Telecommunications Services (Global Market)

• Global Telecom Trends

Telecommunications services, including pay TV

2023

Global market growth of 3% to $1.55 trillion

At the end of 2023, world spending on communications and pay television services is approximately $1.55 trillion. This is 3% more compared to the previous year. Such figures are reflected in the IDC study, the results of which were published on November 3, 2023.

According to analytical data, the American region at the end of 2023 shows an increase of 3.3% on an annualized basis - from $575 billion to $594 billion. In the Asia-Pacific region, growth rates are estimated at 2.6% - from $486 billion to $499 billion. The countries of Europe, the Middle East and Africa account for $461 billion in total costs against $447 billion in 2022, which corresponds to an increase of 3.1%. Thus, the telecom market is showing positive dynamics in all regions.

The report says that the main driver of the global industry is, inflation however, the trends that it forms in different local markets differ significantly. In many countries, regulators have allowed telecom operators to raise tariffs (the consumer price index is often used), which allows telecom industry participants to increase revenue. On the other hand, such a policy leads to a redistribution of the subscriber base: many users switch to less expensive tariff packages or choose other providers with more favorable offers. Therefore, in general, the rate of income growth is much lower than the nominal increase in tariffs. At the same time, in some markets, the current competitive environment does not allow increasing the cost of services. And in a number of countries, mainly developing countries of Eastern Europe and Africa, the increase in tariffs is hindered by the low purchasing power of the population.

If we consider the industry from the point of view of types of telecommunications services, then previously formed trends remain, despite the difficult geopolitical situation and macroeconomic challenges. Mobile communication remains the largest segment: at the same time, the reduction in the cost of voice calls and messaging is offset by an increase in Internet traffic and the demand for inter-machine interaction (M2M) applications. The fixed data services segment is also growing due to the need for higher throughput services. At the same time, the cost of fixed telephony is decreasing, and even the growing popularity of voice IP communication does not save the situation. The traditional pay-TV market declined slightly in 2023 due to the growing demand for video on demand (VoD) services and OTT services, that is, providing services via the Internet.

Due to high inflation, consumers and corporate users have come under pressure to maintain a balance between rising costs and tight budgets, the IDC notes. While the elasticity of communication services is relatively low, and it is difficult for customers to imagine daily life without them, excessive tariff increases can negatively affect demand.

Operators need to carefully evaluate each market for tolerance for price increases. They should constantly analyze and compare the range of products, quality of services, prices and customer support opportunities at all levels. This information should help telecom industry participants find the optimal percentage of tariff increases that will not scare customers away, have a positive impact on revenues and help maintain profits in these turbulent times, says Kresimir Alic, research director at IDC Worldwide Telecom Services.[1]

7 technological trends in telecom named

Against the background of the ongoing digital transformation, large-scale transformations of the telecommunications industry are taking place. Providers and carriers are implementing elaborate plans that involve comprehensive changes across the board - from business models to day-to-day operations to improving customer experience. In a report dated October 13, 2023, analysts McKinsey named seven technology trends that will have the strongest impact on the telecom market.

1. Ever-expanding connectivity

5G telecommunications infrastructure provides qualitatively new opportunities in terms of connecting and creating mobile services, and 6G technology will provide even more potential. We are talking about the development of such areas as telemedicine (remote monitoring of patients), metaverse, unmanned vehicles, etc. Demand for high-speed mobile connections is also spurred by remote work and distance learning. Therefore, as noted by McKinsey, operators need to exponentially increase network bandwidth, expand the spectrum of frequencies, as well as reduce delays and reduce power consumption.

Large-scale transformations of the telecommunications industry are taking place

2. Peripheral Computing

By distributing computing workloads to remote data centers closer to end users, delays and service speeds are reduced. In addition, organizations will gain more control over their information. Peripheral computing enables real-time processing of data, opening up opportunities for its use in a wide variety of response-rate sensitive industries, from remote health care to remote mining management.

3. Next Generation Transport

Rapid adoption of autopilot, AI, network connectivity and electrification technologies is transforming the land and air transport industry. This will make transporting people and transporting goods much more efficient and environmentally friendly. The main efforts of market participants are aimed at the development of electric, hydrogen and hybrid platforms. Under these conditions, McKinsey said in a report, telecommunications companies would need to ramp up network capacity to maintain mobility, especially in remote regions, and provide reliable backup coverage for emergencies.

