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Communication Service Provider Markets in Europe
Marta Munoz
Research Director
EMEA Telecommunications & Networking
Agenda
The evolving ICT industry and Telcos
European telecom market realities
Evolution of the consumer
Helping the European enterprise
Essential guidance
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 2
The ICT Industry's 3rd Platform
© IDC Visit us at IDC.com and follow us on Twitter: @IDC Source: IDC
Every 20-25 years, ICT goes through a
period of “creative destruction” - the old
industry model is replaced with a new
platform for growth and innovation.
Last time around, the early 1990s,
Client/Server, Lans and the Web replaced
mainframes & dumb terminals as the
model.
This time around, the “3rd Platform” is the
new model. It’s built on the “Four Pillars”
(Mobility, Cloud services, Big
Data/analytics, and social technologies)
and on others including machine-to-
machine (M2M), aka the “Internet of things”
(IoT).
From 2013-2020, 90% of IT industry
growth and 40% of all revenue will be
driven by 3rd Platform technologies.
This will create a “mass extinction event”
that will wipe out many established
technologies, services and players - just
as Client/Server and the Web did in the
1990s.
Millions of Users Thousands of Apps
Hundreds of
Millions of Users
Tens of
Thousands of
Apps
Billions of Users Millions of Apps
IDC’s research revolves around what we
define as the 3rd platform for ICT industry
3
West European Connectivity Markets
0
50
100
150
200
250
2012 2013 2014 2015 2016 2017
Spending on Connectivity Services (€B)
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 5
Legacy Source: IDC European Telecom
Services Database, 4Q2013
CAGR
12-17
3% Mobile Data
Mobile Voice
Fixed Data
Fixed Voice
-5%
-5%
1%
Overall CAGR 12-17 is -2%
Mobile Data: • Messaging (-6%)
• Data over Mobile (10%)
Mobile Voice covers spending and not Revenues
Fixed Data: • Legacy (-22%)
• Internet Access (2%)
• IP-VPN (-1%)
• Ethernet (11%)
Fixed Voice: • TDM (-10%)
• IP (10%)
WE Connectivity Market Characteristics
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016 2017
Spending Share by Type of Service
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 6
0%
20%
40%
60%
80%
100%
120%
140%
2012 2013 2014 2015 2016 2017
Connections per Population
Dial Broadband Mobile
Legacy
Growth
Source: IDC European Telecom
Services Database, 4Q2013
Mobile Data
Mobile Voice
Fixed Data
Fixed Voice 27%
29% 23%
25% 30%
24% 21%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016 2017
Spending Share by Type of User
Business
Consumer
35% 34%
65% 66%
0
200
400
600
800
1.000
1.200
1.400
2012 2013 2014 2015 2016 2017
Voice Traffic in Billions of Minutes
TDM Voice 24% 21%
IP Voice 23% 15%
Mobile 58% 52%
WE Telco Portfolio Evolution
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 7
Legacy
Growth
Unified
Communications
Conferencing
Solutions &
Services Network
Infrastructure
Network Lifecycle
Services
Datacenter &
Cloud Services
Security Services
Mobility Software
Enterprise
Mobility Services
Internet of Things Consumer
Content
Telcos
Expanding
Into
Associated
Markets
Fixed and Mobile Broadband Penetration in WE in 2013
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 8
DE
FR
GB
IT
ES
NL
CH
BE
GR
PT
AT
SE
DK
NO
FI
Fix
ed
Bro
ad
ba
nd
Pe
netr
ati
on
Mobile Broadband Penetration
Average for WE is 32%
Average for WE is 62% Source: IDC European Telecom Services Database, 4Q2013
Size of
bubble
represents
total FBB
and MBB
users
Fixed and Mobile Broadband Penetration in WE in 2017
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 9
DE
FR
GB
IT
ES
NL
CH
BE
GR
PT
AT
SE
DK
NO
FI
Fix
ed
Bro
ad
ba
nd
Pe
netr
ati
on
Mobile Broadband Penetration
Average for WE is 35%
Average for WE is 81% Source: IDC European Telecom Services Database, 4Q2013
Size of
bubble
represents
total FBB
and MBB
users
Some Key Industry Themes (1)
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 10
Tension between operators and regulators remains a prominent
theme.
Operators want:
"investment-friendly" policies
on consolidation, network
sharing, net neutrality, and
regulated prices
Regulators want:
cheaper prices, better
networks, unrestricted use of
the Internet, and a single
European market
Some Key Industry Themes (2)
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 11
Operators look to reduce network and device costs.
