Telecoms Outlook, 2014 - 17 by Ovum Events

Telecoms Outlook 2014 – 17 Thursday, October 10, 2013, Warsaw, Poland An Ovum Industry Seminar

The day at a glance 09:30 - 10:00

Registration and coffee

10:00 – 10:30

Opening Remarks Richard Mahony, Global Research & Analysis Director

10:30 – 11:30

“Meeting the OTT Challenge” Michael Philpott, Practice Leader, Consumer

11:30 – 12:30

“LTE: Delivering Next-Generation Broadband Today” Steven Hartley, Practice Leader, ICB

12:30 – 14:00

Lunch

14:00 – 15:00

“EU Regulatory Update and Single Market Proposals” Matthew Howett, Practice Leader, Regulation & Policy

15:00 – 16:00

“Top 5 Enterprise trends” Evan Kirchheimer, Practice Leader, Enterprise

16:00 – 16:30

Closing Remarks Richard Mahony, Global Research & Analysis Director

Opening Remarks Richard Mahony Global Research & Analysis Director

Ovum at a glance

Enterprise Consumer

Wholesale Industry Operations Devices Networks & components Regulation End to end view of IT, telecoms and media 4

How we help our clients Adjusting to an evolving marketplace

We author market leading strategy reports

Pursuing the optimum route to growth

Opportunity sizing and forecasting

~50 forecasts updated annually

OVUM TELECOMS Identifying customer requirements

We profile 95% of the top 30 telcos 5

Identifying competitor intentions

Sam Runham, Account Director, EMEA Manages clients within EMEA with a core focus in Western and Eastern Europe Core clientele are Telcoâ&#x20AC;&#x2122;s within these regions

Please see him to discuss how Ovum work with our clients through our Knowledge Centre Available throughout the day for a demo of the Ovum Knowledge Centre

sam.runham@ovum.com

T: +44 (0) 20 7551 9074 M: +44 (0) 7867 356 031

Meeting the OTT Challenge Michael Philpott Practice Leader, Consumer

Agenda



The OTT disruptors and consumer trends



The changing value chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

Agenda



The OTT disruptors and consumer trends



The changing value chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

Who are OTT disruptors?

Other telcos Specialist service providers

Social platforms

Internet service providers

Telco broadband access and services

Device vendors

Content owners

OTT impacts telcos in 3 ways



Direct and indirect impact on traditional revenues  Especially mobile



Increased competition around new revenue opportunities  In all areas, but current emphasis around TV



Increased strain on the network  Especially from video

Smartphones and tablets are game changers Optimum mix

Bridging technologies

Portability 12

Current trends (Poland) Key service / technology penetra on 160%

100% by 2017

141%

140% 120% 100% 80%

83% 73%

67%

60%

44%

40% 11%

20% 0% PC (per HH)

Fixed broadband Mobile Mobile small- Mobile big-screen pay-TV (per HH)) penetra on (per screen broadband (per penetra on (per Pop) broadband (per Pop) HH) Pop)

Source: Ovum Consumer Insights

All EE countries heading in the same direction Source: Ovum 13

Mobile voice and SMS is still popular Which of the following communication services do you currently use? 100%

18.00%

16.00%

14.00%

87%

90%

77%

80%

Regularly

60% 51%

Never

50% 40%

39%

40% 29%

31%

38% 31%

29%

(bn)

Rarely

10% 3%

0% Fixed voice calls

Mobile voice calls

SMS texts

VoIP

8.00%

Social networks

4.00%

2.00%

Social messaging

Mobile voice minutes Growth (%)

6.00%

29%

28%

20% 10%

10.00%

40 30

33% 21%

21%

12.00%

70%

30%

0.00% 2009 2010 2011 2012 2013e

Source: Ovum Consumer Insights

8.00%

7.00%

6.00%

51 (bn)

The increased penetration of smartphone devices will change consumerâ&#x20AC;&#x2122;s behavior

5.00%

4.00%

3.00%

48 47

2.00%

1.00%

Growth (%)

0.00% 2009

SMS sent

2010

2011

2012

2013e

Source: UKE

Potential new communication preferences Communication preferences of 16-24 year olds

Natural shift

Shift to social

90%

75%

60%

30% 22% 20%

15% 11%

10%

3% 0%0%1%

22%

Parents Children

22%

Natural shift

31%

Natural shift

40%

Shift to social

46%

50%

Renewed interest

16-24 year olds (%)

70%

49%

Friends

Shift to social

80%

85%

38%

Work colleagues

14%

13% 7%

5% 3% 1% 1% 0%

3% 3% 0% 0% 2%

Fixed voice

VoIP

4% 3% 1%0% 1%

Other family members

4% 1%1%2%

1%2%

0% E-mail

SMS

Mobile voice

Social messaging Social network

Not applicable

Source: Ovum Consumer Insights 15

Online applications by device

Desktop/laptop

Mobile phone

Tablet

Other connected device

Don't use that applica on

100% 90% 80%

77%

Connected users

70% 60% 50% 40% 30% 20% 10%

oo ks

eb ad

on s c

Ba nk in Re

co e Pr ic

m pa ris o

in g Sh op p

g gin sa

k oc

ce s

ne te r In

So ci a lm es

w or ia ln et

ep h tt

TV rn et In te

at ch

on y

/v id eo

g ga m in On lin e

m us ic On lin e

te r

ne t

ail

ar ch

Source: Ovum Consumer Insights 16

Tablets change viewing habits like no other device 80% 70% 60% 50% 40% 30% 20% 10% 0%

Internet video clips TV programs / episodes

65% 51% 37%

37% 29%

33% 12%

Overall sample

he r

an ot

th e

ain

liv in gr om oo in m t he W hi ho l st us co e m m u ng P In ub In t he lic ah w ca ot a r el i ng /r es ar ta ea ur s an t/ ca fĂŠ

