Analysys Mason’s 2013 telecoms forecast – LTE, social SMS and smartphones

19 Dec 2012

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The 4G networks based on Long Term Evolution (LTE) will become a commercial reality in 2013 but its economic impact in the first 12 months will be limited. That’s one of the predictions for next year by Analysys Mason, which also predicts Apple’s share of the tablet market will fall below 50pc globally.

4G arrives

Analysys Mason says some European countries and emerging markets in Latin America are set to launch the network, as well as countries in south-east Asia via the Asia–Pacific band plan.

Some developed markets, such as South Korea, will also start to deploy LTE and take advantage of features, such as carrier aggregation, to craft larger channels for higher-speed services.

However, the immediate economic impact of LTE will be limited in countries where it has been priced as a premium product and the economy remains sluggish (eg, Italy and Spain).

The industry will also realise that consumers are unwilling to pay a premium for LTE mobile broadband, and that this service will not compete with next-generation fixed access on anything other than a complementary basis. The effect will be to push down the price of 3G/HSPA mobile broadband services.

2G switch-off

The year 2013 will see growing operator focus on ‘the big switch-off’ – legacy mobile infrastructure for mobile network operators, copper networks and PSTN for fixed operators. Approaches to this will be varied. One operator in South Korea, for example, has already switched off its 2G network.

New rivalry – social media and SMS cannibalisation

In 2012, operators responded to SMS cannibalisation by launching RCS-e, which was followed by a number of ‘telco-OTT’ services.

In the next 12 months, competition will heat up further as social media giants, such as Facebook, move in.

Analysys Mason forecasts that European operator revenue from messaging will decline by 34pc in the next four years, from €28bn in 2011 to €18.6bn in 2017.

Voice-over-LTE

The first voice-over-LTE (VoLTE) services came to market in 2012. Though widespread commercial deployments are still some way off, operators will need to make some tough decisions about the future of their voice services.

Potential cost savings are currently driving the IMS investment case, but revenue implications are uncertain, and a clear vision for how voice services should evolve in an LTE world has yet to be articulated. HTML5/WebRTC will further stimulate the debate about whether ‘voice is just an application’.

Smartphone penetration growth rate to slow

The smartphone market will continue to grow but the rate at which it grows will be markedly slower than in previous years. The number of annual global smartphone shipments will grow from 691m in 2012 to 869m in 2013.

However, the rate of growth in the rate of new smartphone connections will significantly decline: from 39pc in 2011 to 29pc in 2012. In 2013, this growth rate will decline further to 20pc.   

Analysys Mason predicts continued, incremental development of the smartphone OS market share situation. Both Android and iOS are predicted to marginally grow their share of smartphone sales in the next 12 months globally (from 56.4pc to 58.1pc and 21.5pc to 22pc respectively).

However, Symbian’s market share for sales will fall from 5.9pc to 2.7pc, reaching zero in 2016.

Apple to fall below 50pc market share for tablets

As the tablet market continues to grow, Apple’s dominance of it will continue to decline, faster than many expect.

Apple will fall below 50pc market share for tablets by the end of 2013, with the iPad mini expected to have only a limited impact on sales numbers due to its high price point (US$329 versus less than US$200 for a Kindle Fire HD). Both Apple and Samsung lost market share in 2011-12 to the benefit of other vendors, such as HTC, Motorola, RIM and Sony.

Content ecosystems for tablets will be a key differentiator in 2013 and as important a feature for tablets as the quality and size of the screen or processing power. Vendors who focus on expanding their content line-up and international footprint will be most likely to capture non-Apple tablet users.

Multi-device bundling

Selling prices for smartphones and tablets have been falling in the past five years; the average price of a smartphone has declined by €300 since 2007.

This trend has supported increasing data penetration and the emergence of the multi-device user segment, which will result in many more operators launching multi-device subscription plans to capture additional revenue.

This is particularly true for LTE subscriptions, where per-gigabyte pricing covers a wide range of US$14–85 per gigabyte.

Traditional TV under more pressure

OTT/Connected TV and non-linear TV will continue to force broadcasters/pay-TV and telecoms operators to rethink their strategies. The take-up of paid-for OTT video services to the TV in the USA and Canada will more than double to 53.1m households between 2012 and 2017, representing 37.4pc of households.

The take-up of paid-for OTT video services in Europe will reach an estimated 2.3m households in 2012, representing a mere 0.7pc of households. We expect this to increase to 32.2m, or 10pc of households, in 2017. Compared with the USA and Canada, growth in Europe will continue to be constrained by a lower propensity to pay for video services, because of the widespread availability of high-quality free content from public broadcasters.

Wi-Fi to the rescue

Small-cell/service-provider Wi-Fi solutions will address mobile operators’ needs for dense urban wireless coverage and capacity, but limited backhaul availability, standards maturity and solution costs will blunt major deployments until late 2013 or early 2014.

LTE 2600 will emerge as a key option for small-cell spectrum gaining network and device support to address capacity needs of developed-market operators, complemented by growing 5GHz Wi-Fi providing improved Wi-Fi performance.

Service-provider Wi-Fi solutions based on HotSpot 2.0 and devices supporting Passpoint 2.0 will come to market in late 2013, helping to bridge the chasm between cellular networks and the emerging ‘carrier grade’ Wi-Fi service.

Operators will also start to look at providing various grades of service: cellular, SP Wi-Fi and ‘Best Effort’ Wi-Fi to help differentiate their service and brand, as well as support monetisation of the wireless experience.

Telcos in emerging markets to come of age

Process transformation, opex and network cost optimisation will become major issues in emerging markets as operators within these regions are coming of age and an apparently endless growth in mobile penetration rates is finally slowing down.

The penetration rates of active SIMs in some African and Middle Eastern countries, for example, already exceed 100pc of the population (eg, South Africa, Saudi Arabia, Morocco, and the United Arab Emirates).

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com