041607: Telecoms sector in AsPac faces evolution challenges

By Mary Ann Ll. Reyes
The Philippine Star 04/16/2007

The telecommunications industry in the Asia-Pacific region (excluding Japan) is facing a period of evolution, as lines between traditional network architectures and services disappear, spurred by developments in technology and end-user usage patterns and demand, according to leading research group International Data Corp. (IDC).

"From convergence to shifting go-to-market strategies, both equipment vendors and telcos will need to better position themselves for the coming change," said Sandra Ng, vice president for IDC’s Asia-Pacific communications, peripherals, and services research.

IDC expects 2007 to be a period of evolution, and network and information technology equipment will shift its focus from hardware to a greater emphasis on software and services.

According to the IDC report, the Asia-Pacific telecom services market was worth over $183 billion in 2006 and is projected to achieve 10 percent growth to exceed $202 billion in 2007. Growth will continue to come from Voice-over-Internet Protocol (VoIP), broadband, IP services and 3G services.

In addition, the networking equipment market, estimated at over $7.2 billion in 2006, is expected to grow to over $8 billion in 2007.

IDC likewise identified the top 10 trends, vendor and service provider strategies, as well as new technologies that will emerge and impact on the industry and its players this year.

First, IDC expects an increase in Layer 2 Ethernet services. Telecommunication service providers in the region have been active in rolling out optical fiber-based metro Ethernet services in most major cities across the region for the past few years. While these services were previously confined to mature markets such as Hong Kong, Korea and Singapore, they are now available in most major cities from Bombay in the west to Jakarta in the east.

IDC expects most, if not all, major carriers in the Asia-Pacific region to start offering point-to-point metro Ethernet services in 2007 and that the service will gain considerable traction in the market by the end of the year.

Second, after much hype, 2007 will be the year where wireless mesh services will emerge in Asia. IDC believes this will occur because of its potential for large-scale wireless deployments, strong support from governments and the availability of blueprints from visible mesh deployments in North America and, to a lesser extent, in Europe.

Third, IDC believes that many larger WiMax vendors will offer advanced antenna solutions in 2007 to achieve greater spectral efficiencies compared to alternative wireless technologies. The combination of IP-friendly interfaces, VoIP streaming, cost performance advantages, and the scalability of mobile WiMax has already encouraged multiple trial deployments in the region. Going forward, IDC expects that ultimately, mobile WiMax will become the mainstay across Asia-Pacific in the long term.

Fourth, fixed-mobile converge (FMC) is expected to enable mass-market consumer mobility. IDC explained that the move to consumer FMC is occurring in the region, with multiple operators looking at strategies to leverage its development. After several years of discussion, technologies and products relating to FMC have progressed to the stage where initial deployments, either on a trial or commercial basis, are likely to be offered in 2007. This shift to FMC is going to trigger restructuring and changes in the business models as well as network infrastructure of carriers. While FMC will threaten some legacy services, it will also create new opportunities for fixed and mobile carriers to compete in each other’s space.

Fifth, instant messaging (IM) will evolve as the next collaborative tool in mobile business communication The IDC report noted that the business world is increasingly focused on collaboration, which is challenging given the need to coordinate among co-workers who may be spread across different cities or even continents.

Mobile IM, it said, provides a superior messaging alternative for fast and cost-effective communication, particularly when the work force is dispersed in remote locations, where workers may not have access to their corporate Intranet over LAN. IDC expects professional consumers to drive enterprises to deploy IM solutions initially and IM will progressively evolve from being a stand-alone product to a communication product that is well integrated with other business applications.

Sixth, application-aware networking (solutions that make intelligent routing, security, and delivery decisions regarding network traffic) is anticipated to grow in the enterprise.

"2007 will be an significant year for application-aware networking as most vendors have settled down after the acquisition frenzy and have formulated aggressive strategies to acquire new customers," IDC noted.

Seventh, network equipment providers will refine tradition channel distribution model by going direct.

Eighth, mobile TV is expected to become a reality in key markets in the region.

IDC pointed out that while mobile TV service has been available in Asia-Pacific since 2005, service providers in the region have shown mixed interest in the service, although this may change soon.

As average revenue per user (ARPUs) continue to drop throughout the region, service providers are searching for new revenue streams and many believe they will find it in mobile TV. In 2007, IDC believes that many service providers will trial and commercially launch the service in the more developed markets.

Ninth, peer to peer services (P2P) is projected to threaten the growth and development of IPTV. The report noted that the emergence of P2P services that re-broadcast signals from cable or IPTV networks over the Internet needs attention. These P2P services presently originate mainly from China, with increasing usage in the region . Starting in 2007, IPTV operators in Asia-Pacific and around the world will need to closely watch the development of these services in a bid to mitigate this threat.

Lastly, Web 2.0 presents new opportunities and new challenges. IDC explained that the region has some of the most advanced, and connected, telecommunications populations in the world.

"While developments in FMC continue, other applications and solutions are being developed to provide a richer experience to end-users. Among these, applications associated with Web 2.0 are gaining traction in the region. Web 2.0 generally refers to new applications and processes of using the Internet to increase collaboration and interaction among end-users via the Web platform. IDC expects 2007 to be a year when their popularity will push service providers to develop strategies to harness the development, both within the enterprise and among consumers," it added.

Meanwhile, IDC in another study noted that a resurgence of spam and the increased frequency of being replaced by text messaging and VoIP calling, especially among younger consumers and workers, will make it more difficult for email to maintain its status as the leading mission-critical electronic communications method.

IDC predicts that nearly 97 billion emails, over 40 billion of which will be spam messages, will be sent daily worldwide in 2007. This is the first year that spam email volumes are expected to exceed person-to-person email volumes sent worldwide.

"Spam volumes are growing faster than expected due to the success of image-based spam in bypassing antispam filters and of email sender identity spoofing in getting higher response rates," said Mark Levitt, program vice president for IDC’s collaborative computing and enterprise Workplace research. "Instant messaging, joined by free and low-cost VoIP calling, will result in slower email growth, especially among teens and young adults."

IDC estimates that the size of business email volumes sent annually worldwide in 2007 will approach five billion gigibites, nearly doubling the amount over the past two years.

 

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