Beyond 2010: Four Trends that Will Shape the Next Decade of Telecom

30 Dec. 2009, Huawei Unveils its Viewpoints on 2010 Industry Trends

Thanks to technical innovations, the industry has enjoyed continuous and unprecedented levels of growth over the past 20 years. However, a significant challenge looms in the years ahead - a saturated subscriber base and highly penetrated telecom services. How can the industry adapt and stay ahead in this new environment? Huawei’s focus is to look beyond four key trends that will shape our next decade in telecommunications.

1.Beyond population, the Internet of Things is creating a subscriber base of 50 billion.

In some developed countries today, mobile communication penetration rates have already reached or surpassed 100%. In the next two years, the number of mobile subscribers will reach 5 billion, more than 80% of the global population.i Even with such a high penetration rate, we will not reach the levels of human connection necessary to address issues such as energy shortages and environmental pollution.

The Internet of Things, which has come to describe a number of technologies, such as sensor network and RFID, that enable the Internet to reach out into the real world of physical objects, will help to close this gap. Appling information and communication technology (ICT) to different industries, we can connect all kind of machines, monitor machines precisely and control machines intelligently, achieving the objective of "efficiency improvement, scientific decision making, energy saving and environmental protection, and cost savings."

The Internet of Things will expand communication from the six billion people around the world to the estimated 50 billion machines. This means significant opportunities for the telecom industry to surpass population and develop new subscribers. And this advancement will signify a massive shift in human development, from an electronic society (e-society), to a ubiquitous society (u-society), in which everything is connected and everything can be accessed anywhere.

2. Beyond voice communications, booming mobile broadband is the next engine of telecom.

Revenues for traditional voice services have become saturated, and, with the advent and adoption of mobile communications, we have seen a gradual revenue decrease for these services. Mobile broadband, however, is now in its golden age. By 2014, the number of mobile broadband subscribers will grow by 10 times, reaching nearly 3 billion. ii Further development in mobile broadband has been helped by cost effective network technologies such as HSPA/LTE. Web Oriented Architecture (WOA) technology, which enables the development and adoption of widgets and "apps," brings online services and industry services to mobile phones that greatly enrich and expand the services and applications available for mobile broadband. New smart devices, such as iPhones and Android phones, allow for advanced, yet simple, man-to-machine interactions, but thus far these devices remain out of reach for most users due to cost.

The explosive increase of mobile broadband adoption in the next decade and prohibitive costs will bring many challenges to the telecom industry. When these challenges can be addressed, mobile broadband will become the most significant force in the industry's development. But in order to achieve sustainable growth, operators will need to increasingly shift their focus from voice communications to mobile broadband services.

3. Beyond bitpipe, cloud computing brings new opportunities driven by a new business model.

New Internet services and applications have turned many traditional business models on their head. Cloud computing is one such force. Cloud computing has redefined the structure of entire industries by revolutionizing business models across the software, hardware, and media industries and shifting consumers from buying products to buying services. By using a cloud computing and cloud storage platform, Google is incubating a larger revolution to achieve the development and operation of software and services through its APP Engine. This solution could shake up the entire industry by removing the need for software/hardware vendors and users to buy hardware equipment or platform software.

Since it relies on secure and reliable service providers and network technology, cloud computing provides operators with tremendous opportunities. Operators entering the cloud computing market can leverage their unique network and subscriber advantages to create new value-added services and experiences by integrating industry content and applications. Additionally, operators can develop new business models that capitalize on their growing base of assets related to user information, such as data mining and advertising platforms. Cloud computing is a key area for operators who want to go beyond bitpipe.

4. Beyond telecom, home networks will open new markets to operators because of the disruptive user experience.

Using the example of the music industry, we can see that the right user experience can revolutionize an industry entirely. Digital music and MP3s toppled the music industry's traditional business model. The next frontier for user experience is the networked home.

Increasing broadband penetration will create uber-connected homes and home networks. The network of the home is made of many components including, audiovisual entertainment (TV), communications (computers and mobile devices), and video surveillance. TV has experienced the most revolutionary changes with the development of a myriad of ways to consume traditional content online and on demand. It is not unlikely that traditional broadcast and DVD distribution models will become obsolete in the next decade.

The EU predicted in its report, "Internet of 2020," iii that by then, TV channels will be distributed alongside other Internet services and there will no longer be terrestrial or satellite broadcasting, except in isolated areas. In the past decade we witnessed the convergence of telecom and the Internet. In the next decade we will witness the convergence of broadcast, TV, and the Internet.

Home networking is the major battlefield for convergence of telecoms, TV and Internet. It will provide unprecedented strategic opportunities for operators because of the "bi-direction and high bandwidth" features of the telecom network that can satisfy online and on-demand user experiences.

Looking beyond

For operators willing to prepare for and take advantage of these opportunities, the growth potential is unlimited. In the next decade, Huawei looks forward to continuing to develop innovative products, services, and technologies to achieve a future-oriented network strategy that supports the growth of new services and promotes sustainable development for the entire industry.