Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
In the telecom services industry, the data communications market is one of the most competitive in Latin America. The average revenue per line for data communications services has been declining in recent years due to migration from legacy circuits to Internet protocol technologies, expense control by enterprises and governments, and competition.
The most popular technologies nowadays are IP/multi-protocol label switching and dedicated IP.
Connectivity and bandwidth have become commodities in the data communications market. To differentiate themselves, telecom operators have been bundling services to provide complete solutions while also offering value-added information technology services to increase shares in enterprise accounts. Connectivity maintains the largest market share in the data communications services market, however, value-added services present higher growth rates until 2017.
VAS includes network performance management; acceleration; managed security services; content delivery networks; unified communications and collaboration; and mobility – all of which are increasingly important for enterprise customers.
Cloud computing is an important VAS with special appeal to small and medium companies that are adopting dedicated Internet connections. We predict a 36% compound annual growth rate for cloud computing between 2012 and 2017. MSS, CDN and data center segments also have high CAGRs between 2012 and 2017 at 13.8%, 17% and 9.6%, respectively.
Regional companies – like América Móvil, British Telecom, Level 3, Orange and Telefónica – all have a strategy to foster the development of VAS for data communications services. América Móvil and Telefónica compete throughout the region, both in the corporate and SMB segments. BT, Level 3 and Orange focus on large corporations and multinational businesses. These three carriers have a wide geographic scope, as they tend to follow multinational clients to wherever they operate.
In each country, there are participants with limited geographic reach and focus on specific clients. IPLAN in Argentina, GVT in Brazil, Grupo GTD in Chile and UNE EPM in Colombia are examples for such specialized service companies.
As operators will continue to look for alternatives to increase revenues, more companies will offer VAS, which will lead to more sophisticated solutions as the market matures.
The companies must adopt vertical approaches and customize solutions to better meet client´s business needs.
Carina Goncalves began her professional path within GMattos, a consulting company specializing in the electronic commerce industry. She then acquired further experience in the telecommunications sector working for Axoon Telecom in different areas such as strategic analysis, product development and marketing (her area of specialization). Since August 2013, Goncalves has been a research analyst at Frost & Sullivan´s Telecom practice in Latin America.