Tablet users Ot he r

ob i le

ph o

ol e

co ns

m ar tT

PC to p

Ga m

70% 60% 50% 40% 30% 20% 10% 0%

Co nn e

ct ed

La p

to p

Ta bl

Full length movies

Source: Ovum Consumer Insights (Europe) 17

TV trends 100%

90%

Top er pay-TV 80%

80%

70%

43% Middle- er pay-TV

60% 50% 40% 30%

30%

Basic pay-TV

50% 40%

77% 62%

30%

29%

20%

Source: Ovum

60%

20%

20% 10%

Interenet video users

70%

Free-to-air

10%

14%

11%

SVoD

TVoD

Other

Polish TV make up

Short video clips

Catch up TV

I now rarely / never watch regular TV

Free / AVoD

16%

I now mainly watch regular TV for certain programs such as live events

I am starting to watch regular TV less

19%

No real change

47%

I watch regular TV more than I did before

10% 0%

5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Intnet video users

Source: Ovum Consumer Insights 18

Agenda



The OTT disruptors and consumer trends



The changing supply chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

Emerging video services ecosystem

Social networks

Advertising Production services

Talent agency

Post production services

Studios

Online video platforms

OTT video services

DRM

CDN

Connected devices Consumer

Web video studios

Pay-TV platforms

User generated content

Television device / STB / DVD player

Companion applications

Content Providers

Distribution Platforms

End users

Source: Ovum 20

Fostering new competition



Innovative new players: lower cost base, smaller, nimble



Creation of new business models: Freemium, in-app purchases, free



Shorter chains – even direct to consumer



Integration of platforms – such as social networking and video

Agenda



The OTT disruptors and consumer trends



The changing supply chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

Impact on communications

People that use such services (%)

70% 60%

50%

60%

56%

50%

49%

Social networking

Social messaging

76%

69%

41%

28%

Significantly decreased

44%

Decreased

41% 40% 30%

About the same

30% 20% 12% 10%

22%

21%

5%4%

8% 3%

13% 15% 9%

18% 17% 13% 9%

12%

23% 14%

13% 6%

0% Fixed voice calls Mobile voice calls

SMS texts

VoIP

Increased

Social networking Social messaging

Significantly increased

Source: Ovum Consumer Insights

But penetration of this is still relatively small



Smartphone adoption will continue to rise, and with it the general adoption of social communications



Social messaging growth is difficult to combat once it goes viral, this can happen at very low rates of social messaging penetration.  In Korea, KakaoTalk went viral with 10% penetration  While in Orange Spain believed that WhatsApp took off after 5% penetration

So what does this mean?



Gadu-Gadu (current market leader in Poland) users sent 300 million messages per day across PC and mobile in 2010.



Ovum estimates at least 500 million daily messages by 2013 – that’s 180 billion per year from one provider (Polish SMS traffic = ~54 billion)



Ovum estimates over 1 trillion messages sent by 2017 in Poland alone – 6.4 trillion in Easter Europe



Use of SMS will be hit first as it is a direct substitution - in 2012 in Eastern Europe $844 million lost due to social messaging, however this will grow to $3.3 billion by 2017.



Market moving to flat SMS to cap reduction and ‘shifting’ revenues to data



Voice will also come under threat, but more gradually, as culturally we move more towards social communication and voice becomes further integrated into such applications

Impact on TV and video 40%

100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

35%

Pay-TV subscribers that already regularly watch Internet TV (Poland) 34%

30%

Total pay-TV subscriptinos Internet TV households

23%

25%

20% 13%

15% 10% 5%

20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17

(000s)

Eastern Europe

Source: Ovum

No change

I have already I am considering I am considering downgraded my downgrading my cancelling my subscription subscription subscription altogether

I have recently upgraded my subscription

I am considering upgrading my subscription

Source: Ovum Consumer Insights



Cord cutting due to OTT competition on the whole has been over-hyped



However, demand for Internet TV services and features are rapidly growing



Consumers are getting used to the TV everywhere concept



Broadcast services can sometimes have the biggest impact



OTT services educate the user and push general market innovation

So what does this mean?



OTT will impact on revenues and future upsell opportunities



We will see an increasing number of content owners going direct to consumer



Content fragmentation across channels and devices



Will push pay-TV providers to greater innovation around their own services



Increase in non-linear viewing, but not the death of linear



Future consolidation towards the large global players

Other media 

Music:  A consolidation of increasingly powerful retail outlets  Trying to compete with the big players is becoming increasingly challenging  The move to subscriptions streaming is good for the consumer, but less so for the musicians  ‘Direct to fan’ is therefore an increasingly common channel



Gaming:  In gaming the opposite is true as low cost to entry = greater fragmentation

 New window of opportunity therefore for new players to enter the market place  Market is polarizing – triple A titles, and small social gaming titles  General shift to free to play for the latter, requires new business models – mainly around in-app purchases  As per the music industry, a gradual shift to the subscription model even for big titles 27

Agenda



The OTT disruptors and consumer trends



The changing supply chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

Content 

Obvious and well-publicised debate around net-neutrality



On-demand content constrains enforcement  Access to multiple sources increases the risk of exposure to inappropriate content.  Time-shifting erodes the concept of a watershed

 Online consumption bypasses standard checks  Multiple touch-points challenge the effective implementation of parental controls.  Today’s OTT services remain largely self-regulated

Monetization – nothing comes for free 

Advertising versus privacy  As our Internet and TV habits become another source of consumer data, who has rights to this data and how will advertising be regulated?

 Social networks are intrinsically involved and have greater insight than the ratings agencies.  If broadcasters and other entities collect “cradle to grave” data assets, it will be important for end users to have a “right to be forgotten.”



In-app purchasing  Gaming is quickly moving to free-to-pay models.  In-app purchasing can sometimes border on gambling or virtually conning people out of their money.

