Deloitte releases telecoms trends for 2007

Danie Crowther, telecoms partner at Deloitte, comments: "Future growth in Internet penetration will not be solely via a PC, but will instead be driven by a range of small, simple and relatively inexpensive broadband appliances, such as portable email devices and media players fuelling the convergence drive.

"There is an opportunity for technology companies to create a range of devices for such use, with an emphasis on mobility, such as Internet radio receivers, shopping terminals, handheld encyclopaedias, digital messaging devices and video security, all of which avoid the cost and complexity of a PC. All of this sits well with the prospects of South African companies in the light of the 2010 World Cup.

Another key prediction for 2007 will be the intensification of the worldwide debate over net neutrality, says Crowther. At issue is whether additional government regulation is necessary to protect the vibrancy and potential of the Internet. The debate relates to whether there is a need to preserve the ability of any Internet user to connect to any web site or service without discrimination or interference.

But some ISPs and telecoms operators argue that they should be able to establish preferential carriage agreements to generate revenue. Balancing both the two sides of the debate will remain challenging. Something has to change in the economics of Internet access, such that network operators and ISPs can continue to invest in new infrastructure and maintain service quality, and consumers can continue enjoy the Internet as they know it today.

Advocates of net neutrality argue that any attempts to prioritise traffic will undermine the fundamental freedom of the Internet. However future growth in the Internet and continued demands for greater bandwidth will require considerable investment in new infrastructure, says the report.

Infrastructure owners argue that with continued net neutrality they will have little opportunity to recover some of the high costs needed to invest. To reach agreement, arguments for and against net neutrality will need to become less partisan and emotive.

A third trend is the "killer kilobyte". Explains Crowther, "The biggest revenues and the best margins in the telecoms sector have come from services based on the smallest files and narrowest bandwidth. One of the most successful of these to date is text messaging, a service that generates at least three times the gross revenues of the entire global recorded music industry.

"In 2007, the most profitable and successful network operators will be those that identify and popularise mass-market, simple, narrowband applications."

For a full copy of the report with all the 2007 Deloitte predictions, email or go to www.deloitte.com/za>.