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1、Megatrends in telecommunications How service providers around the world are taking control of an industry in transition.Communications technology is woven into the fabric of peoples lives and work all over the globe.While this generates enormous demand for connectivity-based services,customer expect
2、ations of speed,cost and value are at the same time putting unprecedented pressure on service providers businesses.New technologies and approaches are disrupting long-established business models and the fight to win and retain subscribers gets fiercer every day.Service providers are looking for ways
3、 to transform their operations so they can launch new services faster and more cost-efficiently.Theyve recognized the need to do business in“digital time”using technologies,processes and practices in faster,bolder and more intelligent ways that make better use of each moment.The shift to digital tim
4、e is just one of the major changes unfolding across the telecommunications industry.To better understand whats happening and how service providers are responding,Nokia worked with global management consulting firm Oliver Wyman to uncover and analyze the best practices and success stories of service
5、providers worldwide.Disruption and new demands are driving the strategic choices of service providers I N T R O D U C T I O NFocusing on the challenges of business growth,operational efficiency,customer experience and innovation,the study identified three“megatrends”common across the industry,in eve
6、ry region and service provider segment:How service providers are tackling the challengesI N T R O D U C T I O NSearching for growthIn increasingly mature and competitive markets,service providers are searching for new sources of revenue to bolster the top line.M E G A T R E N D 1Optimizing the tradi
7、tional telcoService providers are taking steps to make their traditional offerings and operations more streamlined,efficient and cost-effective.M E G A T R E N D 2Taking a new look at the industryAs more outside players enter the industry,incumbent service providers are taking a fresh look at how th
8、ey can differentiate themselves.M E G A T R E N D 3M E G A T R E N D 1Service providers are finding it increasingly difficult to grow the top line.In mature markets,the internet and mobile markets are nearly saturated:as subscriber growth slows and prices fall,many service providers are focused on a
9、cquiring(and re-acquiring)customers from their competitors.And while emerging markets have enormous growth potential,expansion is focused primarily on segments with lower average revenue per user(ARPU).As a result,only the most creative service providers are making headway by tapping into new source
10、s of revenue and engaging their customers in unique and non-traditional ways.How service providers are seeking growthGoing beyond connectivityAs basic connectivity continues to be commoditized and subject to significant pricing pressure,many of the service providers surveyed are exploring opportunit
11、ies to diversify their businesses.For some,as much as 50%of their revenues come from non-connectivity services,which range from bundling telecoms subscriptions with utility services to providing platforms for e-commerce and app creation.Time will tell if these service providers have made wise invest
12、ments or jumped in at the top of a technology cycle.Service providers seeking growth in these ways are placing a greater focus on creating partnerships with a variety of third parties:mobile payment platforms,content providers,cloud providers and more.They are also using different ways to develop th
13、eir portfolios of non-traditional services,including organic growth,acquisitions,and strategic investments and partnerships.Searching for growth20%50%of revenues for some service providers now come from non-traditional services.Examples include Singapore Telecommunications Limited,AT&T,SK Telecom an
14、d SoftBank Group.M E G A T R E N D 1Increasing their focus on B2BDue to the brutal competition for consumer subscribers,service providers can no longer rely solely on that segment of the market for profitability and growth.In mature markets especially,many service providers are focused on expanding
15、their business-to-business(B2B)offerings for enterprises and for some,B2B has become their main margin contributor.Successful B2B growth strategies require active collaboration with partners and open ecosystems,especially if service providers are to leverage the possibilities of coming technologies
16、like 5G(such as the ability to provide 5G“slices”that can be used by third parties in their own service offerings).Taking on a larger role in content and mediaWith the emergence of over-the-top(OTT)offerings and streaming content,classical media distribution has plateaued.While many service provider
17、s see the aggregation,advertising and sell-through of content(e.g.,TV,movies,sports)as a key potential area for growth,none yet has been able to realize significant profits through these investments(and the stock markets have penalized those that have tried).Access to and an understanding of a broad
18、 range of audiences will be critical to any successful media venture.M E G A T R E N D 1Digital life is a growth engine for SingtelSingtel has become less dependent on legacy revenue streams by building up a strong suite of capabilities in OTT video,digital advertising and data analytics.In doing so