 Again the market is largely self-regulated

Agenda



The OTT disruptors and consumer trends



The changing supply chains



Implications for the communication and media markets



Implications for consumers and regulators



Ovum’s response framework and telco case studies



Key messages

OTT can’t be ignored or blocked out



The impact of OTT can sometimes be over-hyped



But consumers want the features and convenience that OTT services offer – so the long-term impact on the industry is significant



Directly competing can be a difficult, if not impossible task



Telcos / triple play service providers should therefore develop a response by focusing on their strengths:  Compelling portfolio of communication services  Feature rich services via deeply integrated and seamless UI  Enhanced wholesale offerings

Ovum’s response framework Wait and see

Defend

Compete

Partner

Facilitate

• Track the impact • Evaluate technological and commercial options • Block or degrade • Prohibit in Ts &Cs • Lesson the impact / dissipate the advantages of alternative services through innovative pricing • By developing services that are better than OTT alternatives • By developing equivalent OTT applications

• Offer OTT applications / services as part of an overall package • Basic churn reduction, premium feature

• Enable OTT services through open APIs, or wholesale services, e.g. API for SMS, billing, customer care

Not mutually exclusive. 33

Wait and see



It is easy as it doesn’t involve doing anything



It is both customer and regulator friendly



However, it can leave telcos with little time to respond



Although knee-jerk solutions are also not advisable, telcos do need to react faster if they are to remain relevant to their future customers

Protect - blocking



Blocking rarely works long-term. Consumers just don’t like it



In Korea SKT and KT began degrading and blocking the use of KaKaoTalk.



In July 2012 the Korean Communications Commission (KCC) announced basic that would allow operators to charge extra for mobile VoIP traffic or block them.



After facing a customer backlash, LG U+ developed plans that would allow users to use the VoIP services.



Other players then had to follow suit

Protect - bundling ď&#x201A;§

Bundling strategies however works very well and are well liked by consumers 52% customer, 67% revenues (Europe) 14% customer, 22% revenues (4 main European markets)

Plan

100 Plan

300 Plan

600 Plan

Red

Red L

Red XL

Red 4G

Red L 4G

Red XL 4G

Minutes

100

300

600

Flat

SMS

Flat

Data (MB)

100

250

500

1000

2000

4000

2000

4000

8000

Average usage per customer per month (UK)

Source: Vodafone 250 200

Shift the growth strategy from here to here

150

Voice usage (min) SMS (messages)

100

Data usage (MB)

50 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 11/12 11/12 11/12 12/13 12/13 12/13 12/13 13/14

Compete 



OTT – O2’s Tu go 

Initially launched Tu me – an OTT messaging and VoIP app, but with limited success.



Has since ditched Tu me, in favour of Tu go, an app that allows mobile calls to be made from connected devices



Call-out calls are simply deducted from the users allowance

Joyn 

GSMA initiative that provides feature rich features integrated directly on the phone



Took a long time to develop, and app version received bad feedback



No installation required, but network affects take time



Where it has received universal backing – usage is increasing

DT – TV 

Content deal with Sky, but differentiates around the platform.



In a traditionally conservative TV market, has double the premium TV penetration, greater take up of on-demand content than the national average, and 60-70% of sports fans using its interactive features on a regular basis

Partner 

Virgin Media – Netflix  In September VM announced a partnership with Netflix allowing large-screen access to Netflix content to all TiVo customers

 Overall consumer proposition is enhanced as VM offers premium VoD and Netflix brings the long tail as well as some exclusive content



China Unicom & Wechat  A joint SIM card offering between Tencent and Unicom  Four packages ranging from $10 to $25 per month and ranges of free minutes and data usage  Unique features include 50% upgrade in the size of group messaging, personal emoji, 300MB of toll-free Wechat, and access to Tencent’s gaming applications.  1 million users in less than one month

No. of Deals Sub category Total Cable 5 Gaming 2 Unified communications 1 Video service 2 Fixed 8 Gaming 4 Gaming and video 3 Productivity 1 Fixed and Mobile 15 Gaming and video 1 Music 7 Productivity 6 Video service 1 Mobile 125 Gaming 11 Internet search 1 Messaging 50 Messaging and voice 15 Music 32 Payments 1 Productivity 1 Unified communications 8 Video service 4 Voice communications 2 Satellite 2 Video service 2 Grand Total 155

Facilitate



DT’s developer garden  A range of open APIs and wholesale services on offer

 By far the most popular API is currently the SMS API  Developers can choose one of three packages, one which is a basic receive SMS service that is charged at a fixed price of €3 per month, and two send SMS services that are charged at either 6 or 6.8 cents per message sent.

Overall strategy should be a mix of these (DT example) “Deutsche Telekom (and other incumbents) should focus on providing good and rich connectivity services – attractive bundles, rich features through developments such as joyn, and enhanced wholesale communication services for other players.” Rainer Deutschmann, SVP, Digital Business Unit , Deutsche Telekom

Protect

DT has been very successful at protecting mobile messaging revenues through innovating pricing bundles

Facilitate

Delivering open APIs through ‘developer garden.com’

Partner

Compete

Wait and see

Deutsche Telekom sees no value in partnering with any of the OTT messaging players

No direct OTT application, but deploying joyn to maintain value and relevance to the consumer

The OTT market is at a stage where this is no longer an option for DT

Key Messages



OTT may not be impacting revenues today, but growth will be strong over the next few years



Don’t let over-hyped messages make you complacent



Competing with OTT services directly can be difficult, but you need to remain relevant to your consumer



Focus on what you do best



Build in value-add features that will ensure you maintain relevance with your customer base



Look to take advantage of OTT where you can

Recommended Ovum reading



LTE: 2013 and beyond



LTE Case Study: EE



The LTE1800 Opportunity



LTE Case Study: SK Telecom



Mobile Technology Split Forecast: 2013–18



LTE Deployments in Emerging Markets



4G in the US



Sweden: A Highly Competitive LTE Market

 

