Top10 Telecom Trends

VOICE & DATA brings you the hottest trends that will take the industry by storm in the coming year

M&A will Gain Momentum

A wave of mergers and acquisitions (M&A) in the telecom space has been following since the mid 1990s due to liberalization and it will further gain momentum in 2013. In order to survive and thrive in a dynamic and capital intensive telecommunications market, telcos have been focusing on growth through M&A.

Thanks to the cancellation of 2G licences and high reserve price of spectrum, the crowded telecom market in India will spin the ball of consolidation and operators will reduce from 12-15 to 6-8 operators in the next couple of years.

The Indian government in the National Telecom Policy 2012 has relaxed regulations for M&A in order to facilitate consolidation in the market due to the unsustainable competition in the Indian telecom sector.

“The announcement on merger & acquisition is an encouraging step from the point of view of the long-term health of the telecom industry and will pave way for consolidation in an over-crowded market,” Bharti Airtel had said in a statement.

To elucidate this, here are some M&A developments that took place in 2012 and are most likely to materialize in 2013

If media reports are to be believed, Norway-based Telenor was in talks with Tata Teleservices to merge its India operations, Telewings Communications, with the domestic firm.

Russian telco Sistema Shyam Teleservices (SSTL), which operates under the brand name MTS in India, is dicey after the cancellation of its 2G licences by the Supreme Court; if the court does not decide a curative petition in SSTL’s favor then it is forced to exit its local operations by January 18. So, it has to decide to either merge or exit.

TREND 2

Hike in Mobile Tariff

We all know that one of the key factors which contributed to the unprecedented Indian telecom growth story was the low tariff rates, in fact the lowest tariffs in the world.

Telcos must have cogitated that they could grapple even with the lower ARPUs as it was a voluminous, immature and untapped market. But from the past 4 years, the situation is not that rosy due to fierce competition, higher capital expenditure, higher spectrum charges, uncertain regulations, and dwindling ARPUs.

Consequently, hike in tariff rates will certainly be the talk of the town; some operators have already hiked call rates. Average revenue per minute (ARPM) will gradually start rising after a sharp decline over the last few years.

Tariff hike will help to improve financial performance, credit profile, and it will improve profitability of telcos.

Over the last few years, telcos’ credit profile had deteriorated due to the debt for acquiring 3G broadband wireless spectrum in 2010, rolling out of network, lower-thanexpected adoption of 3G services, and subdued operating performance.

TREND 3 Increase in Backbone Bandwidth

Thanks to the growing subscriber base and proliferation of mobile devices, which has resulted in exponential traffic impacting network performance and service quality.

Besides this, network outages are also due to frequent cuts in fiber optic cables laid in India because of construction process. To enhance the quality of service and experience, progressive service providers are working towards improving network backbone and to make India’s backbone more manageable and to turn bandwidth into differentiated services.

Backbone network upgrades are becoming quite apparent evolutionary

Smartphones would grab much attention in 2013. Lowcost smartphones with good functionalities have graced the telecom market, chances are that they will replace mobile feature phones

path for telcos. Some of the evolutionary technologies include coherent 100 Gbps, Dense Wave Division Multiplexing (DWDM), Optical Transport Network (OTN), intelligent control plane, and associated multi-layer management solution. While traditional optical backbone networks have been either linear or ring formations, the significant number of fiber cuts that occur all over in India have driven service providers to explore mesh architectures for these networks.

Optical mesh networks have been enabled by a technology known as ‘intelligent control plane’. In the event of fiber cuts or nodal failures, this intelligent software knows what links remain active in the network and is able to intelligently and automatically re-route traffic over those links in near real-time to ensure reliable services.

Internet pipes are filled with diverse traffic, including streaming video and audio, which could negatively impact a database’s performance. And many of today’s applications are interdependent and they have to communicate across long distances, such as data center to data center so that there should not be slowdowns or even outages. The adoption of newer technologies like cloud computing, virtu- alization, disaster recovery have increased the need and importance of bandwidth of late. Therefore, there will be an increase in the backbone bandwidth.

