Telecommunications are traditionally a good lead indicator for the economy, and yet a recent poll published by BT suggests that broadband, mobile and home phones make up three of the top four things people would hang onto in a downturn.Whether or not this reflects a fundamental shift in cultural attitudes in a 24/7 connected society, the communications industry is faced with some seismic changes in technology, regulation and markets. It is far from clear how it will emerge beyond the current business cycle, but investment payback cycles in this industry can be measured in decades and some big bets are being placed by operators and their suppliers now.
So we recently got together with SAMI Consulting (St Andrews Management Institute), specialists in scenario planning, or “future-proofing”, as they would say. Together we mapped out some scenarios based on the world in 2015, which we summarise below.
The many interlocking trends and developments boiled down to two main dimensions of uncertainty: investment intensity (the amount of investment, or financial incentive to invest) and network fragmentation (how far networks and the industry nationally and globally continue to consolidate and work together).
Some trends seemed to us to be pretty inescapable, for example the move towards higher speeds of mobile and fixed broadband – we felt that 24Mbps+ would be pretty universal in the richer countries and many of the poorer ones too, whether the business case stacks up right now or no, just because there seems to be such a head of steam behind it. We couldn’t see a halt to the spread of pro-competitive regulation, with the European model and variants of it the dominant pattern. We also felt that the big infrastructure investments (particularly access networks) would gravitate towards the utility model, with regulation ensuring steady, if unspectacular, returns, though who would making the investments and reaping the rewards was less clear.
That still left many factors that seemed to us to be important, but uncertain. For example, will the arms race with the spammers, spitters, phishers, fraudsters, terrorists and other malware merchants escalate costs and disaffect people with the networked world? Would privacy issues lead to all kinds of fire breaks and fire walls, or even to activities moving off net? Would the content industries (music, film, sport, TV) get their acts together and evolve business models that enable them to be profitable and to drive consumer network use? What are the limits of advertising as a money source?
All this coalesced, with a bit of expert technical help, into four distinct stories for how the industry moves through and beyond the current recession and into the next business cycle around seven years from now. We’ll be picking up some of the themes in future posts, but if you would like to learn more about the scenarios, and what they mean for your business, please drop us a line .