Smartphone Capability Tracker



Future Strategies for VoLTE Deployment



LTE case study: assessing TeliaSonera's first-mover advantage



Operators Abandon Unlimited Data for LTE



Unlimited Mobile Data Plans Exposed



Unlimited Mobile Voice Plans Exposed

 67

HSPA+ and LTE Deployment Tracker

Lunch

EU Regulatory Update and Single Market Proposals Matthew Howett Practice Leader, Regulation & Policy

Agenda



Setting the scene: a connected continent



NGA, national broadband plans and the Digital Agenda



OTT, net neutrality and the open Internet



Spectrum awards and single market proposals

Setting the scene

“Connected Continent” – building a single market



On 11 September 2013 the EC adopted a set of proposals to complete the single telecoms market and deliver a ‘connected continent’ 

Launched by Commission President Jose Manuel Barroso in his 2013 State of the Union speech



The 2013 Spring European Council conclusions called for the Commission to present "concrete measures to achieve the single market in ICT as early as possible" in time for the October European Council meeting.



Three years of consultations, public events and private meetings to get to this point



A large emphasis on promoting Europe as a digital leader and trying to finally achieve the notion of a single market



Why now? 

Huge growth in demand (especially for data) since last reforms, but this hasn’t been monetised



Revenue is declining in real terms and relative to other markets, market capitalisation is down



Several operators struggling with debt issues



Re-establish Europe as a global leader and boost GDP (0.9%)

Summary of the proposals 

What’s in?

✓

 More coordination of spectrum allocation  Standardised wholesale products (via a Recommendation)  Protection of Open internet: guarantees for net neutrality, innovation and consumer rights.  A single authorization



What’s out?

 No single telecoms regulator  No change to definition of electronic communications services provider  No pan-European spectrum license  No ban on differentiated internet products

 A carrot and stick approach to international roaming  Consumer protection: plain language contracts, with more comparable information, and greater rights to switch provider or contract. 73

NGA, national broadband plans and the Digital Agenda

Digital Agenda progress has been poor 



The EC published its annual update on the Digital Agenda Scoreboard on 12th June 2013. This was the third edition.

Positives:



Basic internet is now virtually everywhere



Fast broadband now reaches half the population - 54% of EU citizens have broadband available at speeds greater than 30 Mbps.

Challenges ahead: 

Lack of investment in highspeed broadband



Low uptake of highspeed broadband - Only 2% of homes have ultrafast broadband subscriptions (above 100 Mbps), far from the EU's 2020 target of 50%



50% EU citizens have no or low computer skills

The Commission’s single market proposals are designed to address the issues of the single market and perceived lack of investment

Progress against national broadband plans in Western Europe

Progress against national broadband plans in Eastern Europe

Commission’s proposals to cut broadband installation costs 

On 26 March 2013, the EC announced “Less digging = more broadband” – a proposed regulation on measures to reduce the cost of deploying high-speed broadband networks (fixed and mobile) 



May cut the cost of roll out by 30% (a €4060bn saving) given that civil engineering can represent 70-80% of the cost



Belief is that rollout is currently slowed down by a patchwork of rules and administrative practices at national and sub-national levels

Four main elements: 1.

New or renovated buildings should be high speed broadband ‘ready’

Opening passive infrastructure on fair and reasonable terms (even to mobile)

Better coordination of civil works particularly with utility companies

Simplified and quicker approval for mast/antenna deployment

Not only restricted to telecoms operators



any owner of physical infrastructures, such as electricity, gas, water and sewage, heating and transport services, suitable to host electronic communications network elements

Builds on best practice elsewhere: 

LI and PT: the re-use of existing physical infrastructures in



BE and DE: transparency of existing infrastructure



FI and SE: co-deployment



NL and PL: the streamlining of rights of way and administrative procedures



SP and FR: high-speed broadband infrastructure in new buildings

… are not overly prescriptive 

The proposal enables commercial negotiations for access to the physical infrastructure, without mandating access at pre-defined or cost-oriented terms and conditions. © Copyright Ovum. All rights reserved. Ovum is an Informa business.

Overview of regulatory obligations for NGA

Country

Date of latest market analysis

Sub-loop unbundling (SLU)

Duct access obligation

Fiber bitstream access

Unbundling of fiber

Dark fiber access

France

June 2011

Yes (according to a BU-LRIC model)

Yes

Germany

January 2011

Yes (cost-oriented)

Yes (based on current costs)

Yes (ex-post price control only)

Yes (only where cable duct access is not possible)

Italy

January 2012

Yes (cost-oriented)

Yes (subject to a price control)

Yes (cost-oriented)

Spain

January 2009

Yes (without offer)

Yes

No (imposed on products up to 30Mbps)

Yes (cost-oriented)

October 2010

Yes (cost-based)

Yes (VULA is not subject to a charge control)

Belgium

July 2011

No (except where VDSL is not deployed)

Finland

December 2012

Yes (not subject to a price control)

Yes (cost-oriented)

Netherlands

December 2011 (market 4) December 2012 (market 5)

Yes

Yes (based on embedded direct costs (EDC))

Yes (cost-based and adjusted to RPI)

Norway

April 2009

Yes (for FTTH)

Yes (cost-oriented)

Sweden

May 2010

Yes (cost-oriented)

Recommendation on costing methodologies and nondiscrimination 



The Recommendation on Costing Methodologies and Non-Discrimination is the second element of the package 

Overshadowed by the roaming measures



Aims to increase certainty for investors, to increase their investment levels, and reduce divergences between regulators.



Comes as a result of inconsistencies identified under Article 7 notifications

Key elements of the proposal include: 

further harmonising and stablising costs (mention of long-term price stability) that incumbent operators may charge for giving others access to their existing copper networks; and



ensuring that access seekers have truly equivalent access to networks through ex-ante regulatory tests.



Where such competitive constraints and non-discrimination are ensured, the prices for wholesale access to fibre based networks would be determined by the market rather than regulators, meaning less red tape for operators.



