In this
era of change and uncertainty, Ernst & Young has uncovered
the forces that will shape the future of communications industry
over the next five years. With a lot of change happening in
the communications industry presently and more to come in future,
it has become nearly impossible to predict the business outcomes
with an acceptable degree of uncertainty. There are too many
variables changing on too many different vectors; there are
new players launching entirely new vectors; and there is the
convergence of the computing and the entertainment industries
into the communications industry.
CEOs must
have the vision to think forward as they are the ones who make
or mar a company''s growth. This first milestone report of "The
Leadership Connection" initiated by Ernst
& Young was finalized after talking to 100 CEOs from 96
companies around the globe.
The churning
of hundred CEOs thoughts have resulted in five conclusions which
must be addressed in order to succeed in future. These are:
The Connected Society; Content Packagers; Broadband Connection;
Mobile Wireless; and Long Distance Transport.
The Connected
Society
The toughest competitors will probably be new players in the
market that can not be identified today.
The connected society will create a new global culture where
individuals will be connected in a high-speed network that will
enable digital transmission of voice, data, and video to anyone,
anywhere, and anytime. All facets of work be it business, personal,
and entertainment transactions will migrate from the physical
world in to the electronic world of high-speed digital network.
Though complete transition will take a generation or more, the
major changes and foundation building will occur in the next
five years. Even the developing countries will experience significant
increase in basic connectivity, which will accelerate the process
of the connected society. The CEOs in this society must compete
for customer loyalty by developing products, services, and brands
with attractive schemes.
Content
Packagers
Players who win the content battle early will dominate by winning
brand loyalty in a rapidly growing arena.
Ernst &
Young sees the emergence of a new type of company labelled as
Content Packagers which will consolidate and structure the overabundance
of available information and filter it through a productive
user interface to make it more simpler to the user. Content
Packager is a heavy investment in the brand, constant improvement
of the user interface, and development of new products and services.
One who wins the content battle will also dominate by winning
brand royalty in a rapidly growing arena. One would also see
the merger and acquisition of players that provide the pieces
of content packaging, along with the firms that own the networks,
hardware and software that support content packaging.
Connection
This is not a battle for PC and TV but for Internet access.
PCs will be productivity-focussed and TV will be entertainment-focussed.
Initially,
Broadband Connection will concentrate on technology but in the
end it will be marketing and customer service that will differentiate
the winners. Interactive services will compel the growth of
DSL technologies and cable TV operators will make huge investment
in upgraded coaxial cables. There will be no outright winners
on technology terms for the local broadband connection. Instead
winners will be defined by their customer service and marketing.
Mobile
Wireless
Mobile telephony will become the standard for voice transmission.
Research indicates that within the next decade there will be
more wireless than wireline subscribers in the world, and mobile
wireless services will become the standard model for voice communications.
This will happen in four different stages: alternate stage-where
fixed line service is either not available or is very limited;
complementary stage-where fixed line and mobile services co-exists;
substitution stage-where mobile begins to displace fixed-line
service for voice communications; and saturation stage-where
mobile communication is ubiquitous and is used for data, video,
as well as voice.
Long
Distance Transport
Pricing will shift to bandwidth on demand, pay for use, and
quality of service.
The long distance support is soon becoming a commodity business
and low cost producers may do well due to the astronomical growth
of data traffic. Long-distance transport must also offer end-to-end
services to the connected customer. The high growth in demand
for data and video will mitigate declining prices for several
years as there will be overcapacity and intense competition.
CEOs of long-distance service providers have to redefine their
business and it will likely involve the elimination
of minute-based pricing to a multilevel pricing model based
on differentiated qualities of new types of services.
The key
success factor in the connected society will be one who has
the courage to change nearly everything at the time when everything
seemed perfect.