It’s no revelation that the Asia-Pacific region - and the rest of the world, really - is experiencing tremendous growth in terms of bandwidth demand, number of mobile devices, end-to-end digital services, and accelerating consolidation of infrastructure-based providers and a lot of niche players joining the scene. But there has also been a distinct shift of the global economic center of gravity towards China, India, Indonesia, Brazil and Mexico.
One of the reasons for this shift towards Asia is that much of the innovation in communications over the past couple of decades has been originating right here. A lot of this has been driven out of sheer necessity. ARPU is very low in many countries in the region, so operators have to be more efficient and look to innovative new services such as m-payments and mobile banking to fill in the gaps.
In addition, Asia also has closer relationships between operators and government than perhaps other parts of the world. Whereas in North America and Western Europe, deregulation and liberalization happened in the early 1980s, it’s only touched many Asian countries in the last decade. As a result, Asian governments are more likely to be able to use the telecom companies as an instrument of national strategy than their western counterparts.
But wherever, operators as a whole have to change to adapt to the new world order of communications. From today’s new value chain for digital services, it’s clear the industry is stratifying into three distinct layers, each occupied by different types of players.
First are the infrastructure providers that create and maintain the vast and complex computing and communications infrastructure needed to deliver services. This is a commodity business that will require a small number of global players able to deploy massive economies of scale.
Second are the service providers that are creating, enabling, aggregating, delivering and tracking the services the industry needs. There will be many thousands (if not millions) of these players creating and delivering services to multiple vertical industries.
Third will be the customer-facing retailers that are offering services. But whether this group will be dominated by a small number of “supermarket” type retailers, or by a large number of specialist retailers is an open question.