Use of BU-LRIC+ for fibre access products, current cost accounting for passive network elements

OTT, net neutrality and the open Internet

A reminder of Ovum’s OTT Response Strategy Framework Compete

Partner

Protect If you can’t beat them, join them? Wait and see

But where will regulators draw the line?

A total lack of traffic management

Best efforts: a lack of traffic management, no charging for tiered QoS

Traffic management only applied during periods of high congestion

Complete freedom in use of traffic management techniques

Priority is given to most vulnerable types of services – voice, video streaming

Priority is given to Throttling/degrading some service of some providers’ content or types of traffic e.g. applications over P2P others

Blocking rivals’ content or applications e.g. IPTV service

Key questions that must be answered



What forms of discrimination are fair and reasonable?



In what instances might intervention by the regulator be justified?



What form of intervention, if any, would be appropriate?

What is the situation in Europe today? UK

Strictly imposed net neutrality Rules/principles have been implemented

Experimentation with new business models allowed.

Consultation/debate but no outcome yet

Ofcom permits experimentation with new business models that rely on certain forms of traffic management, so that the “best-efforts” Internet is protected.

Germany

Through a transparency obligation, customers should be made aware of average speeds, the impact of any traffic management on specific types of service, and whether any services are blocked.

There has been no specific policy developed yet. The German Parliament published a paper which stated that ministers believed existing competition will ensure the neutral transmission of data on the Internet and other new media. They committed to observing the situation closely and, if necessary, taking countermeasures to preserve net neutrality.

Netherlands The Senate of the Netherlands adopted a new Telecommunications Act to put net neutrality into law, making the country the first in Europe to do so.

It was recommended that a vote take place to develop a position; however, the vote was postponed several times.

The new law specifies that no service provider can impose fees or special terms and conditions for any internet service, nor can they determine what sites end users can visit. However, court-ordered site blocking can still take place.

Spain

Italy France

There has been no policy developed yet. The CMT initially discussed net neutrality in 2007 in an NGA consultation. The CMT was interested in the implications that ex-ante regulation on net neutrality could have on wholesale and retail broadband access prices.

Non-binding recommendations. ARCEP published 10 proposals including freedom and quality of Internet access, nondiscrimination between Internet data streams, a framework to govern traffic management, and increased transparency for end users.

AGCOM has not intervened with regulatory measures. The NRA completed a consultation to seek stakeholders’ views. It concluded that traffic management doesn’t represent in itself a form of market failure, and intervention has to be considered to ensure more transparency towards end users. The consultation also endorsed the monitoring of Internet service pricing and levels of competition.

France has become one to watch Event

What happened?

Why?

The outcome

Free/Google dispute – January 2013

Free (France’s second-largest ISP) upgraded the software on the modems it supplies to customers which blocked online ads by default.

The move was aimed chiefly at Google to damage their advertising-driven business model but also to further damage the brand which is already under pressure in France given its tax status

The French government intervened and put pressure on Free to remove the ad block, which it did on 8 January 2013. A roundtable was held on 15 January 2013.

Free is also suspected of deliberately throttling its subscribers’ connection to YouTube during peak hours

Fleur Pellerin, France’s digital minister appeared to come out in support of Free, saying that there are real questions over how OTT players contribute to the financing of networks, although said what Free did was “not acceptable”

Orange/Google – January 2013

Reportedly FT/Orange CEO Stephane Richard has squeezed a deal out of Google which sees it paying to deliver traffic in Africa

Details are few and far between, but it seems they have come to an arrangement whereby Google is paying more than the usual costs of peering

Most likely it’s a FT content delivery network (CDN) arrangement given the quality of the broadband infrastructure in this part of Africa

French Parliament – March 2013

France’s Minister of the Digital Economy, Fleur Pellerin adopted a report from the CNN (National Digital Council), which could enshrine net neutrality in national law

ARCEP has been working actively on the issue of net neutrality since 2010.

What has been proposed has been described as toothless, especially since there are no sanctions if provisions are violated. It would also require legislation which has so far been problematic

ARCEP has continued with its own approach and is focused on monitoring the experience of fixed Internet access which will be performed by the operators

Focuses on overall throughput, general web browsing, streaming video and P2P traffic.

ARCEP – March 2013

Free generally rejects the idea of charging its customers more – especially given that its business is generally a low cost one

After publishing the ‘10 proposals’ things went quiet until the Free and Google disputes earlier this year.

Users will also be able to submit their own monitoring to ARCEP. Results. published quarterly from December 2013

Measures within the current EU framework 

Article 8(4)(g) of the Framework Directive now includes an objective for regulators to promote the interests of citizens of the EU by  "promoting the ability of end-users to access and distribute information or run applications and services of their choice”



Articles 20 & 21 of the Universal Service Directive strengthens the minimum contractual protections for consumers and improves transparency around traffic management techniques used  “Consumer transparency of traffic management is ‘non-negotiable’”



Article 22(3) of the Universal Service Directive sets out a new provision which enables regulators to impose minimum quality of service obligations on providers.

Single market proposals



End discriminatory blocking and throttling



Competition on basis of differentiated products allowed provided that the quality of the open Internet is not impaired  Speed  Quality of service



What’s not clear is the quality expectation of the normal Internet  NRAs to monitor and may impose minimum quality standards  A step closer to regulating the Internet?

