TELECOM ITALIA GROUP
Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications
ETIS Community GatheringRiga, October 2013
Oscar CicchettiDirector, Strategy – Telecom Italia Group
Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
2
Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications
Massive Growth: connected objects, data, traffic, usage…
3
Source: Intel Co.
Global Network Connections from objects will exceed 17B in 2017
Source: Cisco, Visual Networking Index, May 2013.
Global IP Annual Traffic will reach 1,4 zettabyte in 2017
Digital Society and Competition between Ecosystems
Mobile connected devices become key in consumers’ life…
Smart cities improve quality of life:• IoT and sensors enable dynamic services
to reduce traffic, crime and improves efficiency
Connected homes:• IoT and sensors improves
overall convenience, save time and significantly reduce utility bills
E-Health improves care quality:• IoT and connected sensors
permit remote monitoring and combat chronic disease, assisting the elderly and improves access
Digital Identity improves access to government services:• enhances speed and ease of
authentication
Mobile wallet:• enables customised
offers and seamless payment
c
Connected devices
Smartphones
Wearables
Tablets
Home
Educ
atio
n
Health
Go
vernm
ent
City
Retail
Car Connected cars become the
next mobile platform:• consumers receive seamless
access to adaptive services• autonomous driving improves
safety
E-Education enables learning anytime, anywhere: • classroom linked with the
online world• dynamic learning provides
immediate feedback
4
Source: Draft of “GSMA ExCom: Vision 2020”
Digital Society and Competition between Ecosystems
As a consequence, Mobile Ecosystem will grow by 1,1 tn$......
5
1,8 tn $
2,9 tn $
62% 50%
+1,1 tn $
2012 2020
MNO share of the value chain
Mobile Ecosystem Revenues
Digital Society and Competition between Ecosystems
… but Operator’s share will significantly decrease
6
… because competition between Operators is very high, mainly in Europe …
Sources: GSMA Infocenter, Analysys Mason
EU 27 (509M inh; 204M hh) USA (320M inh.; 115M hh)
107 Mobile Network Operators
~160 Fixed BB Operators*
4 Mobile Network Operators
16 Fixed BB Operators*
(*) Cable Operators are included
Digital Society and Competition between Ecosystems
...because Internet Ecosystem seems to have a darwinian superiority compared to the Telcos Ecosystem…
7
CAPEX (€bn) CAPEX (€bn)
OpFCF**(€bn) OpFCF**(€bn)
EMPLOYEES (000) EMPLOYEES (000)
MARKET CAP (€bn) MARKET CAP (€bn)
vs
vs
vs
vs
vs
4 67
14 84
70 1.217
270 521
Pure OTT TELCO
REVENUES (€bn) REVENUES (€bn)
47 460Pure OTT revenues are
quite lower than TELCO...
…they invest relatively less than TELCOs…
…but produce a significant cash flow...
…employing a limited amount of people.
and are more «appealing» than TELCO
10%
6%
17%
6%
52%
Pure OTT/ TELCO
Google, Facebook, Yahoo TI, TEF, FT, BT, DT, Vodafone, Verizon, AT&TData from FY 2012
Source: Telecom Italia study «Benchmarking OTT»
Digital Society and Competition between Ecosystems
…and because Internet Companies fight to lock the customer into a silos...
8
Digital Society and Competition between Ecosystems
Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
9
Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications
In a global competition size matters: the US case
10
Source: WSJ, Aug 27th, 2013
Traditional Levers such as:Interoperabilit
yConsortia Alliances Can fill the gap?
Narrow path towards Digital Telco
Telco Challenges
11
€
t
Revenues
TCOas it would be
TCOas it MUST be
Lean challenge
€
t
Connectivity
Digital Servicesas it would be
Digital Servicesas it SHOULD be
Digital challenge
A deep transformation is needed to reduce
unitary cash costs
A deep transformation is needed to capture
digital opportunities
Narrow path towards Digital Telco
12
Lean Challenge: Total Cost Reduction
Streamlined commercial machine• On Line CRM• Simplified Offering Portfolio
Zero Opex NetworkS• Flat IP architecture• SDN oriented
Simplified and Flexible IT• Cloud based• SOA and Agile
Narrow path towards Digital Telco
Digital Challenge: Service Evolution
13
Big Data and Personal Data
Digital Identity
M2M and Internet of Things
Security Services
Smart Environments
Digital Media
Cloud
1. Bet on distinctive assets• Local Presence• SIM and AAA• Billing and CRM• QoS, QoE Features
Narrow path towards Digital Telco
2. Adopt Internet Service Paradigm
• Flexible Partnerships• Net and Cloud API• Embedded Connectivity• Use of customer and
network data
Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
14
Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications
OSS/BSS Transformation
Away from a Spaghetti Architecture Leverage on SOA and Cloud Adopt Agile Methodologies Real Time Processes
15
Telco and IT Industries go hand in hand
Big Data to transform operations and services
Data Gathering Data Processing Next Generation “Data Based” Services Data Brokering
Telco and IT Industries go hand in hand
The multi-facet role of the cloud
17
Cloud
Serviceoffering
Integrationof old IT
architectures
SDNsupport
Network Control Centre
Telco and IT Industries go hand in hand
18
Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications
What Telcos should look like in the changing world
Telco Challenges
€
Revenues
TCOas it would be
TCOas it MUST be
Lean challenge
€
Connectivity
Digital Servicesas it would be
Digital Servicesas it SHOULD be
Digital challenge
Narrow path towards Digital Telco
Should we pretend to be a Tiger?
Should we ibridate ?
The only way is to nurture a tiger while continuing to be an elephant
Telco Transformation