Telecommunications Industry Forecasts 2015

Transcription

1 Telecommunications Industry Forecasts 2015 Executive Summary CMR Market Research February 2015 Reproduction without permission 1

2 The contents of this report represent CMR s analysis of the information available to the public or released by responsible individuals in the industry. It does not contain information provided in confidence by CMR s clients. Since much of the information in the study is based on a variety of sources that we deem to be reliable, including subjective estimates and analyst opinion, CMR does not guarantee the accuracy of the contents and assumes no liability for inaccurate source materials. Copyright 2015 by CMR Market Research All Rights Reserved. Printed in the United States of America. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, prior to written permission of the publisher. About CMR CMR provides in-depth analysis of major telecommunications and IT industry trends. CMR has been tracking the telecom and IT industry for over twenty years. CMR analysts are in the marketplace every day evaluating information and analyzing data, providing the most current, leading-edge market assessments. CMR tracks actual financial reporting from all of the major telecom service providers throughout the world and measures revenues and units by multiple segments, including wireless/wireline, voice/data/video, and residential/business. CMR analysts estimate upside and downside market ranges, and looks for factors that could alter future market conditions. Contact us at: , or [email protected]. Reproduction without permission 2

3 TABLE OF CONTENTS 1. EXECUTIVE SUMMARY 1.1 Telecommunications an Important Element of the Global Economy 1.2 Regional Environment 1.3 Market Forecast Summary 1.4 Report Structure 2. TELECOMMUNICATIONS MARKETS 2.1 Global Markets 2.2 Technology Trends 2.3 Business Models 2.4 Industry Players 3. SERVICES AND CHANNELS 3.1 Service Definitions 3.2 Service Mix -- Historical 3.3 Connected World 3.4 Channels 4. DEMAND DRIVERS 4.1 Population and Penetration 4.2 Wireline Demand 4.3 Wireless Demand 5. MARKET FORECAST 5.1 Summary 5.2 Methodology 5.3 Market Forecast Global Telecommunications Forecast North American Telecommunications Forecast US Telecommunications Forecast European, Middle East, and Africa Telecommunications Forecast Asia-Pacific Telecommunications Forecast Latin America-Caribbean Telecommunications Forecast Wireline Forecasts Wireless Forecasts 5.4 Conclusion Reproduction without permission 3

4 FIGURES AND TABLES FIGURES Global Telecommunications Revenues, 2014 ($Billions) Regional Wireless Subscribers, (000) Report Segmentation GDP by Region, (Annual Percentage Change) Service Platforms Service Provider Value Chain Telecom Services Framework US Wireline & Wireless Revenues, ($Billions) US Wireless Revenues by Service, ($Billions) Global Internet Access Penetration, US Channels and Marketing Business Sales Channels Regional Population (Millions) TABLES Product Lifecycle by Region Telecom Services Definitions Wireline Access Lines by Region, (Millions) US Wireline Access Lines, (Millions) Broadband Subscribers by Region, (Millions) US Broadband Subscribers, (Millions) Wireless Subscribers by Region, (Millions) NA Wireless Penetration, (Millions) US Wireless Penetration, (Millions) EMEA Wireless Penetration, (Millions) AP Wireless Penetration, (Millions) LA Wireless Penetration, (Millions) Wireline and Wireless Revenues, ($Billions) Revenue by Region, ($Billions) US Revenue, ($Billions) NA Revenues, Wireless & Wireline, ($Billions) US Revenues, Wireless & Wireline, ($Billions) EMEA Revenues, Wireless & Wireline, ($Billions) AP Revenues, Wireless & Wireline, ($Billions) LA Revenues, Wireless & Wireline, ($Billions) Wireline Revenue by Region, ($Billions) Wireline Access Revenue by Region, ($Billions) Reproduction without permission 4

5 US Wireline Access Revenue, ($Billions) Wireline Broadband Revenue by Region, ($Billions) US Wireline Broadband Revenue, ($Billions) Wireless Revenue by Region, ($Billions) Reproduction without permission 5

