2015 Telecommunications Industry Outlook
Interview with Craig Wigginton
Every part of the mobile ecosystem shows powerful potential for continued core growth as well as opportunities for expansion–and businesses and consumers both will ultimately benefit, says Craig Wigginton, vice chairman and US Telecommunications leader, Deloitte & Touche LLP.
Where do you see the opportunities for growth in this sector?
As we’ve seen over the past few years, telecom continues to be a growing, vibrant ecosystem, expanding rapidly across a broad swath of product, technology and services companies. And we believe that are plenty of new and emerging opportunities which could continue to provide robust growth across all of the telecommunications sub-sectors.
A promising recent development, which we expect will accelerate in 2015, is the movement of nascent markets toward the consumer and enterprise mainstream—with Internet of Things (IoT) leading the way. Many businesses have the potential to derive high value from IoT—by one count it is estimated to generate nearly $15 trillion in economic value in areas such as efficiency, productivity, cost reduction and increased customer base. The news is good on the consumer side as well; although IoT is relatively new to most consumers, 55 percent of US respondents from Deloitte’s 2014 Global Mobile Consumer Survey already are interested in connected-home technology—and for smartphone owners, that percentage is even higher. Survey responses also showed consumer enthusiasm for connected-car solutions.
Growth overall also will be driven by ongoing consumer obsession with their devices. In fact, it’s become a critical part of our daily lives, according to our survey. Approximately 90 percent of consumers check their smartphone within one hour of waking up, and about 25 percent check their phone more than 50 times a day.
Another key trend is the growth of audio and video streaming among smartphone users, with most consumers now using more than a gigabyte of data per month. The 2014 Global Mobile Consumer Survey showed a 19 percent increase among US consumers streaming television or film over the past year, and there was an impressive 30 percent year-over-year growth in streaming music. Even more compelling was that the number of consumers who indicated they streamed media has nearly doubled since last year.
"As the reach of IoT and verticals increases, the need for new cybersecurity and privacy solutions offer major new revenue opportunities."
What should businesses be mindful of as they plan for growth?
Traditional telecommunications organizations must be mindful that the sector is becoming more of an interconnected ecosystem. Rather than “going it alone,” in many instances, companies can experience success by strategically and intelligently forming alliances to offer additional value to customers and build their businesses. With mobile increasingly touching every industry, as well as every aspect of business and everyday life, there are a myriad of possibilities for value-added joint efforts.
From a more technical perspective, we touched earlier on 2015 potentially being “the year of streaming.” If that becomes a reality, spectrum will become increasingly important, especially with continued natural growth and higher-definition (e.g., 4K) content on the horizon from a number of major entertainment organizations—and 4K screens correspondingly appearing on mobile devices. As noted in several recent Deloitte reports on mobile broadband spectrum, the mobile broadband ecosystem is contributing greatly to the US economy—some estimate that 4G networks could account for more than $150 billion in GDP growth1 over the next few years. Incentive auctions of spectrum, as well as Federal government policy, could have a profound effect on the US’ ability to meet consumer and business demand.
1 “Airwave Overload,” Deloitte 2012
What’s the next big thing? What markets do you see emerging in the sector?
There are a number of exciting growth opportunities in this ever-expanding ecosystem. On the consumer side, wearables—glasses, exercise bands, smartwatches and the like—will be an interesting market to track. How quickly, and to what extent, will they gain traction? We expect to see continued growth in wearables over time, particularly those with the right features and functionality for consumers, and those that tie to opportunities in vertical markets.
As the reach of IoT and verticals increases, the need for new cybersecurity and privacy solutions offer major new revenue opportunities. Moreover, the availability to gather and analyze rich customer data will offer telecom players the ability to meet consumer needs in innovative new ways. A Deloitte POV on IoT indicates that companies should create a strategic framework for IoT growth focused on financial metrics (growth through innovation/market disruption), operating metrics (acquiring, retaining and maximizing customers and products) and performance improvement (to drive sustained value).
As noted previously, there is major opportunity for mobile in vertical markets. First out of the gate is automotive, with a variety of additional connected-car solutions being introduced in 2015. mHealth may also get a boost as major device manufacturers refocus on its revenue-generating potential. “Smart” cities are on the rise. The re-emergence of NFC (near-field communications) has the potential to offer mPayment benefits to financial partners as well as the retail sector. While currently a small market, consumers who use NFC are passionate about it—in fact, 31% of consumers who have an NFC-enabled phone use the capability at least monthly, according to our Deloitte survey. Finally, there is always a need around enhancing and expanding broadband coverage in new ways—enhanced 4G, nanosatellites, small cells, DAS (distributed antenna systems), and more. Every part of the ecosystem, including carriers, equipment and infrastructure providers, and content developers, shows powerful potential for continued core growth as well as opportunities for expansion—and businesses and consumers both will ultimately benefit.
2016 Telecommunications Industry Outlook
Continued momentum around core telecommunications businesses—as well as innovation around non-traditional business models such as Internet of Things applications, mPayments, and evolving communications technologies—will present both new challenges and growth opportunities for telecommunications companies.
Discover more insights from our 2016 Telecommunications Industry Outlook.