Inside telecommunications Issue 8

  • Share

In this issue, we consider a number of important themes, from operators’ new approaches to investment funds to the growing importance of traffic management and optimization technologies.

Take a closer look:

Jonathan Dharmapalan
Jonathan Dharmapalan
Global Telecommunications Leader

One key development in recent months is the formation of new venture capital funds, often in tandem with innovation facilities.

Foreword

The last three months of 2012 saw a number of key transactions worldwide as in-market consolidation spurred an increase in deal activity compared to the previous quarter.

At the same time, carriers are reconsidering their approaches to innovation as they leverage venture capital and operational capabilities to support technology start-ups.

Important deals announced in the United States and Japan show that consolidation remains very much a key component of transaction rationale. Operators are committed to generating scale in core market segments such as mobile, with spectrum holdings acting as an extra catalyst for tie-ups.

While regulatory concerns over national spectrum distribution and antitrust issues still represent barriers to new market structures, there are already signs that policy makers recognize the benefits of consolidation: in December, the EU approved the Hutchison 3G’s takeover of Orange Austria, for example.

At the same time, some operators, notably in Asia, remain keen to expand their global footprints in both developed and emerging markets. Although moves into adjacent market segments are important for many players, leading operators are overhauling their approaches to innovation well beyond acquiring or partnering with or partnering with established peers in other industry sectors.

One key development in recent months is the formation of new venture capital funds, often in tandem with innovation facilities.

Such moves signal the emergence of a shared approach to innovation. Operators are now keen to identify and support promising technologies and services at an earlier stage while also recognizing that traditional R&D approaches fit less well with new ecosystems that straddle different industry verticals or emerging geographies where efficient routes to innovation are critical.

For their part, technology start-ups can take advantage of operators’ network and marketing capabilities as they look to widen their own addressable markets.

Nevertheless, an enabling environment for innovation in the sector hinges on effective policies and regulation as much as new investment strategies or partnering models. In this light, the European Commission’s list of digital priorities for 2013-2014, announced in December, is notable for its focus on increasing broadband investment and maximizing the socio-economic benefits of infrastructure roll-out.

Nevertheless, even investment-oriented digital policies are themselves at the mercy of the wider EU commitments, as demonstrated by the reduced funding for the Connecting Europe Facility project in the wake of EU budget cuts.
Data privacy and protection is another sphere where policy makers are under pressure to align consumer interests with actionable rules for the industry. Negotiations on updated EU data privacy regulation are entering a critical phase, with industry players highlighting the need for a reduced regulatory burden while some member states themselves want more optionality built into new laws.

Adrian Baschnonga
Adrian Baschnonga
Senior Global
Telecommunications
Analyst

Furthermore, fears are growing that new policies will be unworkable at a global level as different regions seek to safeguard data protection in different ways. Meanwhile, the prospect of a new technical standard for Deep Packet Inspection (DPI) – thereby helping operators manage their data traffic more effectively – has also drawn criticism as a potential catalyst for blocking competitor services, or increased government censorship and surveillance.