Spectrum awards and recent proposals

800MHz awards: spectrum value by country

2.6GHz awards: spectrum value by country

1800MHz awards: spectrum value by country

The problem as seen by the Commission



Licensed and unlicensed spectrum are essential inputs to the EU electronic communications market



The way national spectrum processes operate make it difficult to implement a panEuropean mobile business strategy 



Only 12 Member States have released the 800MHz band to operators 

The current allocations are fragmented and use of spectrum in every Member State is subject to the rules applying in that Member State

This is slowing LTE roll out across the EU



Only 5 member states have assigned all of the 1025MHz of EU harmonised spectrum for mobile broadband at the end of 2012



The Commission is worried about two things 

The current processes are slowing things down with a consequential impact on the economy



The effects of gaining sufficient scale for Europe to be high up device manufacturers agendas

Actions proposed by the Commission



Measures that promote harmonisation of spectrum inputs  Defining common regulatory principles for conditions on the use of spectrum for mobile broadband (i.e. IMT bands) and RLAN  Also for bands that may be harmonised in the near future (e.g. 700MHz, 1.5GHz and 3.8 – 4.2GHz)



Giving the Commission powers (implementing acts) to harmonise  Spectrum availability  The timing of assignments (common timetable across the EU)  Duration of rights of use for spectrum (including minimum duration and synchronised expiry/renewal)



Making it easier to deploy low power wireless broadband access and small cell networks



Spectrum management



Management of spectrum at a national level should not prevent other Member States from using radio spectrum from complying with their obligations for harmonised bands  Seeking a coordination mechanism on equitable access to radio spectrum  Want outcomes that are consistent and enforceable



Timetables for the granting or reassignment of rights of use or renewal of radio spectrum harmonised for wireless broadband should  The possibility to release any new spectrum bands harmonised for wireless broadband  Take account of the need for predictable investment environment and the period for amortisation of investments under competitive conditions

General authorisation



The Commission is proposal a sort of “Article 7” process for radio spectrum used for wireless broadband  Member States should make their proposals available to the Commission and other Member States  Should cover a lot of items including rights of use, duration, fees, compensation for clearance of existing users, coverage conditions, wholesale/roaming requirements, possible shared use of spectrum, technology performance requirements



NRAs to allow small cell / RLAN wireless access points under GA regime  Particularly concerned that planning rules don’t get in the way

In summary



A balanced set of proposals



Designed to address the perception that Europe is lagging behind the rest of the world



As often is the case, the devil will be in the detail



Next steps: Council of Ministers and Parliament.

Top 5 Enterprise Tends Evan Kirchheimer Practice Leader, Enterprise

Agenda



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

C & E. Europe in multinational corporate services

“A-End”

“B-End”

CEE corporates directly contracting for services

CEE corporates using services contracted for elsewhere

“Service Delivery” CEE as a corporate services delivery base

Telco service evolution in ICT Cloud services Infrastructure as a Service

Bandwidth & Connectivity MPLS ISDN Local access DSL Local Ethernet access Internet local access

100

Managed Networks IP VPN Managed Ethernet inc VPLS ISDN management Managed WAN Direct Internet Access Managed CPE

Platform as a Service

Hosting & Integration Data centers and server management Data storage Hosted PBX and VAS International roaming/remote access

Software as a Service

Applications & IT VoIP/IP telephony Conferencing Unified communication & collaboration Enterprise resource planning Security Managed email Third party applications services

Global ICT Third party contracts End-to-end SLAs

IT Service Management Professional services Contact center management Mobile VAS

Examples of MNC contracts Telco

Client

Geog signed

Geog delivered

Service

Interoute

GTS Hungary

Hungary

Mobility

Starbev

Poland

EMEA

Bandwidth

Orange

BNP Paribas

Poland

Bandwidth

BTGS

Pepsico

Russia

WAN

B-end Orange

St Gobain

France

Poland

WAN

Orange

ABB

Switz.

Russia

WAN

Service center

101

Telefonica

Retail

Germany

Europe

Managed DC and cloud

Telefonica

Europe

Managed voice

Agenda

102



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

Is BYOD an unstoppable revolution? To some degree. 

There is a great deal of hype about BYOD. “Employees bring devices whether you like it or not” “BYOD is what the millennial generation expects” “BYOD is inevitable”



Some predictions come from biased sources. 

“BYOD is unstoppable. Employees have high expectations for these tools. Smart companies must build apps.” - Says Matt McLarty, vice president of client solutions for Layer 7 Technologies, a provider of API management solutions (http://gigaom.com/2012/04/08/byod-is-unstoppable-smart-companies-must-build-apps/)

 103

Rates of BYOD – less mature tends to mean more BYOD U8. Do you ever use your own smartphone or tablet for work (e.g. accessing corporate email, data or apps?) % of respondents who own a smartphone and/or tablet

Yes

100% 90% 80% 70%

Global average 62.3%

60% 50% 40% 30% 20% 10%

In general, there is a higher rate of BYOD in “high-growth” markets compared to the more mature IT markets. This tallies with other research and points to differences in cultural attitudes and drivers, as well as less developed enterprise mobility environments and policies. Source UCC: User Survey : N = 1038

104

Reasonable support for employee-owned devices D19. BYOD support - Please indicate your plans to support employee-owned smartphones and tablets. 46%

Support now 27%

20%

Expect to support in 12 months

24%

• Just over a quarter of companies support any employee-owned smartphone or tablet.

Expect to support in 24 months

13%

• This number is expected to increase to 73% and 64% respectively in 24 months.

27%

No plans to support

37%

10%

• Almost half of companies in the survey support employee-owned smartphones if they are from a corporate approved list.

15% 20% 25% 30% 35% Global respondents N= 1326

40%

45%

50%

• This suggests the tendency going forward is to support any smartphone or tablet.

Support for corporate approved employee-owned smartphones/tablets Support for any employee-owned smartphones/tablets

Source UCC: Decisionmaker Survey : N = 1300

105

But poor UCC applications support on BYOD D20. Device support - Which UCC applications do you support on the following devices? Check all that apply 63% Instant messaging and presence

23% 12%

• UCC applications support is much greater for corporateowned devices.

41% IP-PBX/UC client

15% 5% 42%

Web and video conferencing

14% 5%

21% 11% 32%

Enterprise social software (e.g. Yammer, WebEx Social)

14% 6%

Cloud-based business and productivity applications (e.g. Microsoft 365, custom business applications)

32% 13%

5% 0%

20% 30% 40% 50% Global respondents N= 1326 Support for corporate-owned smartphones/tablets Support for corporate approved employee-owned smartphones/tablets Support for any employee-owned smartphones/tablets

Source UCC: Decisionmaker Survey : N = 1300

106

• Only 5% of UCC applications, other than IP, are supported on any employeeowned device.