19、,the company increased its revenues by four percent from 2014 to 2018.M I C R O C A S E S T U D YInnovating in low-ARPU marketsWhere average revenues per user are low,service providers are tapping into their creativity to grow profitably:for example,by augmenting their services with a comprehensive
20、mobile payments infrastructure or developing apps that provide farmers with weather and pesticide information.In many cases,these approaches to growth in low-ARPU markets represent a specific subset of“growth beyond connectivity”strategies.Enhancing the customer experienceMany service providers are
21、starting to embrace a“customer-in”way of thinking rather than the traditional“network-out”approach looking for holistic ways to remove friction points from every stage of the customer journey.Doing so requires an in-depth understanding of customers wants and needs,as well as gaining the capability t
22、o optimize,streamline and simplify not only single interactions but entire end-to-end processes.of overall revenue growth for Kenyas Safaricom comes from its M-Pesa mobile money transfer and financing service.40%M E G A T R E N D 1M E G A T R E N D 2Through online-only distribution and lean IT syste
23、ms,Iliad Free operates at half the cost structure of typical incumbents.50%New technologies,software and business approaches are giving service providers the opportunity to finely tune or even dramatically change their traditional operations,making their existing businesses more efficient and cost-e
24、ffective.How service providers are optimizing their operationsApplying stringent cost controls to sustain marginsSustaining a healthy balance sheet through diligent cost management is critical to staying flexible when rolling out new technologies or undergoing mergers and acquisitions.Service provid
25、ers around the world are using digitization and automation of legacy systems and processes to drive their cost-reduction initiatives.This is especially true among those that already are profitability leaders,making the adoption of automation critically important for those lagging behind and looking
26、to keep pace.Optimizing the traditional telcoM E G A T R E N D 2Substituting fixed-wireless access for fixed broadbandProviding access to high-speed broadband is a must,but deploying ubiquitous fiber is costly and slow.With new mobile technologies such as 5G offering significantly improved performan
27、ce,some service providers are successfully leveraging fixed-wireless access to extend their network coverage at a fraction of the cost of fixed lines or to replace the use of fixed lines entirely.Unlocking value through structural separationTo secure the capital expenses needed for core network inve
28、stments,many service providers are pursuing asset-light business models.For example,separating towers and other passive infrastructure into dedicated entities or selling these assets(whether partially or completely)can be an effective means to unlock cash and increase debt leverage on“real estate”ty
29、pe assets.Some service providers are also looking at divesting or spinning off their active networks into dedicated network companies or divisions.M E G A T R E N D 1M E G A T R E N D 2By migrating customers to lower priced,higher margin fixed-wireless access,Spark NZ has reduced its gross annual ac
30、cess costs to an equivalent of$34.6million.$NZ 51MLMT goes where fixed operators cantIn Latvias highly competitive broadband market,LMT competes by being a mobile-only operator with a heavy focus on fixed-wireless access.In addition to offering home internet services,LMT also introduced the first sm
31、art TV service in Latvia delivering local and international TV content over LTE to people in remote regions of the country where fixed broadband is currently unavailable.M I C R O C A S E S T U D YM E G A T R E N D 3Taking a new look at the industryIn the face of disruptive new competition,many serv
32、ice providers are adopting disruptive strategies of their own and essentially reinventing what it means to be a service provider.In addition to what is happening as part of the other two megatrends,service providers are now looking at their services in a new light,shifting the“battlefield”away from
33、core telco services to innovative new offerings made possible by emerging technologies and business models.M E G A T R E N D 2M E G A T R E N D 1M E G A T R E N D 3How disruption is playing outOutside players are leap frogging established playersMarket disruptions have been seen in every region,led
34、by late entrants into the telecommunications market as well as the arrival of out-of-industry players with significant funding,many of which look at the industry in very different ways than incumbent service providers.By combining multiple successful business models into one including network,paymen
35、ts,content,analytics and e-commerce out-of-industry players can offer very aggressive promotional pricing,forcing the incumbents to lower their rates in response.Simply put,telecommunications is no longer a protected industry.National roaming agreements and tower sharing have brought down previously
36、 high barriers to entry.Service providers are realizing that innovating in customer-facing areas like sales and service for example,by creating digital second brands or new digital ecosystems for their services will be key to matching what the out-of-industry players can offer.M E G A T R E N D 3Tak
