Telecom Italia presented its strategic vision for addressing future business drivers and IT implications. Massive growth in connected devices, data, traffic and usage will lead to a 1.1 trillion dollar increase in the mobile ecosystem by 2020, but operators' share will significantly decrease due to high competition and the dominance of internet companies. Telcos face challenges to reduce costs through lean operations and capture new digital opportunities. Telecom Italia's strategy is to transform networks and IT, leverage big data and cloud computing, and partner with internet companies to transition to a digital telco model.
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Telecom Italia's vision on future business drivers and IT implications
1. TELECOM ITALIA GROUP
Telecom Italiaโs Strategic Vision
on Future Business Drivers and IT implications
ETIS Community Gathering
Riga, October 2013
Oscar Cicchetti
Director, Strategy โ Telecom Italia Group
2. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
2
Telecom Italiaโs Strategic Vision
on Future Business Drivers and IT implications
3. Massive Growth: connected objects, data, traffic, usageโฆ
3
Source: Intel Co.
Global Network Connections from
objects will exceed 17B in 2017
Source: Cisco, Visual Networking Index, May 2013.
Global IP Annual Traffic will
reach 1,4 zettabyte in 2017
Digital Society and Competition between Ecosystems
4. Mobile connected devices become key in consumersโ lifeโฆ
Smart cities improve quality of life:
โข IoT and sensors enable dynamic services
to reduce traffic, crime and improves
efficiency
Connected homes:
โข IoT and sensors improves
overall convenience, save time
and significantly reduce utility
bills
E-Health improves care quality:
โข IoT and connected sensors
permit remote monitoring and
combat chronic disease, assisting
the elderly and improves access
Digital Identity improves access
to government services:
โข enhances speed and ease of
authentication
Mobile wallet:
โข enables customised
offers and seamless
payment
c
Connected
devices
Smartphones
Wearables
Tablets
Home
Health
Connected cars become the
next mobile platform:
โข consumers receive seamless
access to adaptive services
โข autonomous driving improves
safety
E-Education enables learning
anytime, anywhere:
โข classroom linked with the
online world
โข dynamic learning provides
immediate feedback
4
Source: Draft of โGSMA ExCom: Vision 2020โ
Digital Society and Competition between Ecosystems
5. As a consequence, Mobile Ecosystem will grow by 1,1 tn$......
5
1,8 tn $
2,9 tn $
62% 50%
+1,1 tn $
2012 2020
MNO share of the
value chain
Mobile Ecosystem
Revenues
Digital Society and Competition between Ecosystems
โฆ but Operatorโs share will significantly decrease
6. 6
โฆ because competition between Operators is very high, mainly
in Europe โฆ
Sources: GSMA Infocenter, Analysys Mason
EU 27 (509M inh; 204M hh) USA (320M inh.; 115M hh)
107 Mobile Network Operators
~160 Fixed BB Operators*
4 Mobile Network Operators
16 Fixed BB Operators*
(*) Cable Operators are included
Digital Society and Competition between Ecosystems
7. ...because Internet Ecosystem seems to have a darwinian superiority
compared to the Telcos Ecosystemโฆ
7
CAPEX (โฌbn) CAPEX (โฌbn)
OpFCF**(โฌbn) OpFCF**(โฌbn)
EMPLOYEES (000) EMPLOYEES (000)
MARKET CAP (โฌbn) MARKET CAP (โฌbn)
vs
vs
vs
vs
vs
4 67
14 84
70 1.217
270 521
Pure OTT TELCO
REVENUES (โฌbn) REVENUES (โฌbn)
47 460
Pure OTT revenues are
quite lower than TELCO...
โฆthey invest relatively
less than TELCOsโฆ
โฆbut produce a
significant cash flow...
โฆemploying a limited
amount of people.
and are more
ยซappealingยป than TELCO
10%
6%
17%
6%
52%
Pure OTT/ TELCO
Google, Facebook, Yahoo
TI, TEF, FT, BT, DT,
Vodafone, Verizon, AT&TData from FY 2012
Source: Telecom Italia study ยซBenchmarking OTTยป
Digital Society and Competition between Ecosystems
8. โฆand because Internet Companies fight to lock the
customer into a silos...
8
Digital Society and Competition between Ecosystems
9. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
9
Telecom Italiaโs Strategic Vision
on Future Business Drivers and IT implications
10. In a global competition size matters: the US case
10
Source: WSJ, Aug 27th, 2013
Traditional Levers
such as:
๏Interoperability
๏Consortia
๏Alliances
Can fill the gap?
Narrow path towards Digital Telco
11. Telco Challenges
11
โฌ
t
Revenues
TCO
as it would be
TCO
as it MUST be
Lean challenge
โฌ
t
Connectivity
Digital Services
as it would be
Digital Services
as it SHOULD be
Digital challenge
A deep transformation is
needed to reduce unitary
cash costs
A deep transformation is
needed to capture digital
opportunities
Narrow path towards Digital Telco
12. 12
Lean Challenge: Total Cost Reduction
๏ผ Streamlined commercial machine
โข On Line CRM
โข Simplified Offering Portfolio
๏ผ Zero Opex NetworkS
โข Flat IP architecture
โข SDN oriented
๏ผ Simplified and Flexible IT
โข Cloud based
โข SOA and Agile
Narrow path towards Digital Telco
13. Digital Challenge: Service Evolution
13
Big Data and Personal Data
Digital Identity
M2M and Internet of Things
Security Services
Smart Environments
Digital Media
Cloud
1. Bet on distinctive assets
โข Local Presence
โข SIM and AAA
โข Billing and CRM
โข QoS, QoE Features
Narrow path towards Digital Telco
2. Adopt Internet Service
Paradigm
โขFlexible Partnerships
โขNet and Cloud API
โขEmbedded Connectivity
โขUse of customer and
network data
14. Digital Society and Competition between Ecosystems
Narrow path towards Digital Telco
Telco and IT Industries go hand in hand
14
Telecom Italiaโs Strategic Vision
on Future Business Drivers and IT implications
15. OSS/BSS Transformation
๏ Away from a Spaghetti Architecture
๏ Leverage on SOA and Cloud
๏ Adopt Agile Methodologies
๏ Real Time Processes
15
Telco and IT Industries go hand in hand
16. Big Data to transform operations and services
๏ Data Gathering
๏ Data Processing
๏ Next Generation โData Basedโ Services
๏ Data Brokering
Telco and IT Industries go hand in hand
17. The multi-facet role of the cloud
17
Cloud
Service
offering
Integration
of old IT
architectures
SDN
support
Network
Control Centre
Telco and IT Industries go hand in hand
18. 18
Telecom Italiaโs Strategic Vision
on Future Business Drivers and IT implications
What Telcos should look like in the changing world
19. Telco Challenges
โฌ
Revenues
TCO
as it would be
TCO
as it MUST be
Lean challenge
โฌ
Connectivity
Digital Services
as it would be
Digital Services
as it SHOULD be
Digital challenge
Narrow path towards Digital Telco
20. Should we pretend to be a Tiger?
Should we ibridate ?
The only way is to nurture a
tiger while continuing to be
an elephant
Telco Transformation