Industrial Analysis Report On TeleCommunication Industry

Submitted Report By
Name : Prasenjit De
Registration ID : 11608820
Subject: Creativity & Innovation Tools

Submitted to
Prof. Anil Kumar Rawat
What is an Industry?
An industry is a sector of the economy that offers a distinct type of value. This can include products and
services as well as other types of value such as infrastructure, art and knowledge. On simpler note, an
Industry is a business activity, which is related to the raising, producing, processing or manufacturing of
products. Industries are of mainly different types, ranging from Aerospace, Agriculture and Construction
to wide ranging Defence & telecom Industries, wherein each industry has its own Perks and Cons for
choice.
I have planned to explore the Secondary and Tertiary sector of Industry in general & Telecommunication
Industry in particular.

ANALYSIS OF TELECOMMUNICATION INDUSTRY

The telecommunications industry within the sector of information and communication technology is
made up of all Telecommunications/telephone companies and internet service providers and plays the
crucial role in the evolution of mobile communications and the information society.
Traditional telephone calls continue to be the industry's biggest revenue generator, but thanks to
advances in network technology, Telecom today is less about voice and increasingly about text
(messaging, email) and images (e.g. video streaming). High-speed internet access for computer-based
data applications such as broadband information services and interactive entertainment, is pervasive.
Digital Subscriber Line (DSL) is the main broadband telecom technology. The fastest growth comes from
(value-added) services delivered over mobile networks.

Deloitte says & I quote, “The telecom sector continues to be at the epicenter for growth, innovation, and
disruption for virtually any industry. Mobile devices and related broadband connectivity continue to be
more and more embedded in the fabric of society today and they are key in driving the momentum
around some key trends such as video streaming, Internet of Things (IoT), and mobile payments.”

Events that shaped Telecom Industry in India in recent times;

It was the year of the big bang in telecom, the year 2016. Reliance Jio's disruptive entry into the sector
threw an unorthodox gauntlet at its rivals, triggering a bruising war of words -- and tariffs -- among
players.
But it was also the year which ended in a whimper for the telecom spectrum auction. The much-touted
"biggest spectrum auction" proved to be a stupendous failure, marring the spirit of the industry. Reliance
Jio launched its fourth generation (4G) services in September -- offering free voice, forever.
Furthermore, Spectrum auction Ended within five days with a total commitment of only Rs 65,789 crore
& Reliance Communications and Aircel merger that resulted in asset base of Rs 65,000 crore & Reliance
Jio, Reliance Communications got government's nod for spectrum sharing.

Forcasted Growth of Telecom Industry:

The global revenue made from telecom services is expected to reach almost 1.2 trillion Euros in 2019.
With an estimated value of 372 billion Euros in 2016, the fastest-growing telecommunications services
market is the Asia-Pacific region, followed by North America and Europe.
Growth Rate:
Indian telecom sector second largest market in world; significant contribution to country’s GDP growth.
The Indian telecom industry is passing through complex times. It has been almost two decades since the
Atal Bihari Vajpayee government heralded the telecom revolution with the formulation of the National
Telecom Policy (NTP) in 1999. When the policy was enforced, India merely had a million subscribers.
Since then, the industry has grown on to become the second-largest telecommunications market in the
world that is now well past the billion-mark in terms of subscribers. Over the years, the sector has
become a significant contributor of the country’s GDP and job growth. According to one estimate, it
contributed 6.5 per cent of India’s GDP while providing direct and indirect employment to four million
people in 2015. The industry has also been one of the fastest-growing sectors in the country with a
compound annual growth rate (CAGR) of 7.3 percent over the last decade.

TRENDS IN TELECOM INDUSTRY:

In my perspective, looking at Telecom industry trends by 2020 and beyond For last 20 years, continuous
technical transformation and information waves have driven high growth in the telecom industry.
However, an age with saturated telecom penetration is coming, and industry is facing a brand new
situation.
The telecommunication industry is going through a transformational phase of development – to
acclimatize itself per the new technological and cloud trends. An article I had written for Microsoft blog
discusses this in good detail – Digital transformation helps telcos move from perish to flourish.