The trend toward network
sharing continues during
2012 and 2013.
Operators try to move away
from handset subsidy and
bundling.
IPTV providers investigate
move to cloud-based STB
functionality.
Some Key Industry Themes (3)
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 12
M&A gathers pace: some
consolidation, some
diversification.
France Telecom/Sonaecom
Telefónica/Hispasat
Liberty Global/Virgin Media, Ziggo,
and Telenet
Sky/O2 U.K. Broadband
Deutsche Telekom/MetroPCS
Hutchison/O2 Ireland
Vodafone/Kabel Deutschland
Telecom Italia fixed-line spinoff
European Enterprises want QoS
13
n=1,822 (all companies)
Q42. When selecting a network service provider, which are the most important
factors in making a decision?
Significant increase in
importance of quality
compared to previous year.
Price remains important factor
Core service attributes are
key decision factors
Source: IDC EMEA WAN Manager Survey, 2013
1%
21%
31%
33%
35%
39%
44%
45%
64%
66%
-25% 0% 25% 50% 75%
Other(Please Specify)
Cloud service strategy
Vertical/ industry expertise
A broad service portfolio
The ability to provide mobile and…
Geographical coverage
Contract flexibility
Technology innovation
Pricing
Quality of service and support
Enterprise Data Services
Competitive landscape
14
target company size
Domestic incumbents e.g. DT, BT, Orange,Telefónica
Domestic challengers e.g. SFR, VM B, Vodafone DE
Mass market
players e.g. cable ops
Domestic
Business SPs e.g. Completel, QSC
Global Carriers e.g. BT GS, VES,
AT&T, etc.
Regional operators e.g. Colt, Easynet, Interoute
bre
ad
th o
f p
ort
folio
• Landscape can be very different per
segment or country
• Markets typically dominated by
domestic incumbent
• Many operators aim to be provider of
“solutions” instead of just connectivity
• Operators expand target markets, e.g.: • Cable operators try to address beyond
very small business
• VES addresses sizes below its
traditional market
• C&W acquisition has substantially
strengthened Vodafone’s position in the
BNS space
Global carriers (e.g., OBS, AT&T, BTGS,
Verizon)
Equipment vendors
(e.g., Cisco, Avaya, Microsoft, Broadsoft)
Target company size
Domestic incumbents (e.g., DT, BT, Orange,Telefónica)
Regional operators (e.g., Colt, Level3)
Domestic challengers (e.g., SFR, Vodafone DE,
VoiceFlex)
Bre
adth
of port
folio
Enterprise Voice Services
Competitive Landscape
15
Landscape can be very different per segment or
country.
Markets are typically dominated by domestic
incumbent.
Many operators aim to be providers of "solutions"
instead of just services.
Operators expand target markets, for example Cable operators try to address beyond very
small business
Global carriers address sizes below their
traditional market
VoIP
TDM
2011/12 “Consumerization”
2013+ “Mobile First”?
iOS + Blackberry Silos
Executive Jewellery
BYO Device
Experimental Apps
(mainly B2C)
IT Night Job
Risk Management
Point Solutions
Fluid, Multi-OS
>50% of employees
BYO Tools
Widespread Apps
(B2E/B + 2nd Gen B2C)
Dedicated Mobile IT & CoEs
Business Enablement
Platform Architecture
Source: IDC Mobile Enterprise Strategies
Firms Now Entering Next Phase of
Enterprise Mobility
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 16
IT Players Targeting the MEM Opportunity
17
Through which channel would you consider purchasing a
mobile enterprise solution as a trusted partner?
Source: IDC Enterprise Mobility Survey, July 2013 | N = 375
0% 10% 20% 30% 40% 50%
Mobility Implementation Specialist
Mobility Software vendor
IT Value Added Reseller (VAR)
ICT Carrier or Fixed Telecom Provider
Mobile operator
Systems Integrator
#1 choice for
the first time in
the Summer
2013 survey
Essential Guidance
© IDC Visit us at IDC.com and follow us on Twitter: @IDC 18
In the mass market Telcos need to:
Invest in NGA and ensure it pays
off
Leverage the power of the
bundle
Position to exploit the mass-
market megatrends
Adapt to the bigger and more
diverse competitive landscape
In the enterprise market Telcos must
Help clients with cost
optimisation and innovation
Focus on service quality
Move more aggressively in
offering VoIP solutions
Become more technology
agnostic around the WAN
Sell solutions but don’t neglect
the connectivity element
The Telecom Market is
still a large and
dynamic market