6 1. EXECUTIVE SUMMARY 1.1 Telecommunications an Important Element of the Global Economy Telecommunications service revenues represents close to three percent of global GDP. The value of telecommunications is rising as evidenced by the increasing share telecommunications represents of disposable income. Over the past decade telecommunications spending as a share of disposable income has risen by over twenty percent, displacing other essentials, such as transportation and textiles. From sales to manufacturing to customer support telecommunications services allow businesses to connect with their customers and deliver their products some digitally to the customer s door. Consumers have become attached to their telecommunications devices twenty four hours a day and industries such as broadcast TV are in the midst of a transformation to on-demand delivery of content. Telecommunications is a facilitator of economic advancement for every developed country and perhaps even more critical to developing economies which lack the resources to build costly manufacturing and service industries to compete with western economies. Economic factors are important predictors of telecommunications spending, as macro-economic variables, including gross domestic product (GDP) growth, population changes, employment, the number of business establishments, and consumer disposable income, drive personal and business communications. In addition, global telecommunications networks are critical to international trade and finance, providing a conduit for business transactions and market trades. The Internet has fundamentally changed the telecommunications industry, and, in turn, it has changed industries, financial models, and personal communications. A large percentage of business activity now depends on the Internet from everything from electronic commerce to intranet applications to customer service. Consumer demand for the latest wireless devices and on-demand video content have driven consumer telecommunications spending higher, contribution to the higher share of disposable income cited earlier. The shift to cloud-based solutions, where applications no longer run on premises equipment, is transforming the telecommunications and IT equipment business. Telecommunications networks Reproduction without permission 6

7 are enabling that shift, allowing businesses to transition servers and routers into the network. Increasing use of video and wireless services is driving exponential bandwidth demands onto these same networks. As more endpoints and applications are added to these networks data traffic will grow by an order of magnitude, causing service providers to rethink their network architectures. 1.2 Regional Environment The segmentation of the global telecommunications market usually follows along traditional boundaries, such as regional or country boundaries. Indeed, service providers and industry suppliers (equipment vendors, system integrators, and component suppliers) have organized their internal resources and reporting structures by these same regional and country parameters. In addition, the telecommunications market in each country is a product of the unique regulatory rules that governed rates, capital investment requirements, and licensing guidelines in each country and these original constraints are still evident today. CMR uses these boundaries while tracking past performance and our forecast models provide a projection of future demand and revenues within the same boundaries. The forecast of telecommunications services revenues is a product of several macro-economic variables, including region and country-level GDP growth, population changes, employment patterns, growth and changing complexion of business establishments, and consumer disposable income to name a few. Most regions are experiencing modest GDP growth in the current year and economists project further improvements over the next few years, before moderating towards the end of the forecast period. Employment growth will continue to lag economic growth, yet telecommunications spending should rise modestly as the labor market recovers in each region. Business establishments are growing in developing countries, while the bandwidth requirements for office and manufacturing buildings in developed countries continue to outpace current network capacity. Consumers and businesses continue to spend increasing share of their disposable income and cash flow -- on communications services, as digital connectivity pervades our daily activities. CMR looks at these historical results and future trends by region in order to develop the most accurate projection of telecommunications spending over the next five years. CMR s forecasts are segmented into four regions: Asia-Pacific (AP), Europe, Middle East, and Africa (EMEA), North America (NA), and Latin Reproduction without permission 7

8 America (LA). Figure I-1 shows the distribution of telecommunications revenues by region in the past year. Figure I-1 Global Telecommunications Revenues, 2014 ($Billions) The Global Telecommunications market generated $2.2 trillion in revenue in Asia-Pacific (AP) was the largest region, as measured in telecommunications spending, representing 39 percent of total global revenues. European, Middle East, and Africa (EMEA), the next largest region, represented 28 percent of total global revenues. North America (NA) represented 25 percent of total global revenues, while Latin America (LA), the smallest region, represented 8 percent of total global revenues. 1.3 Market Forecast Summary Wireless subscriber and revenue growth has been the biggest factor shaping the global telecom market over the past decade. As wireless voice penetration levels reach saturation future growth of wireless revenues will be driven by wireless data. CMR projects continued strong growth in sales of smartphones, tablets, and machine-to-machine (M2M) devices over the forecast horizon, while the deployment of 4G LTE in each region will drive even more consumers (and businesses) to wireless data communications. Figure I-2 shows the high-level forecast of wireless subscriber growth by region across the forecast period Reproduction without permission 8