37、ing a new look at the industryM E G A T R E N D 2M E G A T R E N D 1M E G A T R E N D 3Japans Rakuten offers prices 30%below market as it looks to break into the MNO market.30%M E G A T R E N D 3The voice interface is becoming the ultimate control pointBrowser-based internet access and online shoppi
38、ng are increasingly complemented by and even substituted with voice-based interfaces.To stay relevant in the face of strong competition and reduce capital expenditures,some service providers are also actively embracing the use of AI-based virtual home assistants and smart speakers that allow consume
39、rs to control everything in their homes with voice commands and are expanding the capabilities of these devices through an ecosystem of third-party partnerships.Fixedmobile convergence is being used to develop and protect the coreBundling fixed and mobile offerings can help service providers increas
40、e differentiation,reduce subscriber churn and defend their core business against new entrants to the market.Capitalizing on the opportunities of fixed mobile convergence quickly ramping up the mobile play where they didnt have it before,for example often requires significant infrastructure investmen
41、ts,as well as a solid understanding of the customer beyond a singular product perspective.However,these barriers to entry can be disrupted as well,with some service providers managing to expand from a fixed-or mobile-only play to a converged offering in record time.M E G A T R E N D 2M E G A T R E N
42、 D 1M E G A T R E N D 3Jio brings large-scale disruption to IndiaWith a$US 25 billion greenfield investment and six years of preparation,Indian LTE-only operator Jio attracted 50 million subscribers in just 83 days after launching in September 2016 a milestone its main competitors took more than a d
43、ecade to reach.Through a wide range of partner offers(including TV,mobile wallets and streaming music),a bold free trial offer and extremely low rates,Jio has caused the ARPU of Indias market leader,Bharti Airtel,to drop by nearly 70%in two years.M I C R O C A S E S T U D YIts time to re-evaluate yo
44、ur strategyC O N C L U S I O NAll three of these megatrends present compelling business opportunities for service providers.Many are already achieving resounding successes by acting on them.For any service provider,the first step is to determine which of the many possible options will work best for
45、your business taking the time to evaluate where you are and where you want to be,then developing a strategic plan to get you there.As you think about the strategies youll use to respond to the megatrends,consider the following:32You dont need to wait for 5G to find opportunities for growth.But you d
46、o need to consider whether your overall business strategy should change.For example,do you have room to grow in your current market?Are there adjacent markets that are natural extensions of your business?If so,what might be required to expand into those markets and how will the changes you make affe
47、ct your customer relationships?Do you want to be a disruptor?Or are you prepared to be disrupted?Successful service providers have developed strategic options for multiple scenarios.A new bar is being set in operational efficiency.You need to consider where and how your traditional operations should
48、 evolve,and if your current corporate structures allow for optimal steering and valuation.OperationsOpportunities Options31O U T R OLooking ahead,5G will have the most“revolutionary”effect on the telecommunications industry.While service providers may still be far away from mass rollouts of 5G servi
49、ces,the pressure is on to lay the groundwork for 5G offerings today or risk being left behind when the moment arrives.Asking some core questions can support that effort:What infrastructure needs to change?What digital capabilities and platforms will be needed?How will you monetize 5G?Are your backen
50、d and frontend systems ready to support new use cases?C O N C L U S I O NGetting ahead of the curveWith the industry in flux and a potentially game-changing technology on the horizon,service providers need to re-evaluate their strategies now if they want to gain market advantage and improve their bo
51、ttom line.About NokiaWe create the technology to connect the world.Powered by the research and innovation of Nokia Bell Labs,we serve communications service providers,governments,large enterprises and consumers with the industrys most complete,end-to-end portfolio of products,services and licensing.
52、From the enabling infrastructure for 5G and the Internet of Things to emerging applications in virtual reality and digital health,we are shaping the future of technology to transform the human experience.Nokia is a registered trademark of Nokia Corporation.Other product and company names mentioned h
53、erein may be trademarks or trade names of their respective owners.2019 NokiaNokia Oyj,Karaportti 3,02610 Espoo,Finland|Product code:SR1905035000EN CID206370 Discover moreWill you be ready for 5G?Contact usSchedule a presentation todayTo discuss the capabilities youll need to take advantage of these opportunities please contact us.Visit our websiteTell me moreDiscover our research findings and the top strategies service providers are employing to address these megatrends.