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Introduction

This report forms part of Ovum’s Digital Economy 2025 series and looks at how communications services will evolve over the next ten years.

Highlights

  • The need to communicate will be just as strong in 2025. Total communications traffic will grow to 68.5 trillion minutes in 2025, equal to 23 minutes per day for every person on the planet. The spread of IP-connected devices and the increased availability of screens will also mean that communication can be initiated from virtually any device, from anywhere at almost any time.
  • Communications revenues will not grow in line with demand. Despite demand growing, revenues will decline and CSPs must address this mismatch. Overall, all communications traffic, on an equivalent minute basis, will grow at a CAGR of 8%. However, revenues will fall by 4.4%. Competition from CSPs and non-CSPs will result in price declines.
  • Future success will depend on efficient delivery on the network. The cannibalization of voice revenues is acting as a catalyst for CSPs to upgrade infrastructure in order to reduce costs, support better quality of service, and enable new product development. With traffic increasing but communications revenues falling the only option for success is to remove cost from the business and have efficient delivery of the services over the networks. New technologies like 5G will require investment, but there must be cost savings and economies of scale in the network for the business to survive in 2025. Almost all voice will be delivered via IP by 2025. Most voice traffic will move onto IP as the transit network both for CSP and non-CSP players, bringing long-term cost benefits to CSPs.

Features and Benefits

  • Analyzes the outlook for communications services to 2025
  • Evaluates the changing methods of communication over the next decade
  • Identifies the critical success factors for today's communications service providers looking to succeed to 2025

Key questions answered

  • How will the communications services evolve to 2025?
  • What will CSPs have to do in order to survive in 2025?
  • How will the OTT threat impact CSPs in 2025?

Table of contents

Summary

  • In brief
  • Ovum view
  • Recommendations

The desire to communicate will remain as strong in 2025 as it is today

  • There will be 68.5 trillion minutes of communication in 2025
  • But the ways in which we communicate will change

Communications services of the future will demand a converged platform

  • Convergence is the future
  • The future of the phone number
  • Communications will be the anchor for other services
  • WebRTC will gain more support than RCS
  • In 2025 the term “OTT” will no longer exist

Explosive growth for text-based communications

  • Social messaging drives growth in text-based communications
  • Video- and photo-sharing apps will see strong growth, but as part of a converged communications service
  • SMS is the big casualty of IM success

Voice remains the anchor product of communications, but will be delivered via IP

  • CSPs should not underestimate the importance of voice in 2025
  • Voice communications will move outside of the realms of today’s relatively simple services
  • Most voice services will be delivered via IP by 2025
  • Mobile will continue to dominate calling traffic
  • Video will become increasingly important as part of a converged offer

Caution: increased demand won’t translate into increased revenues

  • Core CSP revenues will not grow at the same pace as demand
  • Future survival will require efficient delivery of communications services

CSPs are beginning to manage the OTT threat

  • CSPs will retain the majority of voice traffic
  • Most substitutional VoIP is impacting fixed, not mobile usage
  • Operators are adapting to counter the OTT threat

Appendix

  • Methodology
  • Further reading
  • Author

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