4. xRAN

By this term, analysts mean various architectures of radio access networks (RAN). These are, in particular, ORAN (open RAN), VRAN (virtualized RAN) and CRAN (centralized RAN). It is said that the deployment of such platforms increases the flexibility of telecom companies to interact with OEMs and even reduces the requirements for physical assets such as towers, antennas and cables. And this will help reduce capital and operating costs, speed up the deployment of new network services and stimulate competition between suppliers.

5. Trust Architecture and Digital Identification

As organizations build and scale digital products and services based on the collection and analysis of vast amounts of data, trust and privacy are increasingly important. Therefore, according to McKinsey analysts, companies should increase investment in cybersecurity solutions. We are talking about the architecture of zero trust, means of identification and ensuring confidentiality.

Companies should increase investment in cybersecurity solutions

6. Artificial intelligence

Advances in AI, including generative tools, open up new opportunities for organizations to develop and sustain businesses. Telecom companies can use AI to optimize networks (by managing resources based on real-time traffic and data analysis), solving technical issues, minimizing customer outflows, etc. Generative AI will help change the quality of service by providing subscribers with highly personalized content and proactive support.

7. Quantum technologies

Advances in quantum technology can lead to exponential increases in computational performance and data transfer rates. Telecom executives see the greatest value in the development of quantum key distribution (QKD) systems that provide secure exchange of cryptographic keys. On the other hand, quantum computing will jeopardize traditional encryption methods.^[2]

2022

Market growth of 2.2% to $1.51 trillion

At the end of 2022, global spending on telecommunications and pay-TV services reached $1.51 trillion. For comparison: a year earlier, costs on a global scale were $1.48 trillion. Thus, an increase of about 2.2% was recorded, as stated in the IDC report, published on May 5, 2023.

In the current macroeconomic situation, crisis and high inflation, providers around the world, as noted, began to raise tariffs. This is necessary to compensate for increased operating costs and equipment costs, which have risen significantly in price. The International Monetary Fund (IMF) estimates that inflation will continue until at least 2025, meaning telecom operators will continue to raise prices for their services. Customers will have to pay more, which will lead to an increase in the total nominal volume of the industry (in monetary terms).

According to estimates, the size of the American market for telecommunications services and paid TV services in 2022 amounted to $580 billion. This is 1.4% more than in the previous year, when the cost here was $572 billion. In the Asia-Pacific region, spending on an annualized basis rose by 3% - from $467 billion to $481 billion. In the EMEA market (Europe, including Russia, the Middle East and Africa), costs in 2022 were recorded at $449 billion - this is 2.4% more compared to 2021, when the result of $438 billion was shown.

IDC emphasizes that in the EMEA region, inflation exceeds the average for the global market as a whole. This is due, among other things, to the energy crisis and the formed geopolitical situation. In addition, a sharp increase in interest rates of central banks led to a slowdown in the growth of key areas of the economy. At the same time, the most significant increase in the Asia-Pacific region is due to the relatively low saturation of markets in less developed countries.

Analysts say that the positive momentum given by inflation is only nominal. In fact, the recorded growth rates of the industry are much lower than the annual growth rates of the price level, which means that there is a real decrease in costs in the market. For this reason, telecom operators continue to invest heavily in advanced telecommunications technologies. They hope the shift to next-generation broadband and 5G services will help offset the decline in fixed and mobile voice revenue.

Companies are also increasing the pace of digitalization and translation of their processes into a software architecture, creating new strategies for entering the market based on data analytics and intelligent solutions, and introducing innovative business models based on the telco-as-a-platform concept. In addition, operators are looking for additional sources of income in areas not related to telecommunications, such as [[Internet Internet of Things () IoT |]][[Internet of Things (IoT)|Internet of Things (IoT)]]]]]]]]]]]]]]]]]]], data centers cloud technologies, augmented and (AR/VR) systems virtual reality , enterprise vertical solutions, financial services, digital cyber security media, video on e-commerce demand (VoD) services, etc.