At the very outset, the focus was on the Communication Technology (CT) which marked the first wave of
the information era. The second phase was the internet phase which started approximately around the
year 2000. The industry realigned itself around horizontal solutions during this phase. It was the time of
e-commerce and portals.
After 2006, the cloud began taking shape and this marked the third phase of transformation in the
telecommunication industry. Come 2019 and we are in the midst of the era of cloud, where a new world
of opportunities has opened up for the carriers. It is quite evident that this era is unstoppable and there
is no escape.
Industry Segmentation:
Of all the customer markets, residential and small business markets are the toughest. With hundreds of
players in the market, competitors rely heavily on price; success rests largely on brand name strength and
investment in efficient billing systems. The corporate market remains the industry's favorite. Big
corporate customers are concerned mostly about the quality and reliability of their telephone calls and
data delivery while being less price-sensitive than residential customers. Multinationals, spend heavily on
telecom infrastructure and premium services like high-security private networks and videoconferencing.
Network connectivity can also be provided to other telecom companies by wholesaling circuits to heavy
network users like internet service providers and large corporations.

Considering the Mergers & Acquisitions;

Around 24,800 M&A deals have been conducted in the Telecommunication Industry with either the
acquirer or the target company coming from the Telecommunications sector. In total over 5.712 bil. USD
have been spent on M&A between 1985 and 2018 in this industry.
There has only been one big M&A wave around 1999 and 2000. In most other industry there are three
waves between 1990 and 2018. Since 1999 deal value shrunk by -90.12% and is expected to stagnate in
2018.

PERFORMANCE & GROWTH DRIVERS

There are Few Top Global Players in the Telecom Industry, namely
GROWTH DRIVERS:

Top 5 disruptions that will drive the most change in telecommunications by 2020 are:

1. Integration with content service providers: Being connected continues to become

cheaper. Connectivity is capturing a smaller proportion of the information value chain
while content, service, and product deliverers capture more. By 2020, it is likely that one
or more major telecom companies will be acquired by a content company.
2. IoT: The next major trend that will impact is the explosion of connected devices. This will
add billions of new connected data sources globally by 2020. The upswing of all of these
devices will be an astronomical growth in data volumes; we will quickly push through
exabyte volumes and enter the world of zettabytes per year.
3. Mobility: Growth of mobile connectivity is far outpacing fixed line connectivity. This
makes sense, as most growth is occurring in the developing world and amongst poorer
populations. For these people, mobile is cheaper, convenient, and more useful, even
when landline connectivity is an option.
4. Market Saturation: Elder population as they retire will enter retirement communities and
assisted living facilities which are fully digitized in order to be as efficient as possible.
Older population will be forced into using these technologies by the world around them
and will likely consume vastly more bandwidth than they, or their carriers, ever
imagined. As this occurs, the last remaining percentages of market penetration will be
achieved, and the market will be thoroughly saturated.
5. Security: As custodians of the networks, carriers play a pivotal role in fighting the new
threats that are emerging. Customers will begin to expect, then demand, more proactive
protection from the entire internet value chain, and carriers will be expected to support
these expectations with a range of technical and operational innovations. The desire for
greater security may be a boon for carriers, if they embrace the need.
Telecom Industry: Supply & Value Chain
Supply Chain:
Telecommunications industry has a complex set of suppliers, including vendors for equipment,
infrastructure and service providers. Many service providers own their own transmission networks and
infrastructure but there are many who might lease from other players. Business and household
telecommunication services make up the largest source of revenue for the industry, followed by sales of
products, equipment, and infrastructure services.

Cost Model:
The telecommunications industry requires heavy capital investments to create wired, wireless, or
broadband infrastructure and networks. It is a capital-intensive business with high fixed costs and lower
variable or incremental costs. Customers pay for a share of the fixed costs apart from the variable costs in
their fees. Companies in the industry are continuously looking for new customers so they can distribute
these fixed costs among many payers. This helps companies remain competitive under price pressures
and profitable in a fiercely competitive market.