TREND 4 Smartphone Uptake will Increase

Smartphones would grab much attention in 2013. Low-cost smartphones with good functionalities have graced the telecom market, chances are that they will replace mobile feature phones.

According to a survey by Neilsen Informate Mobile Insights, there were over 27 mn smartphone users in urban India as on June 2012. Another report on ‘2012 Internet Trends’ released by Kleiner Perkins Caulfield and Byers, however, said that with 44 mn smartphone users in Q4 of 2012, India is the 5th largest smartphone market globally.

India follows China, the US, Japan and Brazil. With just 4% of the total mobile subscribers being smartphone users, the country’s year-on-year growth in smartphones is pegged at 52%, higher than China and the US.

Globally, there were 1.1 bn smartphone subscribers in the fourth quarter of 2012, according to a report.

As smartphones are powerful devices that can act as a pocket supercomputer and can do a lot more than to just navigate through social networking pages, the uptake of smartphones will further accelerate in the coming year.

TREND 5

BYOD will Gain Acceptability

In this digitization world, workplace is transitioning, on-the-move work culture is gaining traction; workforce is empowered to deliver work anytime and from anywhere in the world. .

Bring Your Own Device (BYOD) has made inroads and it will further transform the traditional corporate structure. BYOD trend will gain acceptance and it will reign in 2013 despite IT challenges

such as mobile device management, application management, data protection, and IT security. Enterprises today are also well-equipped with a strategy to minimize security risks, financial exposure and management chaos.

Employees are already using personal devices for work, and now more companies will give an official green signal for mobile workforce with a BYOD programme and policy.

TREND 6

Security will Get a Big Push

Security threats are directly proportional to the advancements and adoption of technology, so security will never take a backseat. Information is an asset and it needs to be protected. This is especially important in the increasingly interconnected business environment, where information is now exposed to a growing number and a wider variety of threats and vulnerabilities.

Causes of damage such as malicious code, computer hacking, denial of service attacks, data theft, attacks on operating systems, vulnerabilities in web-based applications, and a mass level spread of malware/ spyware have become more common, and increasingly sophisticated. This concern has given a greater push to security and enterprises to adopt a holistic security approach.

LBS is another hot segment that will create much buzz in 2013. According to Gartner, the global location based services industry is set for a big plunge in the near future and is expected to generate $13.5 bn in revenue by 2015, driven by mobile advertising

Investments on security are something telcos cannot do without. ICT systems are also basic core and the reservoir of all pieces of information which are fundamental to organizations, and it is also more complex and vulnerable, consequently it is exposed to new types of intrusion.

Clearly, there will be a complete shift from a ‘specialized’ phase where ICT security is a prerogative of technicians to an ‘aware’ phase where ICT risks and security strategies will be analyzed by the highest managerial spheres of each organization.

TREND 7

LBS to Create the Buzz

Location based Services (LBS) is an information service, which delivers area specific information with the help of global positioning capability using IP addresses of mobile devices and computers.

Stating security reasons, the Department of Telecommunications (DoT) has urged mobile operators to track users within 50 meter of their location. Operators are making efforts but the current technology does not offer precise information, there are no vendors who can facilitate real-time info on the location of subscribers, and it also lacks an ecosystem in place.

Between 2013 and 2015, we are likely to witness major commercial LBS deployments in India. At present, LBS have been deployed in car infotainment sector. Some of the LBS apps are Hoppr, which enables users to avail deals and offers they check into, Zomato, which enables to check out restaurant, LocalEver connects buyers and sellers in real-time via Google Maps. DelightCircle is also a location-based shopping app, and LocalBeat is a GPS-enabled app that informs users about news, deals and events. LBS is another hot segment that will make much buzz in 2013.

According to Gartner, the global location based services industry is set for a big plunge in the near future and is expected to generate $13.5 bn revenue by 2015 driven by mobile advertising.

TREND 8

Green Towers to Make it Big

DoT has directed telcos to go green and to run 50% of rural towers and 20% of urban towers on hybrid power by 2015. By 2020, it wants 75% of rural towers and 33% of urban towers to become environment-friendly.

The industry has been talking of innovations like tapping renewable energy reservoirs to meet power needs. Sadly, there is more green talk than some real action and actual implementation. A prime