Telecom operators are completely transformed: from providers of traditional mass demand services, they are turned into providers of modern complex technologies. Thus, they become the leaders of digital transformation and hope that they will be able to occupy one of the central places in the new digital world, "said Kresimir Alic, Research Director of IDC Worldwide Telecom Services.[3]

Named the 15 most significant technologies in the telecommunications industry

The Institute for Statistical Research and Knowledge Economics (ISIEZ) of the Higher School of Economics, using the iFORA big data mining system, identified the most significant digital technologies in telecom and announced this on August 18, 2022.

Table 1.Top-15 Digital Technologies in the Telecommunications Industry
Calculated from the Analysis of Publications in Professional Media (more than 187 thousand sources). The technology significance index shows its relative occurrence in the array of sources for 2020-2022, where 1 corresponds to the maximum number of mentions.

communications Fifth generation mobile networks (5G No. 1) meet the latest network performance requirements telecommunication to the greatest extent. They are capable of providing advanced broadband mobile communications (eMBB), ultra-secure low latency communications (URLLC), and mass machine-to-machine communications (mMTC). The main potential of this technology is concentrated in the B2B segment. The concept of open radio access networks (), Open RAN which will allow telecom operators to use equipment from different manufacturers, can significantly speed up and reduce the cost of deploying 5G networks.

The technological potential of 5G networks will enable market participants to implement a new communication function - the integration of computing and information storage.

Cloud and edge computing (No. 2) in combination with the expertise of telecom operators in the Datacommunication segment (collection, storage and transfer data) become a key value proposition of telecom in the digital services market for business.

The development of 5G mobile communications, cloud and peripheral computing will lead to the construction of decentralized communication networks that integrate Internet of Things devices (No. 3). One of the most promising technologies of the Internet of Things is the system of data exchange between vehicles, road infrastructure elements and other traffic participants - S-V2X (Cellular Vehicle-to-Everything).

The security of transmitted data in the near future will guarantee quantum communications (No. 4). In the short term, active deployment of quantum-protected communication channels is expected, including to maximize the effects of using quantum computers.

Satellite communication technologies (No. 5) are beginning to occupy a significant share in the telecom services market.

The orbital groupings being created as early as August 2022 are able to meet the demand for data services not only in the segments of the oil and gas industry and marine freight, but also in the V2S segment, especially for subscribers in those regions where it is impossible or inappropriate to deploy the ground infrastructure of high-speed mobile communications. Efficient solutions in the field of optical wireless communication (OWC) (No. 15) based on visible light communication technologies (VLC) and laser inter-satellite communication system (ISL, Inter Satellite Link) will allow satellite communication to achieve the quality and speed of connections comparable in characteristics to "ground" broadband Internet.

The demand of subscribers for an increasing data rate is growing not only due to the rapid increase in volume, Internetcontent but also due to the influence of the increase in the number of devices for its consumption. This forms a steady demand for all types of both wired and wireless connections, which will support the further improvement of 4G, LTE 5G eMBB, (Wi-Fi 6 No. 6) fiber-optic and communication technologies (FTTx) (No. 7).

Wearable devices are an important tool for collecting and analyzing behavioral data and biometric indicators. The impetus for the development of biometric technologies (No. 8) can be the formation of an open market for data collected using devices connected to mobile communication networks, and the introduction of digital identification services according to biometric parameters.

The distribution of direct-to-consumer (D2C) services and the growing popularity of media aggregation platforms are supported by Content Delivery Network (CDN) technology (# 10). The proliferation of 5G networks will support the growing demand for high-resolution immersive technology (# 9). Content becomes a powerful marketing tool to sell communications services and retain subscribers. This adds value to Over-the-Top (OTT) (# 11) ISPs providing video services over the Internet.

The approach to managing geographically distributed networks is provided by SoftwareDefined Wide Area Network (SD WAN) technologies (No. 12), which allow intelligent traffic redistribution, as well as reduce operating costs for infrastructure management.

IoT devices become the main data generators, so the demand for such D2D/M2M technologies (device-to-device/machine-to-machine) connections as narrowband Internet of Things (NB IoT) (No. 13) and LoRaWAN networks is growing.

Dynamic Spectrum Sharing (DSS) technology (No. 14) allows you to deploy 5G networks at existing 4G/LTE frequencies.

