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Top 10 risks in telecommunications 2012 - Failure to capitalize on new types of connectivity - EY - Global

Top 10 risks in telecommunications 2012

Risk 6: Failure to capitalize on new types
of connectivity

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Sector growth increasingly relies on new understandings of connectivity.

This new risk, which has come straight into our top 10, springs from the fact that new types of connectivity — notably M2M links — require new types of strategies.

As M2M takes off in various vertical markets, the very concept of connectivity is rapidly being fundamentally redefined.

From human- to machine-based

While operators continue to think of connections in primarily human terms, sector growth increasingly relies on new understandings of connectivity.

Global M2M connections in 2020 by vertical7


Global M2M connections in 2020 by vertical

There is clear value in the "interconnectedness" of devices, through technologies and links including not just M2M but also NFC and multi-screen content. The business models for monetizing connectivity are also proliferating, spreading across the spectrum of B2B, B2C and B2B2C.

The new connectivity-based services now emerging promise increased efficiency, higher customer centricity and value enhancing repurposing of existing infrastructure.

But operators' moves into emerging market segments such as mobile money are often defensive and piecemeal, they also raise various challenges that include high upfront costs, lower ARPU per SIM card in the M2M environment, and exposure to new regulatory and reputational risks.

Unlocking incremental revenues

As companies seek to tackle these challenges, new strategies can unlock incremental revenues. To realize these, operators need to work out how best to align themselves to new growth areas.

This will generally mean deciding on their core competencies for use in increasingly composite value chains, and delineating clearly between the need to build capability and the need to partner or outsource, in light of their existing network and customer footprints.



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7Analysys Mason, "Imagine an M2M world with 2.1 billion connected things," January 2011.

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