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Foreword
In the wake of recent research, the telecommunications industry should not ignore the growing importance of emerging markets, says Lynd Morley
Emerging markets (when did that phrase come into such common usage?) are being hailed as the great future hope of the telecoms industry. Of course, many sceptics (who probably describe themselves as 'realists') point to a range of problems, from lack of infrastructure and competition, to low disposable incomes, as barriers to the holy grail of profit in the developing world, but researchers at Gartner insist that telecom companies ignore emerging markets at their own considerable risk.
According to recent research, Gartner notes that emerging markets account for more than half of the world's total telecom connections. Predicting that worldwide mobile connections will increase by 1.5 billion by 2010, Gartner believes that emerging markets will account for 87 per cent of that increase, and that, combined with fixed connections, developing regions will account for 69 per cent of the world's total phone connections in the same period. Clearly not figures to be sniffed at.
“Emerging markets may be under penetrated by communications services, but the hunger for improved connections is strong,” says Jouni Forsman, research director at Gartner. “Compared to disposable income, phone users in developing regions are spending five times more on communications on a per-user basis than their counterparts in developed countries.
“The rapid expansion of the telecoms industry in these markets is being fuelled by under penetration and the fact that communication-enabled services are crucial for overall development,” he continues. “This not only relates to telecoms and entertainment services, but to communications-enabled 'life enhancing' services such as banking, education and remote health. The high level of disposable income being spent on communications in developing countries today is clear evidence that the telecoms industry is mission critical in the emerging world.”
Among the regions that might be termed emerging, Asia is showing particular promise, though it is worth bearing in mind that this is a region of stark contrasts between some of the most developed and sophisticated markets in the world, and others that are only just beginning to bite the telecom bullet.
According to research by Paul Budde at BuddeComm, the Asian telecoms market is estimated to have been worth around US$300 billion in 2006. The big new drivers are broadband and IP services, as well as ongoing growth in the mobile sector, particularly as value-added services come into the market. NGNs are also being rolled out by the regional heavyweights, with a strong move into triple play services. Budde notes that in looking at the Asian telecom market, it is impossible to avoid the impact of China. With its huge population and strongly developing economy, it is a powerful presence in the region. Having rapidly moved to become the biggest mobile market in the world, China's mobile sector has continued to expand at a rate of almost 20 per cent per annum.
But whilst China, along with India, still represent the largest opportunities, Gartner also highlights Indonesia as a high growth location – forecasting that the country will have more new telecoms connections between 2006 and 2010 than Brazil and Russia. Worldwide, according to Gartner, 50 per cent of new communications connections in the next five years will come from the so-called BRIC countries – Brazil, Russia, India and China.
No wonder the industry is being warned that it neglects emerging markets at its peril.
Lynd Morley is editor of European Communications
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