The dynamics of the development of the digital economy is largely determined by the speed of deployment of telecommunications networks and the pace of introduction of information technologies. The COVID-19 factor has accelerated the process of digital transformation of the economy, preserving the main trends in the development of information and communication technologies: intelligent networks, convergence of mobile and fixed communications, D2D/M2M connections, integration of computing and storage, high-speed Internet access, narrowband Internet of Things and increasing the availability of satellite communication services ^[4].

The cheapest Internet - in Ukraine

According to TradingPlatforms.com analysts, which were released in July 2022, the world's cheapest wired Internet is available to residents of Ukraine - they pay an average of $6.4 per month for it. At the same time, the most expensive Internet is in Eritrea ($2666 per month). In addition, this country is leading in price at 1 Mbps - $1,590, which is about seven times more than in Niger, the second most expensive country.

The TradingPlatforms.com analyzed 211 countries, in more than 41% of them (87 countries) Internet users pay on average no more than $1 per Mbps per month. 81% of them, that is, 171 countries, pay an average monthly fee of from $1, but not more than $10 per Mbps. Cheap Internet also takes place in, Moldova, and Russia, Belarus Kazakhstan analysts noted without specifying average prices.

The cheapest connection was in Ukraine

The United States ranks 131st in terms of the cheapness of broadband Internet access. American subscribers pay an average monthly fee of $60 per month. The United States is in 26th position at an average monthly price of 1 Mbps.

Of the countries that the authors of the study classify as "advanced economy," Saudi Arabia has the highest monthly cost of Internet access for fixed broadband access. Subscribers in this country pay $107.27 monthly. In Canada, the average monthly fee is $76.14. In the United States, the average monthly fee is $59.99. Australia and Japan finished fourth and fifth with $59.25 and $48.37 respectively. With an average monthly fee of $43.43, Spain took sixth place, and Germany follows with an average monthly fee of $41.46. Great Britain, Italy and France took the remaining positions, entering the top ten most expensive countries in terms of the cost of Internet connection. In Britain, the fee is $34.78, in Italy - $32.73, and in France - $32.16 per month.^[5]

2021: Global Telecom Services Market Shows 1.6% Growth

In 2021, global spending on telecommunications and pay-TV services amounted to $1.57 trillion, up 1.6% from a year earlier. This was announced on May 6, 2022 by IDC analysts. They noted that the market size was higher than experts' expectations.

According to them, 2021 was characterized by a rapid exit of the global economy from the recession caused by the COVID-19 coronavirus pandemic. The current favorable environment led to an additional increase in spending on telecommunications services, so the market grew a little faster than initially predicted. This trend was common to all regions of the world.

According to an IDC study, the American market recorded a 1.5% increase in costs for telecommunications and pay-TV services - from $574 billion in 2020 to $582 billion in 2021. In the Asia-Pacific region, spending increased by 2.1% - from $494 billion to $505 billion.

As for the EMEA region, which includes Europe, including Russia, the Middle East and Africa, here the final result was $479 billion against $474 billion a year earlier. Growth - about 1.1%.

Higher than expected growth took place in all technology segments except pay TV, which is logical, since people were able to spend more time outside the home, and therefore some of them decided to unsubscribe from TV packages purchased during lockdowns, the report said.

The global telecom services market showed an increase of 1.6%

It also notes that the telecommunications services industry has remained very stable throughout the COVID-19 pandemic. What's more, it has served as a mainstay of the global economy, allowing people to connect, entertain and do their jobs from the comfort of their homes.

{{quote 'Economic recovery in 2021 accelerated market growth and led to higher than expected rates. But the same drivers that pushed the market up could also lead to its fall, warns Kresimir Alic, research director at Worldwide Telecom Services at IDC. - Like other markets, the telecom industry is not immune to changes in economic trends, and factors such as inflation and recession can quickly change dynamics. Inflation is already happening [by May 2022 - note TAdviser], and the economy has begun to slow down - for this reason, our view of the market remains cautiously optimistic. }} According to analysts, military actions in Ukraine related to the start of a Russian special operation there will negatively affect the communication market in EMEA. First of all, the Ukrainian market will be badly affected, which will experience a significant decline due to the destroyed network infrastructure and the huge number of people leaving the country. The Russian market will also decline amid Western sanctions. On the other hand, the military conflict will positively affect the markets of neighboring countries (Poland, Slovakia and Romania), receiving a large number of Ukrainian refugees, researchers say.