9 Figure I-2 Regional Wireless Subscribers, (000) CMR projects that global wireless subs will increase from 4.9 billion in 2014 to 5.8 billion in 2019 at a Combined Average Growth Rate (CAGR) of 3.5 percent over the forecast period. From 2014 to 2019 NA wireless subs will increase from 372 million to 488 million at a CAGR of 5.6 percent, while EMEA wireless subs will increase from 1.7 billion to 1.9 billion at a CAGR of 2.3 percent. During this same period AP wireless subs will increase from 2.1 billion to 2.6 billion at a CAGR of 4.5 percent. LA wireless subs will increase from 692 million to 776 million at a CAGR of 2.3 percent. NA wireless penetration will increase from 105 percent to 131 percent as 116 million new subs are added. Much of this increase will come from other connected devices, such as tablets and sensors that use the same 4G LTE data spectrum. AP will add the most new subscribers, which is not surprising given the low penetration levels still in China, India, Vietnam, and Indonesia. The EMEA growth is almost entirely due to new mobile service penetration in Africa and the Middle East. Wireless subscriber growth is just one element driving the overall telecommunications market. In chapters II through V, CMR provides extensive Reproduction without permission 9

10 forecasts of other demand drivers, such as population, minutes of use, data traffic, and broadband lines. Revenue forecasts are provided by services (wireless, wireline), access arrangement (broadband, landline, wireless) and region (NA and US, EMEA, AP, LA), along with discussions of the trends and technologies affecting the industry size. 1.4 Report Structure The report covers the entire telecommunications spectrum, from wireline to wireless, from business to consumer services. Telecommunications equipment markets, while closely associated with services, are not covered in this report. In our data gathering and analyses, CMR tracks the entire global market, which includes most of the major service providers in each region, as well as the underlying services (voice, data, and video) they provide. Figure I-3 shows where these services fit within CMR s segmentation framework. Figure I-3 Report Segmentation Services Equipment Wireless Wireline Voice Data Msg Voice Data Carrier Enterprise Consumer Video BB PL FRS IPE Business Carrier Enterprise Residence Consumer ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= ======= NA US CAN EMEA AP LA NA, EMEA, AP, LA Global Telecommunications Services CMR's market research reports provide in-depth analysis of major telecommunications industry issues. This report, Telecommunications Industry Forecasts 2015, provides a high-level assessment of this multi-trillion dollar services market and the economic environment over the next few years that will influence its growth. The report provides a historical perspective of these markets and sub-segments, along with identification of key technology trends that will influence demand, pricing, and revenues over the forecast horizon. Complete five Reproduction without permission 10

11 year forecasts of revenues are also provided based on CMR s experienced judgment of the industry. CMR's forecasts are based upon primary and secondary research about current and future services adoption rates in each region. CMR maintains a comprehensive forecast model of telecommunications spending, including actual revenue and metric reporting from all of the major industry players. These data are combined with various time series and econometric models of industry performance to produce projections of future revenues, units, and pricing. Telecommunications services are a product of current transport services, technology trends, consumer and business activity. CMR has developed a detailed model to support this validation. The model includes input from a number of independent variables, including consumer spending, business activity, broadband adoption, wireless penetration and usage, and cloud computing. Assumptions about industry pricing, service and technology substitution, and penetration rates were validated against input from primary and secondary sources. The report is structured as follows: Chapter II, TELECOMMUNICATIONS MARKETS, provides an overview of the global economy, definitions used throughout the report, and an assessment of the industry players and business models that will influence the telecommunications services market. Chapter III, SERVICES AND CHANNELS, looks back five to ten years to show where the industry has come from, how it has changed, and identifies the services and technologies that are likely to swing the industry in new directions. Chapter IV, DEMAND DRIVERS, provides an assessment of the fundamental units of production (population, minutes, packets, subscribers, etc) that will drive revenue growth over the forecast period Chapter V, MARKET FORECAST, provides CMR s five year forecasts of all telecommunications services (wireless, wireline) by region (NA and US, EMEA, AP, LA) from 2014 through Tables and Figures for segment and region, along with discussions of trends and conclusion, are also provided. Reproduction without permission 11