Telecommunications Industry Value Chain:

The telecommunications industry is made up of a complex set of suppliers, service providers, regulators,
and customers. The key stakeholders in the telecommunication value chain include
1. Telecommunication product and equipment manufacturers
2. Telecommunication service providers
3. Customers
4. Regulators

Concerns & Challanges:

In addition to opportunities, the telecom companies around the world are facing a lot of challenges in
this era. New technologies like the Internet of Things (IoT), augmented reality (AR), virtual reality (VR),
microservices and more necessitate that telecom providers realign their business strategies and
restructure themselves as per the cloud era, in terms of operations, architecture and networks as well.
Moreover, in order to gain a competitive edge, they need to focus on providing customized solutions to
their customers and focus on developing long-term relationships with them.

Top 5 challenges and trends in the telecommunication industry in 2019

1. Telcos have to decentralize the purchasing and decision power, both internally and
externally,because of the essential agile reconfiguration of the cloud.
2. With the availability of new technologies, the variety and quality of services from telecom
companies and internet service providers (ISP) are increasing, profit margins are decreasing, and
the lines between telecom companies and technology vendors are blurring. Hence, telcos have to
take a fresh look at the level of ICT innovation and adapt their organization to digital
transformation by creating strong cross-functional interfaces and by seeking tools for maintaining
organizational flexibility.
3. With millions of subscribers, a variety of new products, bundled and customized solutions, the
operational support services like service configuration, order fulfillment, customer care, and
billing are becoming increasingly complex. Hence, the cost of handling these operations require
resources and different tools, thus, increasing the financial overhead.
 4. Telecommunication providers need to upgrade their IT and connectivity infrastructure and focus
on providing data and voice services that are high quality, reliable, and affordable. Security of the
networks has become a major priority for the telcos and they are facing challenges with the
emergence of new threats that are powered by new technologies. So, a number of operational
and technical innovations are needed to meet customer expectations of complete system
security from network till the device level.
5. One more challenge waiting in the wings for telcos and ISPs is the impact of Internet of Things
(IoT) that is leading to explosive growth in the connected devices. This growth is generating
billions and trillions of new data sources and thus, it is expected that this growth will push the
data to be handled by networks to zettabytes per year.

Alongside these challanges in the field there are few Famous trends driving the Industry

5G Networks – The telecom carriers are working on providing the 5G networks to spark an enormous
wave of faster internet. While the technology has not yet been fully defined, carriers are proceeding with
the lab and field trials in their race to stay competitive.
The full, mass-market 5G coverage is expected by approximately 2020.

Secure and reliable services – Modern telecom environment offers a rich set of services that need
reliable and secure authentication. The number of smartphones equipped with biometric fingerprint
readers is increasing. This technology is also being used by retailers, financial institutions, government,
and even schools, to verify identities.
Other biometric mechanisms like facial or retinal recognition, are also telecom trends and are likely to
pick up steam in the coming years. An increasingly large number of telecom companies are adopting
biometric SIM cards for curbing crimes related to mobile phones and terrorist attacks as well.

Artificial Intelligence (AI) – The addition of artificial intelligence (AI) capabilities to smartphones will bring
the next shift in technology, according to Huawei, in an article by ZDNet.
AI allows smartphones to perform highly sophisticated functions such as augmented reality (remember
Pokémon Go), speech recognition, indoor navigation, and even learning the daily tasks and preferences
of an individual to enable digital assistants like Siri and Alexa.

Customer service chatbots, like CenturyLink’s ‘sales assistant’, speech and voice services for customers
where they can explore or buy content by speaking, traffic classification, network optimization and
orchestration, and predictive network maintenance, like AT&T’s self-healing and self-learning hardware
that’s powered by artificial intelligence are among some AI applications that are used by the leading
players and are among the emerging trends in the telecommunication sector.

Internet of Things – Although mentioned above as part of challenges faced by telecom industry due to
the huge amount of data that connected devices generate, but this is one major trend that will provide
telcos with more opportunities in the coming years. Becoming an IoT connectivity service provider and
offering Machine to Machine (M2M) devices can open up new streams of revenue for the telcos.
Gartner predicts that there will be nearly 20 billion devices connected to the IoT by 2020 and that IoT
product and service suppliers will amount to a business of $300 billion in revenue.

As per a survey by Tata Consultancy Services (TCS), the telecom sector ranks fourth as far as spending on
IoT technology is concerned. Making software-based updates to their products and services has been
rated as the top business process improvement by telecom companies.