastructure to meet increasing demand. Who should pay (or how end-users should be billed) remains open.
  • There is a cultural and generational gap between OTTs developing IP-based applications and traditional telcos. Timescales and developmental cycles for Internet services and traditional telcos in terms of investment, regulatory, business and network models are dramatically out of sync.
  • There is a danger of losing interconnectivity through the global telephony system as different clients and applications form closed proprietary systems operating in silos of communication. This may not matter: the traditional ubiquity of telephony is not a right but dependent upon consumer demand, which remains uncertain in the long term.
  • An important shift in the position of voice services is taking place:
    • Voice calls are declining in popularity as usage minutes go to apps or Internet services. Voice may have become “uncool” and mere “noise”.
    • Voice is increasingly fragmented and embedded as a feature or function of applications (gaming, messaging) rather than a standalone billed item.
    • The voice model of minutes as traditional metrics is coming to an end as time, distance, location are irrelevant in a flat IP world.
    • Revenue from voice is falling dramatically as demand and prices fall.
    • Emergency service calls remain critical infrastructure but can be replaced by innovative applications, location-based services, alternative delivery technologies.
    • Voice can be monetized as part of a package of integrated services; potential of hypervoice as collision of voice and web delivering telephony over mobile IP networks.
  • Convergence with vertical sectors such as banking, health, education will drive broadband demand, generate content and transform industry; but threatens conflict between opposing or parallel regulatory, billing and cultural frameworks.
  • The consumer or end-user is increasingly empowered, driving demand, generating content and developing applications as innovation is led from the edge of the network. Consumer choice on quality, price, services, flexibility and privacy, plus increasingly personalized services over software defined networks, is vital.
  • Exploiting data services in the digital age represents a cultural shift for traditional telcos; supported by big data analytics, cloud computing and software defined networks.
  • Open source innovation and standards are an irreversible trend.
  • Local solutions to local issues, locally relevant content and applications, and local development are driving uptake of services and content to support infrastructure investment. Local solutions are then adopted or adapted to global markets.
  • Policy makers and regulators are not always aware that communication is no longer via service providers alone; operators no longer compete with homogenous players but in a diverse market; frameworks imposed on copper-based networks are unsuitable for the realities of fibre and mobile. Regulation needs to reflect this and encourage rather than stifle development.