48%

Consumer applications (e.g. Skype, Twitter, Facebook)

10%

60%

70%

BYOD begs the management question.



The CIO of a large emerging market mining conglomerate:  “We just made a laissez faire policy. We will work with whatever devices employees want to work with.”  “[This] helps with the problem of picking winners - the BYOD approach means we don't have to try and keep up with new technologies …Our end users can do more interesting things in the apps environment.”  “We pay the core cost plus network connection charge if you want an iPad.”

BYOD – but costs paid for by corporate.

 User demand 107

Users innovate more than central IT.

A focus on applications, not device (laissez-faire).

BYOD as a trigger for discussion New applications

Network implications

What are your organisationâ&#x20AC;&#x2122;s main mobility priorities? Cost management Security

International roaming costs Customer support Remote access for staff working off site Billing & analysis tools

Extremely important Important Of low importance

Exploiting UC and collaboration potential International contracts for mobile services Device management Service management & SLAs On-site mobility Mobilising data applications Mobile voice and integration with the corporate PBX

0% 108

Managed mobility is about control Which aspects of a managed mobility service do you consider most important? Please put the following in order of importance

Billing and usage analysis tools Management of devices Management of contracts with mobile operators Professional services/consulting Global help desk Self service portal for endusers 1.00 Least important

109

2.00

3.00

4.00

5.00

6.00 Most important

In summary – does your supplier support this vision?

THE CONTROL PHASE



Cost containment

THE OPPORTUNITY PHASE



 billing analysis  international roaming



 Logistics



 Across all devices



Device management  Security

Contract management  Supplier rationalisation

Unified communications

Remote access  Including laptops



Biz. app mobilization  CRM  Industry-specific

 BI/dashboards

 SLAs

110

Agenda

111



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

Key applications and verticals â&#x20AC;&#x201C; B2B vs. B2B2C B2B Manufacturing

Logistics

Increasing involvement of end user

B2B2C

Supply chain monitoring

Delivery tracking

Fleet and asset management

Whereâ&#x20AC;&#x2122;s my parcel?

Smart cars: vehicle telemetry, entertainment,

Automotive Vehicle telematics

emergency service support, fuel efficiency monitoring PAYD insurance,

Insurance

health insurance

Healthcare

Home and consumer electronics Utilities

Health asset management

Personal health monitoring, personal safety, drug compliance

Smart homes: appliance monitoring and diagnostics, home security

Domotics: consumer smart-home services E-readers, digital photo frames

Smart grid

Smart metering

Consumer energy services

Public surveillance,

Government

road pricing

Smart cities

Digital signage

Retail Point-of-sale

115

Agenda

117



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

Enterprises view UCC strategically, and have budgets to invest This is good news, but will also bring additional pressure on IT decision-makers to measure and demonstrate positive results from UCC investments. D5a. Do you have a strategic plan to evaluate and implement some, most, or all aspects of unified communications and collaboration (UCC)?

19%

20%

D5b. Do you have a supporting budget to evaluate and implement some, most, or all aspects of unified communications and collaboration (UCC)?

22%

16%

27%

29%

32%

Source UCC: Decisionmaker Survey : N = 1300

118

35%

All aspects of UC&C Most aspects of UC&C Some aspects of UC&C No aspects of UC

Research conducted on behalf of and in conjunction with Dimension Data

UCC is firmly linked to business process improvement D23. Which two statements do you agree with most? (Please choose top two.) “My investment in UCC is based on….” Business process improvement

397

Supporting more flexible working patterns for…

350

Future calculations of increased productivity

308

Readying the business to increase its agility

302

Direct savings - reducing current spend levels…

292

Directly improving sales or service performance

251

Finding savings in another part of the IT budget…

228

Supporting key executives with new technology

222

Making savings for operational units/LOB

185

Retaining and attracting staff

138 0

100 150 200 250 300 350 400 450

It is highly significant that UCC is linked first and foremost to business process improvement and enablement of flexible working and productivity, as well as business agility – a real surprise. Yet firms are Research conducted on not measuring such improvements and are not yet rolling out applications to facilitate them. Source UCC: Decisionmaker Survey : N = 1300

119

Standard UC, mobile UC and social are priorities D12. Which of the following do you have now, or expect to have in the future? Telephony (IP-PBX)

75%

Telephony (Microsoft Lync voice)

29%

16%

Instant messaging and presence

47%

66%

Standard UC (unified messaging, presence, softphone etc.)

12%

40%

UC client on smartphones and tablets (softphone, presence, video)

22%

36%

21%

Audio/web conferencing

31%

Room based video conferencing or telepresence

14%

Consumer applications (e.g. Skype, Twitter, Facebook) 27%

Team workspaces and content tools (e.g. SharePoint)

39% 0%

Expect to have in 12 months

10%

20%

9% 15%

20%

26% 43%

35%

30% 40% 50% 60% 70% Global respondents N= 1326

Expect to have in 24 months

16%

30%

10% 17%

42%

16%

52%

Enterprise social software (e.g. Yammer, WebEx Social)

28%

11%

45%

15% 26%

16%

17%

12%

62%

Personal video (e.g. video clients, personal video terminals)

Have now

10% 4% 11%

80%

90%

100%

No plans

• As we would expect, adoption of voice telephony is close to 100% if we take PBX and Lync voice together, though we acknowledge that Lync voice is very likely to be overstated in the survey. • IM and audio/web conferencing also see high adoption. Lowest adoption today is with personal video Research conducted on behalf of and enterprise social software, though these are still fairly high at 31% and 27%. Source UCC: Decisionmaker Survey : N = 1300

120

We are moving to a more managed, more private-cloud world D17. If you are considering new investment in the following in the next 24 months, which of the following delivery methods would you seriously consider? Check all that apply. 38% Telephony (IP-PBX)

52%

21%

30% Telephony (Microsoft Lync voice)

31%

13%

33% Instant messaging and presence 12%

24% 32%

Standard UC (unified messaging, presence, softphone etc.)

