Mobile Broadband Will Deliver Key Global Telecom Revenue Growth Through 2016

By Tony Rizzo January 03, 2013

Recently we provided some insights into what AT&T Wireless is up to relative to delivering new mobile data services capabilities. AT&T is making major infrastructure and services investments in order to ensure it has both the capacity to deliver mobile services, and the right mix of mobile services to entice its subscribers to keep spending with it. Mobile broadband remains AT&T's central strategy for growth for the next decade. Intuitively we all know this is the only path AT&T and the rest of the global telecom operators can pursue in order to build their businesses.

It should come as absolutely no surprise that in a newly released research report Ovum finds that mobile broadband will be the largest contributor to telecom operator revenue generation through at least 2016. Ovum's report forecasts that global mobile broadband growth will be in the range of 19.2 percent annually and as a result will generate at least $122.9 billion in revenue between 2013 and 2016. Though mobile broadband will be the single largest revenue contributor, Ovum views and characterizes this mobile broadband contribution as "incremental" revenue growth. 


Image via Shutterstock

We don't agree with that perspective - it will most certainly prove to be of far greater impact to all the telcos. The real issue is whether or not mobile broadband growth will be enough to "grow the business" or if it will merely replace other revenue sources - in particular analog voice and landline services and messaging revenue - that will be lost as the world evolves globally into an entirely digital domain.

The Ovum report also highlights other segments that will deliver double-digit revenue growth over the next five years. These segments include public cloud services, enterprise Ethernet, IPTV, and managed/hosted IP voice. These areas of growth aren't surprising either, yet Ovum does confirm that expectations here will be met not only in terms of revenue generation for the telcos but also in terms of what both consumers and enterprises will be generating demand for. The AT&T outlook we referenced earlier points in the same exact direction.

According to Ovum, global telecom operator revenue exceeded $2 trillion in 2012, Ovum also notes that 60 percent of that revenue - $1.2 trillion - went to the mobile operators. Ovum believes that some market segments will deliver above-average growth and significant incremental revenue over the next five years at each level of the value chain. However, this above average growth won't grow the industry much beyond today's $2 trillion. Due to the ongoing and growing loss of older analog and messaging revenue streams, overall global telco revenue growth is expected to be minimal.

Ovum's chief forecaster John Lively suggests that, “The recovery from the 2009 recession has been weak, and the ongoing global fiscal crisis continues to present a risk to the telecom industry. Over the next 3 to 4 years, both fixed and mobile operators will face the same fundamental challenge: to increase new sources of revenue fast enough to offset the decline in mature services.”

For the infrastructure vendors Ovum recommends that, in order to grow revenue faster than the current industry average, vendors must position themselves to play in several high-potential product segments, such as converged packet optical, ROADMs, 40G/100G networking gear, carrier Wi-Fi, and network-related services. Again, this reflects exactly what AT&T is now focusing its investments on.

On the consumer side, the telcos will find themselves competing with new "Over the Top" (OTT) players - such as Skype - as well as traditional competitors. To meet this challenge, Ovum recommends adopting consumer-services marketing approaches. In truth, most telcos already do this, but they need to become far more aggressive in head on competition with the OTT players.

The bottom line here is that mobile data - and by this we mean "fast" mobile data that includes advanced LTE services - will be the engine for overall telecom growth. No surprises here!




Edited by Brooke Neuman

TechZone360 Senior Editor

SHARE THIS ARTICLE
Related Articles

Congress Passes Consumer Privacy Rollback

By: Paula Bernier    3/29/2017

Yesterday, the House of Representatives voted 215-205 to eliminate privacy rules aimed at protecting the browsing histories and data of U.S. broadband…

Read More

How Enhanced Connectivity Benefits Analytics and Big Data

By: Lindsey Patterson    3/29/2017

Potential benefits of data analysis include enhanced marketing potential, the ability to improve overall efficiency as well as the means to track and …

Read More

Think IT Can Handle Security On Its Own? Think Again

By: Special Guest    3/28/2017

One of the major fears of any IT department is losing control - of projects, of users, of applications. Yet, even with the best technology solutions, …

Read More

Optane: Intel Builds a Supercharger for PCs

By: Rob Enderle    3/28/2017

Optane is Intel's brand name for 3D XPoint memory, a brand-new memory architecture which has speed a bit slower than DRAM but otherwise performs like …

Read More

IBM's Cloud/Data/AI Trinity Vision

By: Doug Mohney    3/27/2017

If you want to know what the future of IT looks like, it's always good to look to IBM. The company pioneered and championed PCs, the Internet, open so…

Read More