Asia Pacific ends 2017 at the forefront of major telecoms shifts such as mobile payments, IoT trials, digitalization, and more. These trends have extremely significant implications for the networks that support these deployments, and service providers can flourish if they act early on to harness global digitalization. Looking to the year ahead, I view the following as opportunities (rather than ‘trends’) for long-term growth in 2018 and beyond.
Operators must adopt a ‘connected world’ mindset
Traditional mobile services are dampening revenue growth in Asia Pacific. Across the region, total operator revenues grew by 3% in 2016, down from 9% in 2013. On the other hand, the region’s adoption rate of OTT platforms such as WhatsApp, Facebook Messenger, Skype, and WeChat, is the highest in the world. These platforms now offer a range of attractive, feature-rich, enhanced services that companies are adopting for enterprise communications.
Given this trend, mobile and fixed-line operators must change their strategy in 2018. Instead of perceiving digital players as the opposition, incumbents must adopt a more forward-looking ‘connected world’ vision. If operators adapt their business models to help deliver new solutions and engaging experiences, they can continue to stay relevant in the new communications ecosystem. These could include platforms and services for IoT, storage, health-tech, FinTech, smart cities, chatbots, data analytics, and 4K content.
M&A megadeals and small-scale consolidation
2017 was the year of mega-mergers. In APAC, for example, we saw Idea Cellular and Vodafone India announce a merger which would create the region’s largest – and the world’s second-largest – telecoms firm. Many industry observers are asking whether M&A activity in 2018 will match the pace of the past 12 months.
In 2018 M&A will continue, with telecoms players looking to acquire IoT expertise in different vertical sectors. For instance, we may see telcos showing interest in companies with automotive expertise so they can enter the connected cars market and provide ultra-low-latency, high-reliability connectivity with potentially huge returns. We will also witness consolidation between smaller players looking to expand their offerings and stay relevant in the digital economy.
CPaaS will drive A2P traffic volumes and monetization
Cloud platform adoption is predicted to increase by 69% [PDF] in the region in 2018. CPaaS (Communications Platforms-as-a-Service) enables real-time communications to be easily and cost-effectively integrated into any customer-facing business. 2018 adopters could include airlines, healthcare providers, banks and retailers who will use it to enhance customer engagement via cloud-managed voice, video calling, or SMS. The boost in CPaaS adoption will serve as a major driver for operators’ A2P messaging traffic volumes, which are forecast to increase globally by 20% over the next five years to more than 2.7 trillion by 2022.
Mobile is the cornerstone of successful enterprise IoT strategies
The increasing globalization of business, combined with the maturing of technology and network infrastructure, has created the perfect IoT storm. From start-ups to international corporations, more and more companies will finalize their IoT strategies and connect smart devices, infrastructure and sensors. To truly unlock the potential of the IoT, devices must be able to access highly reliable connectivity on the move, wherever they are in the world.
The GSMA cites Asian markets such as South Korea, Japan and China as driving the development of 5G mobile technologies. In 2018 operators must identify approaches to enter the connected device ecosystem. Operators who lack machine-to-machine connectivity platforms can consider adopting white-label platforms to improve time-to-market for resale to the enterprise market.
The telecom industry is at inflection point and 2018 presents opportunities for telcos if digitalization can be harnessed correctly. Operators should therefore look to embrace change and innovate, and in doing so can achieve sustainable growth from the connected world.
Written by Malcolm Chan, managing director of Asia-Pacific at BICS
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