28%

12%

46%

48%

49%

29% Audio/ web conferencing 10%

30% Team workspaces and content tools (e.g. SharePoint) 14% 0%

54%

21%

29%

50%

10% 20% 30% 40% 50% Global respondents N= variable from 610 to 1033

Premise-based and managed internally

Premise-based and managed by third party

Dedicated hosted or private cloud

Multi-tenant hosted or public cloud

60%

Research conducted on behalf of and in conjunction with Dimension Data

Source UCC: Decisionmaker Survey : N = 1300

121

Agenda

122



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

Security, data governance and public internet the biggest barriers â&#x20AC;&#x201C; easily allayed? How do you rate the main barriers to the adoption of cloud services? Security Data governance Use of public internet Loss of control SLAs Lack of standards Ability to evaluate performance of providers Lack of industry roadmap Difficulty with adoption strategy

0% Source: Ovum

10%

20%

30%

40%

50%

Most important barrier Significant barrier

60%

70%

Slight barrier

80%

90%

100%

No barrier

Source: Ovum: Large Enterprise Cloud Survey 2012

123

Telcos improve rating as suppliers Who would you consider are credible supplier types for the following managed services? 80.0% April 2010 survey: only 37% of corporates would consider telcos for cloud computing

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

Managed network

Managed ICT infra. Managed communications Cloud computing Cloud communications (servers, desktop, storage) (IP telephony, UC) (storage, servers, processing) (IP telephony, UC)

Telcos (e.g. AT&T, BT, Orange or C&WW)

IT Service Providers and SIs (e.g. Accenture, IBM)

Network equipment vendors (e.g. Alcatel-Lucent)

Infrastructure integrators (e.g. Dimension Data)

Web-based providers (e.g. Amazon, Google)

Source: Ovum: Large Enterprise Cloud Survey 2012

124

Many firms remain cloud ‘adolescents’ Mature Established, complex cloud ecosystem.

Adolescent Standards developed and solutions implemented to address large corporate concerns over security and reliability.

Cloud becomes the delivery method of choice for a range of SME workloads, and for those within larger enterprises, and is incorporated within large corporate IT governance structures.

Continued takeup by SMEs but broader and deeper adoption by large enterprises as proof points grow, cloud providers launch broader services and aggregation platforms develop for a wide range of services.

Early SMEs and lower-risk workloads within larger enterprises.

125

‘You are here’

% of relevant ICT services

Further adoption of private cloud.

Agenda

126



Introduction – Eastern Europe in Global Perspective



Consumerization and Managed Mobility



M2M



Unified Communications & Collaboration



Cloud Services



SME Strategies

It is clear that SMEs prefer single-supplier sourcing

127

Telcos are highly trusted suppliers

128

Thereâ&#x20AC;&#x2122;s growth in mobile, but even more in IT

129

8 tactics for targeting SMEs (1)

130

Austerity plans

Start-up support

Tariff agility

The IT channel

8 tactics for targeting SMEs (2)

131

Cloud

UC&C

International SME

Business to consumer

Closing Remarks Richard Mahony Global Research & Analysis Director

132

Thank you and goodbye!

133

Biography

134

About me: Steven Hartley, Practice Leader, Industry Communications & Broadband

Lead a global team of analysts providing strategic advice to the world’s leading operators and vendors. Over 15 years’ experience in fixed and wireless communication market analysis. Areas of focus include market forecasting; mobile broadband; next generation migration and service strategies; and femtocells. Have spoken at leading industry events, including the Mobile World Congress, and regularly appears in the media.

135

Topic Focus  Market forecasting  Next generation service strategies  Mobile broadband  Operator strategies

steven.hartley@ovum.com T: +44 (0) 20 7551 9147 M: +44 (0) 7884 336 439

About me: Michael Philpott, Practice Leader, Consumer

Lead a global team of analysts and responsible for all of Ovum’s consumer research. Over 13 years with Ovum in both a consulting and analyst capacity.

Topic Focus  Consumer insights  Maximising triple-play ARPU  Telco / multi-screen TV strategies

Four years with BT Laboratories, designing nextgeneration access networks. Areas of focus include consumer insights, maximising fixed-ARPU, telco-TV and connected home strategies.

 Connected home

michael.philpott@ovum.com T: +44 (0) 20 7551 9245 M: +44 (0) 7799 810 951

136

About me: Matthew Howett, Practice Leader, Regulation & Policy

Leads and manages Ovum's regulatory advisory service. During his 7 years at Ovum he has developed expert knowledge of regulatory frameworks for telecommunications and their practical implementation around the world.  Regular contributor to the international press and broadcast media on regulation and policy issues given his ability to distil often complex topics in a clear and concise way. Has spoken at a number of recent high profile events in Europe, Asia and Latin America on key policy issues such as net neutrality and spectrum awards. 137

Topic Focus  Spectrum policy  Broadband policy  EU regulatory framework  Net neutrality

matthew.howett@ovum.com T: +44 (0) 20 7551 9157 M: +44 (0) 7900 365 304

About me: Evan Kirchheimer, Practice Leader, Enterprise

Lead a global team of analysts and responsible for all of Ovum’s enterprise telecoms research.

Topic Focus  SME insights

Over 14 years with Ovum in both a consulting and analyst capacity.

Previously with Nortel and Uniden as part of enterprise PBX/UC solution development teams. Areas of focus include: - enterprise mobility - unified communications - ICT services/service evolution - contact center and customer experience

138

 Enterprise UC&C strategies  Enterprise mobility and procurement  M2M

evan.kirchheimer@ovum.com T: +44 (0) 20 7551 9385