We have seen what stagnation looks like in our developed markets, but in telecom we haven’t felt it as acutely as other industries. And in telecom software we have felt it even less. Barclays said this week that at $72 billion, the telecom software and services market has been one of the most resilient areas of carrier spending during the recent downturn.
“Long-term contracts, high replacement costs and steady carrier upgrade cycles support its high visibility, healthy cash flow business," the financial services provider said.
Resilience. It is the ability to recover from or adjust easily to misfortune or change. Telecom had no resiliency back in 2000, perhaps because there was no misfortune. Misfortune is not self-induced; the tech bubble was. But to continue to grow in the current environment is true resilience. And emerging markets are growing at a healthy clip, thanks in part to technology development and availability, and in part to the insatiable appetite of consumers for anything that would make the lives of people in those markets easier.
The emerging markets found in Southeast Asia, Latin America and Eastern Europe were of particular interest to Frost & Sullivan and Amdocs this year as the latter commissioned the former to conduct a study on how service providers view the concept of a connected world and what operational strategies they are employing to take full advantage of all that resilience.
It isn’t as if operators can replay the same strategies that built today’s mature markets. The growth path for emerging markets is not the same.
“The developed world took a pathway from landline phone to the Internet to the cell phone, but the emerging world, in many situations, leapfrogged to the cell phone,” said Nancy Weber, senior consultant for North America, Information and Communication Technologies at Frost & Sullivan. “The Internet isn’t as prevalent so neither are the tools.”
Consumers and vertical markets such as health care, education, government and banking are driving the evolution of the connected world for both emerging and mature markets. And service providers in both markets see themselves as leaders in this evolution, according to the Frost & Sullivan survey. They also both know that their current operational environment won’t support the connected world. Ninety percent of service providers believe new pricing models will emerge to drive adoption and fund the introduction of consumer services.
One of the biggest differences in emerging markets from the customer perspective is the adoption of mobile banking applications and mobile commerce. Users are adopting these services faster than in mature markets and service providers rank these above health care, education, transportation, smart metering and even government in terms of growth potential.
Service providers also see themselves differently in emerging markets. While they rely on partnerships and third-party content providers in developed markets, in emerging markets they see themselves more as end-to-end providers. In developed markets, service providers still struggle with and experiment with their place in the value chain; in emerging markets their place is secure for now. Only 33 percent see themselves as service enablers; the other 67 percent see themselves as end-to-end experience providers.