Annual Report 2007 - Company Description Market and Customers: Technology Trends
Technology trends are paving the way for new consumer trends. The technological evolution is gaining speed, which is evident particularly in the development of terminals, both mobile and smart residential gateways. The mobile terminal is becoming the Swiss army knife equipped with an increasing number of functionalities such as messaging, e-mail, camera, music, media player, TV and GPS navigators. Broadband is no longer just about access but a variety of IP-based services are being rapidly introduced on the market.
The need to always be online is driving the need for seamless access to the Internet, voice services and TV both on fixed connections and mobile solutions.
Mobility: trends driving the mobile revolution
Three trends are driving the mobile revolution, with the potential to bring gains to our customers and support profitable growth.
The first trend is mobile data take-up, which is exploding world wide. A barrier has been passed and the mobile data explosion will accelerate as terminals reach a usability level that will boost new services, complementary networks start to provide sufficient capacity and users are offered attractive flat rate offerings.
Entertainment is an important driver of mobile data services. Customers are increasingly using the mobile phone as a means of accessing music, games and TV services. One service that is showing strong growth is digital music where a mobile operator plays an important part in delivering the music to the phone.
Increased speed in mobile data networks through technologies such as 3G and HSPA is meeting a growing demand for always being online both via the handset and a connected portable PC. Now HSDPA networks have up to 7.2 Mbps in the downlink. The increased speeds offered by mobile technologies will enable the mobile network to cater to better services and meet higher demands for bandwidth-hungry user generated content like video.
The second trend has to do with new innovation systems. Customer driven innovations like second generation web based communities, Web 2.0, have revolutionized Internet services and are starting to reach the mobility domain. This is also a third party and content wave and is often driven by communities. New promising business models for business-to-business to be sold to consumers, B2B2C, new revenue streams, including mobile advertisement, and new innovation systems are enabled through new terminal and software-oriented service architectures.
The third trend is about new user behavior. Emerging rich services place the mobile as the number one personal tool and companion. The mobile will be used for communication, for pleasure, such as TV, music and games, and simplicity, such as the mobile wallet, mobile ticketing, mobile office and my remote control. This will drive demand for service quality, trust and security in coming years.
Better mobile handset browsers and increasing functionality are driving content services. Many high-end handsets also have capabilities enabling a multitude of new and exciting functionalities to be introduced in the handset by downloading of software applications.
The mobile handset is also becoming more capable in terms of access since many handsets today already have GSM, GPRS, EDGE, 3G and WLAN functionality. This opens opportunities for new innovative ways of always being best connected for voice, data and TV.
Broadband: IP wave brings potential to make life easier for users
The wave of IP-based services introduced on the broadband market is growing stronger and is accompanied by complex technologies and a wide selection. The potential to make life easier for users presents a business opportunity.
A variety of IP-based services are being rapidly introduced on the broadband market. As the trend is growing stronger, actors in partnerships, using each others' components in open value chains, will trigger launches of new services. The rapid increase of new, dominant actors on the Internet indicates that new agile actors can quickly become leaders. Many services will be terminal-based but terminals and other gadgets present a complexity in terms of their large number of interfaces. The complexity of these technologies and the many choices in the market present a business opportunity to simplify life for the customers.
The rapid technological development is driving an increased functionality in the home, or office, gateway. Internet, the home network, telephony, TV, music, gaming, remote cameras and alarms in a single box which can be remotely managed by the operator ensures that new services can be launched that are easier for the end consumer to use.
Two of the major household hubs are in the process of converging. A PC can be used for watching TV and downloading films, and a TV can be used to access the Internet and to order and download films. Thus, if a customer has broadband access, we have the potential to offer our customers a wider set of services, one of the most interesting being television over Internet, IPTV. Taking full advantage of the possibility to have the TV in the living room connected to the Internet, adding on-demand based services such as video-on-demand and time shift, could potentially create a competitive advantage, provided that compelling services are developed.
IPTV, video services and online gaming services are driving demand for increased bandwidth. ADSL2+ networks deliver up to 24 Mbps, but increasing demand for even higher speeds, especially from HDTV, is driving fiber and VDSL2 access investments.
Triple play, i.e. telephony, broadband and TV in one package, is becoming a must have for broadband operators. IPTV and video-on-demand are growing quickly.
The installed base of HDTV-ready flat screen TV sets is growing rapidly and some TV providers have started HDTV transmissions, but the real uptake is still ahead of us.
Content and media services, often user generated, will remain the strongest drivers of broadband usage. Peer-to-peer, or P2P, download, i.e. download in decentralized networks where computers can communicate with each other without a central server, will coexist with the newly introduced P2P streaming services. Digital eco-systems with networked machine-to-machine systems and sensor networks will also evolve. These eco-systems will probably place new demands on the IP-based accesses and networks, in particular as a result of the vastly increased number of small transactions.
In the EU's present strategies towards the Information Society, i2010, digital eco-systems play an important role. The EU also predicts the development of IP-accesses towards "always best connected" by networked, mobile, seamless and scalable systems and services. Services and systems will also be embedded into parts of everyday life - intelligent, personalized, individualized, and centered on users and their needs. Services will be rich in content and experiences with visual and multi-modal interaction.
"We operate in one of the world's most rapidly changing industries."
Lars Nyberg, President and CEO, TeliaSonera
We are living in an all-communicating society. We spend more time communicating with friends, colleagues and customers at the same time as new technologies are gaining ground as means of carrying our communications.
The demand for being "always-on", and expectations on others, friends as well as companies, stores and government offices, to always be available is growing simultaneously. Demand for capacity is virtually unlimited now and in the future.
TeliaSonera believes that fixed lines will be the most efficient technology for many years to service fixed locations, i.e. homes and offices, in regions where fixed networks already exist. Complementary wireless technologies are being explored to support areas where economies are not supporting fixed network presence. In this context, an operator such as TeliaSonera is faced with both numerous opportunities and challenges.
The market is growing as more customers use a wider range of services, such as mobile Internet, TV over broadband, music downloading and online socializing. The increased usage generates a growing amount of data in the form of images, sound and data, to be transferred at higher and higher speeds. In parallel, customers are growing less content with being able to access the Internet just from the office or from home, but rather want to connect anytime, anywhere.