The study noted that digitalization stimulates the use of wireless technologies and equipment. Growing data traffic, the growth of public Wi-Fi and the development of 4G and 5G technologies are contributing to increased use of wireless equipment in developed and developing countries. In addition, many companies are moving from traditional systems, such as fixed-line technologies, to more advanced wireless and mobile technologies. For example, according to a report by the American National Center for Health Statistics, by the end of 2013, 41% of American households used wireless communication, which indicates a decrease in the share of wired communication.^[6]

2020: Telecom services market does not fall in COVID-19 ($1.53 trillion) - IDC

In 2020, spending by companies and consumers on telecommunications services, including pay television, reached $1.53 trillion. The same volume was registered a year earlier, analysts say. IDC

According to them, in the countries of the Americas, the telecom services market at the end of 2020 amounted to $583 billion, which is 0.7% more compared to 2019. In the Asia-Pacific region, the dynamics was zero, and the market volume reached $482 billion. By 0.8%, the costs of individuals and legal entities for telecommunications services in the EMEA region decreased to $467 billion.

In 2020, the global telecommunications market passed a serious test, and it successfully coped with it. IDC believes the lessons learned in 2020 will help the industry deliver sustainable growth in the future, the study said.

Telecoms market not down or up in 2020

Chris Barnard, vice president of research for the European telecommunications services market and related infrastructure, noted that the COVID-19 coronavirus pandemic has shown the sustainability and importance of the telecommunications industry. New working methods will continue after the pandemic, forming future opportunities for income generation, while consumer attention to networks will determine the requirements for bandwidth in the market, the expert added.

According to analysts, the transition to FTTP (Fibre-To-The-Premises) networks will accelerate in many countries, and the B2B segment of the fixed-line services market will recover in the long term, as the economic recovery pushes investments in cloud-based corporate-level tools. Revenue growth in the mobile services segment will be supported to a certain extent by the introduction of 5G networks, which will offer users more advanced data processing capabilities and use content and services dependent on high-speed communication channels.

Revenue in the telecom services market by region

The dynamics in the telecommunications market in 2020 was uneven in a pandemic. Because of it, in the first half of the year, user expenses and subscriber bases of operators were significantly reduced. In particular, the decline occurred due to restrictions imposed by the authorities of countries to combat the spread of infection, as well as due to general pessimism and anxiety, which forced people to spend less money on insignificant products and services.

In the second half of 2020, demand in telecom recovered, which was facilitated by measures to support the economy and vaccinate the population. Renewed optimism helped global and regional markets offset losses recorded in the first half of the year and approach 2019 results.

Telecom Services Market by Region

As noted in the study, the pandemic has dramatically changed the trends that have long determined the situation in the telecommunications market. Fixed-line services suddenly became the most important means for consumers to connect to the internet as they helped them work, learn and have fun at home.

The dynamics of growth in expenses for fixed-line services in the B2B segment, on the contrary, deteriorated significantly, but long-term contracts with companies saved telecom operators. Another trend in a pandemic is that business has begun to abandon traditional telephony more often. Many companies representing small businesses have closed, and most of the remaining businesses have cut costs for such services.

In 2020, the mobile market also saw a decrease in costs largely due to a slow extension of contracts, a reduction in costs outside of package tariffs and a sharp drop in operators' roaming revenues.^[7]

2019: Telecom grows faster in EMEA than in the world

The volume of the global telecommunications services market, including pay TV, in 2019 will reach $1.63 billion, an increase of 0.8% compared to 2018. Such data analysts IDC released on November 6, 2019.

A little more than half of the market will be occupied by cellular communications, which is largely facilitated by mobile data services and M2M solutions, which compensate for the drop in sales of voice services and SMS.

The volume of the global telecommunications services market, including pay TV, in 2019 will reach $1.63 billion, an increase of 0.8%

Fixed communications in 2019 will account for 21.7% of telecom expenses due to the high demand for high-speed Internet access services.

