10 major trends to shape Asia-Pacific telecoms in 2009

MANILA, Philippines - The latest predictions of market research firm IDC for the telecommunications and networking industry in the Asia-Pacific (excluding Japan) break away from the gloom-and-doom scenario that industry players might have come to expect this year.

Despite the major global economic hiccup that’s making industries hunker down and turn off the investment switch, IDC believes industry players across the region will weather the downturn as carriers and larger corporations focus on investing in strategic projects and technologies, enabling the creation and launch of new innovative services and products.

IDC said this would help industry players compete and increase their wallet share, and optimize their existing investments and reduce overall IT expenditures.

“The long-term economic prospects in the region remain very promising,” said Adrian Ho, research manager for IDC’s Asia-Pacific Managed Services and Enterprise Network Group.

“In this (hard) economic time, we expect carriers to continue to invest in next-generation mobile and IP infrastructure and enterprises to focus on technologies that will allow them to drive IT and cost efficiency, from collaboration tools, software as a service to datacenter networking technologies,” Ho added.

Offering optimism in times of crisis, IDC’s top 10 telecom predictions for 2009 released this month, represent major trends to have the most significant financial impact or long-term market effects across the Asia-Pacific.

From IDC’s Singapore and Hong Kong offices, researchers believe the following would be the possible developments to shape the telecoms industry in the Asia-Pacific (except Japan) in the next 10 months: 

1. Reviewing operator strategies to combat recession

Spending for telecom bandwidth and networking equipment could contract this year as carriers delay rollout of emerging technologies to help deal with recession.

In a recession, IDC expects consumers to be more careful about signing up for new services and SMEs and large enterprises will curtail spending growth in new telecom bandwidth and networking infrastructure.

In the case of severe recession, markets will be characterized by significant job losses and bankruptcies among SMEs and enterprises.

IDC sees only a moderate four percent growth in the carrier equipment market this year, with the total market reaching $52.7 billion.

Ho noted, however, that “there are still expected increases in infrastructure and services spending and thus the cost of doing nothing will ultimately be the biggest cost of all. Everyone should anticipate and plan for recovery in order to stay ahead.”

2. Virtual collaboration rises to the occasion

Service providers could see good demand for unified communications services this year as more enterprises struggle to maintain smooth business processes and collaborations in a highly distributed and mobile environment. 

IDC expects the telecom services market in the Asia-Pacific (except Japan) to reach $253 billion in 2009, representing a growth rate of 8.9 percent.

3. Virtualization and optimization at the datacenter

For most enterprises, the cost of running and operating a datacenter is one of the most resource-draining and expensive endeavors. With the economic downturn, IT managers are faced with the challenges of lowering overall operational cost and delivering improved application performance.

IDC believes that organizations familiar with server and storage virtualizations will start to turn to the networks for further cost savings. Networks will be the next frontier in datacenter virtualization.

IDC expects spending in enterprise networks to grow by nine percent this year to reach $10.3 billion. Continued spending in datacenter networks and migration to an all-IP platform will drive this growth.

4. Femtocells the saving grace for incumbent operators

More people now rely on portable gadgets to get their work done and operators must feed this trend with improved bandwidth coverage. For operators that have licenses to provide both fixed and mobile services, as well as the necessary capital to fund upgrades of their networks, IDC believes that femtocells might help them offer scalable solutions to improve network coverage.

5. The age of Software-Defined Radios

Carriers are finding it increasingly costly to extend their services to either mobile broadband and/or fixed broadband. Managing multiple base station equipment from either the same or multiple vendors is becoming cost-inefficient.

IDC believes that implementing Software-Defined Radios (SDR), a software module that provides greater flexibility and functionality as compared to their hardwired counterparts, can help operators better manage their base stations.

6. Alternative broadband for small businesses

Many small businesses have leveraged the available 3G networks and the existing mobile broadband using HSPA technology for their mobile network. This makes better business sense as opposed to paying for a more expensive fixed-line business broadband access.

Although a WiMax network offers the same promises as an HSPA/HSDPA network, the full capability of this technology will not be seen until the appropriate business model and pervasive coverage area are established.

7. Moving the wireless backhaul to IP

IDC believes mobile operators looking at deploying Next Generation Network (NGN) equipment that offers scalable bandwidth and new multimedia-rich wireless services should migrate this year to an IP environment to address bandwidth constraints.

8. Converged network operation centers

Most integrated carriers in the Asia-Pacific have separate network operation centers (NOC) for each of their services and, if more than one supplier is being used, there would be a NOC for each vendor network, too. Because of this, IDC sees the implementation of the converged NOC as the next logical step in the evolution to next-generation and convergence service infrastructure.

9. Resurrection of SaaS

The global economic slowdown has resulted in industry players intensifying their cost management agenda, leading to a paradigm shift from capital expenditure to operating expenditure. This creates renewed opportunity for Software as a Service (SaaS), which offers low upfront capital outlay and the simplicity of scaling up and down.  

10. Time for Reconfigurable Optical Add-Drop Multiplexer

The rollout of Standard Definition TV, High Definition TV, Video on Demand (VoD) and more mature Metro Ethernet services means heavier data transactions in the network. IDC believes that the Reconfigurable Optical Add-Drop Multiplexer (ROADM) now offers an intelligent solution for better network management.

Of course, the quickest way to ride the current economic storm is to tighten budgets. IDC, however, stressed that investments should still continue not to affect the long-term growth potentials of the regional telecom industry.

IDC’s annual Top 10 Predictions for the Asia-Pacific (excluding Japan) draws upon the latest researches and worldwide brainstorming exercises among its over 900 analysts. This was followed by an extensive regional review to weigh in on key industry events, user trends, vendor strategies and economic measures, that promises to uniquely define the technology trends which would impact and drive the telecoms market in the Asia-Pacific (except Japan) in 2009.