Annual report 2012

Trends in ICT sector

Technological trends in the ICT sector

Technological trends in the information and communications technology (ICT) sector were strongly characterised by the development of technologies for mobile devices. The number of smart phones and tablet computers exceeded the number of personal computers sold for the first time, while growth in the former was also significantly faster than growth in the latter. That trend will continue to have an impact on the increase in mobile data traffic in IP networks, and we are only at the halfway point in the migration from traditional mobile phones to smart mobile phones. The launch of Microsoft Windows 8 and Windows RT represents a significant shift in the area of mobile platforms.

The use of mobile devices has expanded considerably in all areas, from content, social networks and advertising to purchases. Sharp growth in payments using mobile phones has been noted. Major shifts are also occurring on the applications market, where the use of combinations of mobile, social and photo applications (Facebook/Instagram) and mobile, social and game applications (DrawSomething – one million users in 9 days) has expanded.

A new path to the full convergence of networks was laid with the emergence of software-defined networks (SDN) that facilitate control over networks and the flow of data without direct physical access to devices. The basis is the OpenFlow protocol that provides opportunities for considerable savings in the computer infrastructure, as it is based on inexpensive, high-capacity switches.

The range of mobile phones with a built-in near field communication (NFC) interface that facilitates the wireless exchange of data by placing devices in close proximity to each other was expanded. This opens opportunities to expand the Internet of Things (IoT), i.e. the linking of objects for everyday use (telephones, household appliances, cars, etc.) with a network and the collection and exchange of data.

Forecast trends envisage 100 billion devices linked via the Internet of Things and machine-to-machine (M2M) communication by 2020, which will require the development of new methods for processing large amounts of data (data analysis). Commercial opportunities are also opening with regard to the physical transfer of NFC data, NFC services, location services, data processing, etc. Some of these services are linked to telecommunication operators, for which this direction of development offers another opportunity. The Internet of Things is closely linked to security issues. Thus, managed security services will also represent an important segment of services for telecommunications operators. 

An opportunity is also opening for the use of data analysis for the in-depth statistical analysis of data at the disposal of telecommunications operators. This brings the opportunity to reduce operating costs, increase revenues and define new business models and market niches.

Another fast growing area is cloud computing, which provides larger and smaller companies greater flexibility and efficiency, and lower costs of IT solutions. Companies can store data on a “cloud”, and access software (software as a service – SaaS), the server infrastructure (infrastructure as a service – IaaS) and development tools (platform as a service – PaaS) via the internet. Cloud computing is also a trend in the field of scientific computing and high-performance computing because it significantly reduces the operating costs of academic institutions. Cloud computing services are developed and marketed in the Telekom Slovenije Group by Avtenta.

Also in progress is the development of solutions that allow applications to run directly in a web browser and not as periphery applications. Examples of these solutions are Mozilla’s new mobile operating system Firefox Mobile and WebRTC which is being tested by the Internet Engineering Task Force (IETF), together with Ericsson and Google.

A true market explosion is foreseen in the distribution of over-the-top (OTT) video content, with estimates for the market of nearly USD 5 billion annually by 2015. Expansion is taking place in parallel with growth in internet television. These products will drive new needs for broadband transfers and serve as the trigger for new investments in the IP infrastructure.

Telefonica provoked a change in thinking when it began selling its physical infrastructure for mobile communications (base stations, antenna towers) to other operators who will manage and market the infrastructure for several mobile operators at the same time.

Key to maintaining the competitiveness of telecommunication operators are investments in the mobile infrastructure and LTE technology, in the strengthening of existing security mechanisms and in increasing openness, and facilitating the integration of other service providers with their own application programming interfaces (API). Characteristic of the current telecommunications market are declining revenues from fixed and mobile voice telephony and growth in revenues from internet services, mobile data transfer and pay television.

Revenues from telecommunication services in the EU-27

Service Growth rate (2009-2010) Growth rate (2010-2011) Proportion of revenues from electronic communication services
Fixed voice telephony, internet access and services - 2.9 % - 3.4 % 35.0 %
Fixed voice telephony - 7.6 % - 7.1 % 21.3 %
Internet access and services 6.4 % 2.9 % 13.8 %
Mobile voice telephony and mobile data services 0.2 % - 0.8 % 46.4 %
Mobile voice telephony - 3.3 % - 4.7 % 32.6 %
Mobile data services 11.1 % 9.8 % 13.8 %
Commercial data services - 1.1 % 0.4 % 7.4 %
Pay TV 6.1 % 2.5 % 11.1 %
Total telecommunications services - 0.4 % - 1.3 % 100 %

Source: European Commission, electronic communications market indicators, Digital Agenda Scoreboard 2012.

Revenues from telecommunication services at the EU level were down more sharply in 2011 (-1.3 %) than in 2010 (-0.4 %). The trend of negative growth in revenues from fixed and mobile voice telephony continues; the decline in the fixed telephony segment was less severe than the previous year, but accelerated in the mobile telephony segment. Mobile data services recorded the highest growth, of 9.8 %. Growth in pay TV continued, but fell from 6.1 % to 2.5 %. Despite the negative growth, the proportion of revenues from telecommunication services accounted for by fixed and mobile voice telephony remains at 54 %.

The analysts and consultants of Analysys Mason are forecasting a continuing drop in revenues from telecommunication services in Western Europe until 2017. Communication services between M2M devices and mobile data transfer services will achieve the highest growth.