The largest demand for telecommunications services remains in the Americas, where the corresponding costs in 2019 will amount to $630 billion, an increase of 0.7% compared to a year ago. Asia Pacific and EMEA are expected to grow 0.6% and 1.3%, respectively.

IDC forecasts that global costs for mobile and fixed-line services will increase by 1.3% and 2.6% annually between now and 2023.

Regional Telecommunications Spending Growth, IDC Data

At the same time, sales of traditional telephony services will decrease by an average of 4.8%, and in 2023 their share in the cost structure will be only 8.5%, IDC believes. According to experts, the decline in interest in traditional phones is not compensated by the growing use of IP telephony.

The study also said the launch of 5G networks has a big impact on the telecommunications market as they offer improved architectures, new services and faster data rates. Analysts predict that by 2023 there will be more than 1 billion subscribers using 5G services in the world. 5G creates the basis for a smarter world with more network communications, IDC noted.^[8]

2018: Up 0.8% to $1.62 - IDC

In 2018, the global market for telecommunications and pay-TV services reached $1.62 trillion, an increase of 0.8% compared to 2017. Such data analysts IDC released on May 10, 2019. At the same time, they previously estimated the market in 2017 at $1.67 trillion - taking this into account, there was a decline in 2018.

The market in question is dominated by mobile services (they accounted for 53.1% of global spending in 2018) due to high demand for smartphones. At the same time, voice phone calls are becoming less and less, as this segment has reached its peak and is experiencing competition from Internet services like WhatsApp and Skype.

Telecom Market Dynamics Across Regions, IDC Data

Fixed-line service costs continued to increase in many regions in 2018, the study said, confirming the importance of content services for consumers and IP solutions for companies. Data transmission services via wired networks accounted for 20.5% of the telecommunications market (taking into account pay-TV services) at the end of 2018.

According to experts, the pay television market, including cable, satellite, digital and IPTV, remained stagnant in 2018. Moreover, by 2023, positive dynamics are not expected. However, according to experts, such services are becoming an increasingly important part of the package offers that operators around the world are developing. In 2018, global spending on packaged telecommunications services increased by 7.1%, and by 2023 the figure will rise by about 3.7% annually, analysts predict.

The largest market for telecommunications services in 2018 remained the countries of the Americas, where revenue reached $616 billion largely due to the United States. The top three were Asia-Pacific and EMEA, with the latter showing the highest growth rate (+ 0.9^[9]

2017: IDC estimates market size of $1.67 trillion

At the end of 2017, the global market for telecommunications services and paid TV services will grow by 1.7%, and its volume in monetary terms will amount to $1.67 trillion. This became known from a fresh study by the analytical company IDC, published on December 4, 2017.^[10]

Telecommunications market valued at $1.67 trillion

Experts expect that the uptrend in 2018 will continue: global spending on communication services and pay television will increase by another 2% and exceed $1.7 trillion.

The largest segment of the market in question remains mobile communications. According to IDC estimates, in 2017 it will account for 52% of total revenue, and in the period from 2017 to 2021, the mobile category will grow on average by 2% per year. Among the growth factors that will help compensate for the drop in costs for voice communication and SMS messages, analysts listed the increasing volumes of mobile traffic and the spread of M2M services.

Global Costs for Communications Services and Pay-TV ($ Bn)

The second most important segment - fixed-line services - in 2017 will provide about 21% of total revenue. The average annual growth rate (CAGR) in this area is expected to be 4% during this period. The growing need for high-speed communication contributes to the positive dynamics here.

In the pay-TV category, which includes cable, satellite, IP and digital terrestrial TV, analysts predict zero growth from 2017 to 2021.

As for fixed telephony services, revenue from them will fall annually by 6% per year during the five-year period under consideration. By 2021, this segment will account for less than 10% of total income in the telecom and TV services market, IDC believes.

Global revenue from telecom services for 2017 by region ($ bn) and year-on-year growth (%)

From a geographical point of view, the most significant contribution to spending will be made by the American region. In 2017, it will account for $635 billion, most of which will be provided by North America. The second largest market will be the Asia-Pacific region ($545 billion), and the third - EMEA countries ($492 billion).

Notes