telecom italia's vision on future business drivers and it implications

TELECOM ITALIA GROUP

Telecom Italia’s Strategic Visionon Future Business Drivers and IT implications

ETIS Community GatheringRiga, October 2013

Oscar CicchettiDirector, Strategy – Telecom Italia Group

Digital Society and Competition between Ecosystems

Narrow path towards Digital Telco

Telco and IT Industries go hand in hand

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Massive Growth: connected objects, data, traffic, usage…

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Source: Intel Co.

Global Network Connections from objects will exceed 17B in 2017

Source: Cisco, Visual Networking Index, May 2013.

Global IP Annual Traffic will reach 1,4 zettabyte in 2017


Mobile connected devices become key in consumers’ life…

Smart cities improve quality of life:• IoT and sensors enable dynamic services

to reduce traffic, crime and improves efficiency

Connected homes:• IoT and sensors improves

overall convenience, save time and significantly reduce utility bills

E-Health improves care quality:• IoT and connected sensors

permit remote monitoring and combat chronic disease, assisting the elderly and improves access

Digital Identity improves access to government services:• enhances speed and ease of

authentication

Mobile wallet:• enables customised

offers and seamless payment

c

Connected devices

Smartphones

Wearables

Tablets

Home

Educ

atio

n

Health

Go

vernm

ent

City

Retail

Car Connected cars become the

next mobile platform:• consumers receive seamless

access to adaptive services• autonomous driving improves

safety

E-Education enables learning anytime, anywhere: • classroom linked with the

online world• dynamic learning provides

immediate feedback

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Source: Draft of “GSMA ExCom: Vision 2020”


http://www.gfi.com/blog/wp-content/uploads/2013/05/big-data.jpg

http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&docid=NNnaXt3b4a3T8M&tbnid=zkRzZSDUJEu4vM:&ved=0CAgQjRwwADj3AQ&url=http://supportworx.iconics.com/License/Help.aspx&ei=mu8JUsnkHaeR7Aa424GQAQ&psig=AFQjCNGuNIIBgTO5oRj2o2OUKUXGZUIJ_A&ust=1376469274582902

http://www.google.co.uk/url?sa=i&source=images&cd=&cad=rja&docid=IwCgJ6z22xL1wM&tbnid=P34UqfyHozd1ZM:&ved=0CAgQjRwwADgj&url=http://www.indiatimes.com/technology/mobile/what-next-after-the-smartphone-a-transparent-phone-61099.html&ei=Qv8JUquGKNSw7Ab2goGoBw&psig=AFQjCNHyYXruthyKkVGusYpHLaHsryhUTg&ust=1376473282731163

As a consequence, Mobile Ecosystem will grow by 1,1 tn$......

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1,8 tn $

2,9 tn $

62% 50%

+1,1 tn $

2012 2020

MNO share of the value chain

Mobile Ecosystem Revenues


… but Operator’s share will significantly decrease

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… because competition between Operators is very high, mainly in Europe …

Sources: GSMA Infocenter, Analysys Mason

EU 27 (509M inh; 204M hh) USA (320M inh.; 115M hh)

107 Mobile Network Operators

~160 Fixed BB Operators*

4 Mobile Network Operators

16 Fixed BB Operators*

(*) Cable Operators are included


...because Internet Ecosystem seems to have a darwinian superiority compared to the Telcos Ecosystem…

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CAPEX (€bn) CAPEX (€bn)

OpFCF**(€bn) OpFCF**(€bn)

EMPLOYEES (000) EMPLOYEES (000)

MARKET CAP (€bn) MARKET CAP (€bn)

vs

vs

vs

vs

vs

4 67

14 84

70 1.217

270 521

Pure OTT TELCO

REVENUES (€bn) REVENUES (€bn)

47 460Pure OTT revenues are

quite lower than TELCO...

…they invest relatively less than TELCOs…

…but produce a significant cash flow...

…employing a limited amount of people.

and are more «appealing» than TELCO

10%

6%

17%

6%

52%

Pure OTT/ TELCO

Google, Facebook, Yahoo TI, TEF, FT, BT, DT, Vodafone, Verizon, AT&TData from FY 2012

Source: Telecom Italia study «Benchmarking OTT»


…and because Internet Companies fight to lock the customer into a silos...

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In a global competition size matters: the US case

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Source: WSJ, Aug 27th, 2013

Traditional Levers such as:Interoperabilit

yConsortia Alliances Can fill the gap?


Telco Challenges

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€

t

Revenues

TCOas it would be

TCOas it MUST be

Lean challenge

€

t

Connectivity

Digital Servicesas it would be

Digital Servicesas it SHOULD be

Digital challenge

A deep transformation is needed to reduce

unitary cash costs

A deep transformation is needed to capture

digital opportunities


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Lean Challenge: Total Cost Reduction

Streamlined commercial machine• On Line CRM• Simplified Offering Portfolio

Zero Opex NetworkS• Flat IP architecture• SDN oriented

Simplified and Flexible IT• Cloud based• SOA and Agile


Digital Challenge: Service Evolution

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Big Data and Personal Data

Digital Identity

M2M and Internet of Things

Security Services

Smart Environments

Digital Media

Cloud

1. Bet on distinctive assets• Local Presence• SIM and AAA• Billing and CRM• QoS, QoE Features


2. Adopt Internet Service Paradigm

• Flexible Partnerships• Net and Cloud API• Embedded Connectivity• Use of customer and

network data




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OSS/BSS Transformation

Away from a Spaghetti Architecture Leverage on SOA and Cloud Adopt Agile Methodologies Real Time Processes

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Big Data to transform operations and services

Data Gathering Data Processing Next Generation “Data Based” Services Data Brokering


The multi-facet role of the cloud

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Cloud

Serviceoffering

Integrationof old IT

architectures

SDNsupport

Network Control Centre


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What Telcos should look like in the changing world

Telco Challenges

€

Revenues

TCOas it would be

TCOas it MUST be

Lean challenge

€

Connectivity

Digital Servicesas it would be

Digital Servicesas it SHOULD be

Digital challenge


Should we pretend to be a Tiger?

Should we ibridate ?

The only way is to nurture a tiger while continuing to be an elephant

Telco Transformation