The Economist writes in the introduction of the survey entitled “Beyond the Bubble”:
Industry revenues have steadily increased to reach an all-time high of $1.37 trillion this year, according to the International Telecommunication Union (ITU). There are 1.2 billion fixed telephone lines, and 1.3 billion people carry mobile phones of decreasing size and increasing complexity. Around 665m people now have access to the internet. Consumer spending on communications is growing faster than spending in any other category. Surely that makes telecoms a vibrant and successful industry?
It does not. Despite all these apparently healthy signs, over the past couple of years the industry has become notorious for fraud, bankruptcy, debt and destruction of shareholder value. Exactly how much money has gone down the telecoms drain is hard to quantify, but many estimates hover around the $1 trillion mark.
The post-bubble opportunities seem to lie in exploiting three main trends. The most visible growth area is the continuing rise of mobile phones, which have overtaken fixed-line phones to become the most widespread communications devices on earth. Their number is expected to rise from 1.3 billion today to 2 billion by 2007, and they are being increasingly used to do much more than make phone calls, providing new opportunities for wireless operators and equipment makers.
The second trend is the growth of high-speed or broadband internet access, which is booming in many parts of the world. This offers a valuable new market for fixed-line operators, once they have supercharged their existing telephone networks to make them broadband-capable.
A third promising area is in the corporate-telecoms market. As large firms look for ways to cut costs and move operations overseas, many are adopting new internet-based technologies that can interconnect regional offices cheaply and securely and allow voice and data to flow over the same network. Many operators are now overhauling and simplifying their tangled networks to ensure they can implement such next-generation services quickly and efficiently.
The experience of the past couple of years, says Dave Dorman, chief executive of AT&T, has demonstrated that there is more to being a telecoms operator than simply owning a shiny new network. The best prospects are at the network’s edges, not at its core, and revolve around providing complex services, not merely dumb capacity. The watchword now is transformation, not construction.
