While markets around the world have many concerned due to what looks like increasing volatility on several fronts, one bit of good news emerged as telecom analyst Ovum offered some commentary on the likely future for the commodity wholesale services field. Ovum analyzed the financial results posted by over 200 service providers in the field, and not only produced some estimates on value, but also a look at some of the factors that drove that growth.
Perhaps the centerpiece of the Ovum report was the expectation that, in 2019, the global wholesale telecom market would be worth $142 billion. That's a substantial number, but it would represent just a small part — 6.6 percent — of the total revenue for telecom service providers, up from 5.5 percent in 2012. Driving this is a pair of key factors, one, the growth of the Asia-Pacific market, and two, the overall increase in retail competition in many countries.
But the Asia-Pacific market will represent one of the strongest fields of growth at last report, accounting for 26 percent of global total wholesale revenue in 2019, as opposed to 17 percent in 2012. With wholesale offers on the rise in both South Korea and Malaysia, and China licensing 19 new mobile virtual network operators (MVNOs), the end result is clear: a huge potential for likely growth.
However, it will become fairly clear the farther along we go that the largest players will be the greatest beneficiaries of this trend. In 2012 this was already starting to be clear, as the five largest firms in the market brought in over a third of total revenue, and the 10 largest brought home over half the revenue. Much of the top 20, meanwhile, was largely firms of North American and European descent, with three in the Asia-Pacific region, one in the Middle East and Africa region, and none from either Central America or South America. This is likely to change as Ovum's practice leader for the wholesale research channel David James offered a look at the future that suggested at least one carrier from China would hit the top 20 in 2019. However, even in 2019, North American and European firms would still be heavily represented.
James offered a note of elaboration about the report, saying “The rapid rate of retail service innovation, the growth of voice and data traffic volumes, and the increasing complexity of retail services all depend on an efficient and effective wholesale market because few (if any) retail service providers can do everything themselves. New types of service provider are emerging, but their need for connectivity will stimulate greater demand for traditional wholesale services, while those telcos that do innovate at a retail service level will create demand from those that don’t.”
Much of this is rational enough in nature; the rapid growth of the telecom industry in general suggests that most of its components will grow, European and North American firms will dominate the field but growth will be clear in the Asia-Pacific market—much as it is in several other industry fronts today—and the Chinese will make a strong showing in the not too distant future. All of this has actually been seen in other markets, so for Ovum to believe that such will extend to the wholesale services market really only makes sense.
While only time will tell if this turns out to be the case, ultimately, the predictions have the clear ring of rationality on hand, and Ovum's predictions aren't likely to be proven outlandish when 2019 arrives.