Analysts share their 2017 expectations

December 21st, 2016, Published in Articles: EE Publishers, Articles: EngineerIT

 

The days when one could lift out one or maybe two trends expected to dominate a new year are long gone. There are so many issues that are likely to dominate 2017 that it would be more appropriate to highlight a few of these issues that stood out in 2016 and are likely to remain in focus in 2017. Read on to see what Frost @ Sullivan analysts forecast for 2017.

 African communication markets are maturing but are not saturated

Naila Govan-Vassen forecasts that Africa’s communication services markets, while not yet at saturation point, are approaching maturity, particularly in urban areas of some of the relatively more advanced telecoms markets – like South Africa and Mauritius. The real challenge is to increase the connectivity reach into less densely populated areas, the urban and semi-urban areas. Government involvement is, therefore, critical to the success or failure of ICT infrastructure deployment.

Govan-Vassen said that the pressure is on for government, as it needs to have a clear vision and understanding on how ICT can benefit its citizens, the country and the economy; and that government needs a realistic road map on how ICT infrastructure needs to be deployed. And there is also a clear need for government to collaborate with the experts on the industry.  She said that 2017 is expected to be the year where sound ICT plans need to be developed, that serve as a guideline to investors and other ICT stakeholders. In the case of South Africa, there are solid plans for broadband; however there is a lack of guidance as to whom, how and when the plan will be implemented.

Govan-Vassen is right about that solid plans for broadband have to be developed. However there is a big question mark as to whether South Africa will achieve this. The Minister of Communications and Postal services is hellbent on implementing the proposals contained in the white paper but the Independent Communications Authority of South Africa (ICASA) and some sectors in the industry have a different view. The minister and ICASA still have to meet up in the courts to settle the spectrum auction issue. Either could win but for the minister to think that any of the incumbents will be giving up spectrum freely for a national managed and controlled network, is a pipe dream!

IoT – Africa taking the lead?

Will Africa take the lead in the internet of things (IoT) in 2017? “ Yes, most definitely”, says Deepti Dhinakaran. ”The technology will not only disrupt but also serve as a key driver to the growth and development of the African ICT market. The African IoT market is currently in its early growth stage, driven by the need for increased business efficiency and productivity. South Africa has the most developed IoT market in Africa, followed by Kenya and Nigeria respectively. Fleet management, retail, energy, security and surveillance, and manufacturing verticals will see an upward growth trend in respect to the use of IoT services. 2017 will see a large number of the IoT applications that currently run on 2G networks, shift to 3G networks. The adoption of low power wide-area network (LPWAN) connectivity technologies will grow significantly, driven by the need for increased speed, longer range, and higher power efficiencies. IoT providers across verticals will leverage their in-house and acquired capabilities to benefit from the platform and software application services segments, given their higher value potential. International providers will increasingly follow an indirect business model in countries like Kenya and Nigeria as this ensures cost-effective operations and the sharing of risk with local providers.

VoLTE and VoWiFi to feature more strongly

Having witnessed slowing growth of voice and messaging revenues in recent years, mobile network operators are turning to WiFi and LTE networks to fight off the threat posed by over-the-top (OTT) applications, predicts Lehlohonolo Mokenela “Voice over WiFi (VoWiFi) and voice over LTE (VoLTE) are becoming accepted as the next generation of mobile communications services. The packet-based solutions are an improvement on the circuit-switched predecessors – in terms of quality, functionality and cost. These technologies will offer high definition voice services, faster call connection and a seamless switchover from voice to video.”

There is growing evidence that South African operators are building their mobile communication strategies around these technologies, with Cell C and Vodacom launching VoWiFi services in 2015. In 2017, the market is expected to witness a lot more focus on VoLTE and VoWiFi by local operators; however, the release of spectrum is central to the development of VoLTE services. Given the sensitivity of subscribers to the quality of voice services, operators will be best placed testing the stability of their VoWiFi and VoLTE offerings.”

Is Blockchain still a pipe dream?

George Etheredge says that the past year (2016) saw a dramatic decrease in the hype surrounding Bitcoin and Blockchain technologies. Venture capital investment in Blockchain start-ups fell by 17% from 2015. Frost & Sullivan believes that a similar trend will occur in 2017. However, this does not mean that there will not be activity in the Blockchain market. “We expect that, in 2017, firms will focus on core Blockchain and Blockchain-like technologies, rather than on their applications to crypto-currencies. It must be noted that Blockchain-like technologies essentially provide a mechanism by which the authenticity of a digital asset can be verified. Naturally, crypto-currencies would be a non-starter, if not for this fact. Bitcoins could simply be duplicated, rendering them immediately valueless.

Although all banks in South Africa claim to be investigating Blockchain technology, it is unlikely that anything will come of this in the near future. Banks have very little motivation to change their operating models unless incentivised to do so by external factors. “I believe it may be possible that banks will guard their Blockchain innovations to use as a weapon against disruption in the near future,” said Etheredge.

Will 2017 be the end of telcos as we know them?

Telecommunications providers, having already experienced several years of upheaval, are faced with a critical question: what should they do about infrastructure? Of course, this entails a myriad related dilemmas – do they continue to invest billions in infrastructure provision? What about legacy deployments; what level of connectivity is required – and their responses to these concerns will shape their intended market positioning. “At the one extreme is the ‘dumb pipe’ route – labelled as such because it seems simplistic, but it is important to recognise the legitimate opportunities that it brings”, says Hendrik Malan: operations director, Frost & Sullivan Africa. “At the other extreme is the desire to move away from infrastructure completely and focus solely on the service elements of the market aspects; like customer experience, digital transformation and big data analytics, all of which are enabled by effective connectivity. And then, of course, there are the range of options that sit within these two extremes.”

Send you comments to annette.thompson@ee.co.za

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