As 2015 comes to a close, Analysys Mason offers its predictions on the trends that are likely to impact APAC over the next 12 months. While these cover a lot of ground, a common theme is this: divergence between developed and emerging APAC will divide strategies and cultures in 2016 and beyond.
- Competition among OTT players will intensify in some markets, and telcos will be more involved as enablers and platform providers. OTT competition will intensify in APAC countries where a dominant retail platform has yet to emerge. Telcos will step up partnership efforts to be seen as enablers providing channels, customer insight, operator billing, optimized services network resources and other services.
- The automotive and transport sector will be one of the key verticals for telco M2M deployments in APAC. Connected cars and fleet management are the two main vectors - APAC will account for 17% of the world’s connected cars in 2019. There’s strong adoption in developed Asia-Pacific (DVAP) and significant growth in emerging Asia-Pacific (EMAP).
- Increased LTE deployment will pave the way for VoLTE and enhanced messaging, voice, and video. 4G will dominate in DVAP by 2020 while the number of 4G connections will grow at a CAGR of 55.7% during 2014-2020 in EMAP, accounting for 38% of the total by 2020. This will drive the deployment of VoLTE and other enhanced services.
- Growing data consumption will encourage telcos in EMAP to shift from cellular fixed wireless access (FWA) to FTTx. Total annual fixed data will grow at a CAGR of 39% in EMAP during 2015-2020, and connected TVs - particularly 4K TVs - will be a major driver, particularly in China. Telcos will be forced to shift from FWA to fiber.
- More new entrants in EMAP will begin to deploy fixed networks to enter fixed broadband markets. Low FTTH/B rollout costs (compared to developed markets) and high fixed broadband ARPU (compared to other technologies) in EMAP will attract new entrants. MNOs that roll out FTTH/B will benefit from network and digital economy-related synergies, and fixed/mobile bundles will help drive adoption of postpaid subscriptions.
- Tablet market revenue will increase in EMAP only, and this product category will prove its value in enterprises. Tablet market revenue worldwide is expected to decline - EMAP is the only region that will experience revenue growth. The newly launched iPad Pro may help attract much-needed attention to this device category.
- Advanced mobile wallet (AMW) solutions represent the best mobile money opportunity for operators in APAC. AMW solutions (typically standalone apps or services that enable users to link payment details to their smartphones) will replace other services such as mobile-stored value accounts (MSVAs) including M-Pesa. In Indonesia, AMW will be driven by e-commerce, and in Malaysia, AMW will continue to displace MSVAs.
- 5G use cases will focus on enhanced mobile broadband, the IoT and the need for reliable communications. Operators and vendors continue to hype 5G, but we expect the number of use cases to decline by at least 50% next year. Most of 2015’s trials and testing used new high-band spectrum (>28GHz), which is already earmarked for 5G in developed markets, and massive MIMO will be added as well.
- CSPs will emphasize short-term cost gains over new service opportunities when virtualizing networks. Adoption rates of virtualization technology in APAC will be higher than in other regions. Tier 1 CSPs will lead spending with SDN-based bandwidth-on-demand services, commercial vIMS and vEPC, and trials in vRAN to reduce access network costs. China’s investments in mobile backhaul optimization with cloud RAN and transport SDN will also drive CSPs’ investments in SDN. In India, Reliance Jio’s greenfield status will give it the ability to implement NFV at launch, but this is an anomaly.
- CSPs will increase spend on “digital natives” by bringing a modern digital experience to customers. CSPs seeking to become DSPs will adopt the characteristics of digital players like Amazon and Uber. Customers will interact with the DSP using the channels they prefer - with access to real-time information about their services and accounts.
Sherrie Huang is lead analyst for Analysys Mason’s Asia-Pacific research program
Shanthi Ravindran is a member of Analysys Mason’s Telecoms Software research team
Telecom Asia December 2015 / January 2016