Communications services spending set to grow (probably)

It’s always important to take analyst forecasts with a pinch of salt. Predicting the future is difficult at the best of times (see our article on predictions in ITProportal) and a single unexpected geo-political event (Brexit anyone?) can scupper the most meticulously prepared financial projection overnight.

But while the numbers might ultimately turn out skewed, research firms do have a knack of identifying more general industry trends. So Gartner’s expectation that global spending on communications services will increase 2.4% year on year to be worth US$1.4 trillion in 2018 is worth digesting.

Those are global numbers, so some regions and countries (eg China) will almost certainly spend more than others, especially where they are rolling out fixed and mobile communications infrastructure and services for the first time.

However, there are other reasons why European telcos and communications service providers (CSPs) should have cause for optimism. The telecoms sector has endured some difficult times but the intense competition and frenzied merger and acquisition activity of recent years now appears to have petered out.

The regulatory changes that had such a profound impact on existing business models too have been absorbed and there is strong political impetus behind accelerating the rollout of superfast broadband services in the UK and elsewhere.

The steady spread of fibre to the premise (FTTP) infrastructure across major cities is a particular opportunity for CSPs to reach and connect new enterprise customers, one that will bring more cost effective service propositions into play that free providers from reliance on leased lines and the local loop.

There will of course be differing rates of growth within broader CSP portfolios – unified communications, cloud, IP telephony, web conferencing and managed security services are all likely to yield better returns than legacy connectivity for example.

Nevertheless, Gartner calculates that communications services will account for a hefty 38% of the total US$3.8 trillion spent on all aspects of IT. That is a large pot of cash, and it is likely to be the telcos and CSPs that prove adept at applying new technologies and business models to meet customer requirements that win the bigger portion of it.


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