ASINA PORNWASIN
THE NATION November 22, 2012 1:00 am
The market value of the companies that are the top 25 drivers of Internet traffic is now almost half of the combined market capitalisation of the top 150 telecom operators. They are mainly what are known as "over-the-top" (OTT) companies, that is, service providers as opposed to being purely telecom carriers.
OTT service providers, in particular the top four - Apple, Amazon, Facebook and Google - represent 70 per cent of the top 25 and are expanding their dominant position in the communication landscape, said van den Dam. The massive shift in value continues towards the OTT providers as capital markets prize the direct customer relationship and value provided by OTT providers.
This is because dramatic forces are radically altering the telecommunication landscape, confronting communication service providers with both major challenges and opportunities. "It is an era of mobile Internet, data, a mass of applications and the ability to send images and video from everyone to everywhere," he said.
The proportion of mobile Internet subscribers in developing countries, including Thailand, is about 10 per cent, while the ratio in developed countries is around 50 per cent.
Smart phones and tablets - the key devices driving heavy traffic over the network - were sold in large quantities last year, when some 490 million smart phones, 210 million notebooks and 63 million tablets were sold around the world.
Communication service providers in developing countries have proven they can grow and generate high levels of profit from low average-revenue-per-user customers, said van den Dam.
The amount of mobile data, especially video, has exploded, causing significant capital- and operating-expenditure pressures on telecom operators. Mobile video and mobile Web data is expected to account for 90.5 per cent of all global mobile data traffic by 2016.
Future scenarios
He identified four future scenarios: survival consolidation, market shake-out, a clash of giants, and what he called a "generative bazaar".
Survival consolidation will occur as a result of reduced consumer spending leading to revenue stagnation or decline.
Market shake-out will be triggered by increased fragmentation resulting from greater involvement and investments by government, municipalities, utility companies and others to provide ultra-fast broadband to underinvested areas and for economic and business purposes.
A clash of giants, meanwhile, is a response to increased competitive threats from OTT providers and device manufacturers. In this scenario, where the addressable market is expanding, mega-carriers are also looking for growth through selected verticals, such as e-health and smart grids, for which they may provide packaged end-to-end solutions, he said.
A generative bazaar is predicated on the break-up of the vertical integration model, resulting in some form of structural separation of communication service providers into distinct network and service businesses, he said.
Thailand's situation falls between the generative bazaar and clash of giants scenarios, he added.
Pawish Jaishuen, country manager for the communications sector at IBM Thailand, said around 10 per cent of the local unit's revenue comes from the telecom sector.
"But there is a lot of room for growth in the Thai telecom sector, and telcos are a focus industry for us," said Pawish.
IBM plans to assist the local sector by offering solutions including a fast and smart network, "big" data, advanced analytics, cloud computing technology - such as cloud telephony, a cloud-based eHealthcare system, cloud TV and cloud gaming - social collaboration, and security technology, he added.
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