Telecom Services Market 2020 and Forecast 2021-2027

                                          
Report Overview: Global Telecom Services Market


The global telecom services market size was valued at USD 1.63 trillion in 2019 and looks set to grow at a compound annual growth rate (CAGR) of 4.9% from 2021 to 2027. Rising spending on wireless communication infrastructures due to the shift in customer inclination towards cloud-based technology and mobile devices is one of the key factors driving this industry. An increasing number of mobile subscribers, soaring demand for high-speed data connectivity, and growing demand for value-added managed services are the other potential factors fueling the market growth.

The global communication network has undoubtedly been one of the prominent areas for continued technological advancements over the past few decades. The industry’s product offering evolved in the late 19th century from only voice and visual signals in terms of facsimile or telegraphs over wired infrastructure to the current scenario of exchanging audio, video, and text content over numerous wireless infrastructures. The market for telecom services has also witnessed significant improvements in data speeds, from Global System for Mobile communications (GSM) and Code Division Multiple Access (CDMA) to Third Generation (3G), Fourth Generation (4G), and now the commercialization of Fifth Generation (5G) networks. The advent of data connectivity has made possible the reduction in the duration of transferring large chunks of data from days to hours and now to a few seconds.

In today’s digital age, customers favor Over-The-Top (OTT) channels for a variety of reasons, among which the number of viewing options, and the pricing offered are the most prominent ones. The OTT solution providers offer video, audio, and other media over the internet. Usually, they are not bound to price agreements with limited viewing choices to pick from. Common instances of OTT applications are Netflix, Amazon Video, Roku, Facebook, and Google Duo.

The consumers and marketers alike are getting more acquainted with OTT applications and content. Furthermore, smartphone display and sound quality, open-source platforms, super-fast Internet Protocol (IP) networks among other innovative services act as a mobilizing factor to draw more consumers to the OTT providers ‘freemium-based’ business models, thus witnessing an ever-growing adoption rate and boosting the market growth.

As people worldwide struggle with the realities of the COVID-19 pandemic, digital entertainment platforms as well as the global telecom service providers have benefitted from the current scenario due to their industry type and business model. In a current worldwide lockdown scenario, a shift among masses to remote working will fuel the demand for network connectivity and infrastructure. Similarly, the temporary shutdown of multiplexes and other outdoor entertainment avenues due to strict social distancing has shot up the usage of various digital platforms, including social media, gaming, and OTT applications. The mobile voice traffic has also witnessed an upsurge during this period with prominent communication operators reporting an enormous escalation in their voice traffic since the outbreak of the pandemic.

However, the escalating consumption of digital media platforms by global customers has resulted in the sudden demand for higher bandwidths with high-speed connectivity. With the upsurge in consumption of these platforms, the telecom service companies are urging OTT providers to reduce the streaming resolution of their media content. In fact, the Cellular Operators Association of India (COAI) has requested the video streaming providers to reduce their content quality from High Definition (HD) to Standard Definition (SD). To avoid the congestion in internet traffic, especially when most people are working from home and require high bandwidth, some governments are also helping the market for telecom services to ensure the smooth functioning of their data and voice carriers.

For instance, Ireland’s Commission for Communications Regulation (ComReg) has released an extra radio spectrum within the 700 Mhz to 2.6 GHz bands to enable mobile network operators to cater to their customers accessing 3G as well as 4G technologies. Similarly, the Federal Communications Commission (FCC) has allocated an additional spectrum to the communication network service providers ensuring continuity of broadband in the U.S.

Service Type Insights: Global Telecom Services Market

By service type, the market for telecom services is bifurcated into basic communication and Value-Added Service (VAS). The VAS segment held the largest revenue share in 2019. The segment includes no-voice offerings such as in-line data processing, online database storage and retrieval, electronic data interchange, email, and voice mail. The upsurge in VAS revenues for the telecom service operators may be credited to the sustained increase in the number of subscribers in the emerging countries and thrust from network operators to offer relevant mobile services.

Over the last decade, there have been dramatic changes within the telecom service industry, wherein globalization and liberalization have improved supplier and end-customer interaction by incorporating value-added communication services. The global telecom service operators are significantly investing in upgrading their VAS portfolio for cross-selling and amplifying their share-of-wallet. The ability of these services to upturn Average Revenue per User (ARPU) provides multiple revenue-generating opportunities for the market players.

The paradigm shift in the consumer preference from mobile voice to Voice over Internet Protocol (VoIP) as well as communicating over social media platforms has compelled the industry players in this extremely competitive business to provide bundled services as a part of their standard offerings. Increased return on ad spending, coupled with increased usage of mobile applications, has immensely contributed to the growth of the VAS segment.

Transmission Insights: Global Telecom Services Market

By transmission, the global market has been categorized into wireless and wireline. While wireline communication involves the transfer of information via twisted pair, coaxial, and optical fiber cables, the wireless method transmits information Over-The-Air (OTA) using transmitters, receivers, and Radio Frequency (RF) waves. The wireline segment captured the largest revenue share of over 60.0% in 2019 and is projected to maintain its lead over the forecast period 2021-2027. This is attributed to a rising number of SMEs and MNCs in countries, including the U.K., U.S., and China, that utilize an extensive network of Public Switched Telephone Network (PSTN) and Integrated Services Digital Network (ISDN).

The advent of cloud-computing technologies, artificial intelligence, and IoT is presumed to majorly contribute to the growth of wireless communication channels worldwide. Over the years, there has been a rapid deployment of systems for Wireless Local Area Networks (WLANs) that has allowed internet access to cellular devices in private homes, public spaces, airports, office buildings, cafeterias, and other areas in the vicinity. Such wireless densification to simplify work processes and automate routine test actions is presumed to prove beneficial, hence registering a robust CAGR in the forthcoming years.

Furthermore, a growing 5G wave will offer demarcation between wireless and wireline networks and is envisioned to converge the communication modes into a unified end-to-end system in public, residential, and enterprise spaces. In parallel to the wireless infrastructure of 5G, the wireline infrastructure also plays a integral role in offering better mobile user quality and optimizing network performance. In addition, wireline technologies enable data/voice traffic from the nodes to where content is streamed, hosted, and manipulated.

Product Insights: Global Telecom Services Market

By product, the global market is classified into mobile data, mobile voice, fixed data, fixed voice, and others. The mobile data segment accounted for the largest revenue share in 2019 and is expected to maintain its lead over the next few years. Increase in the usage of social networking apps, including Instagram and Facebook, upsurge in the adoption of payment platforms, and amplified demand for entertainment through OTT platforms, especially at an all-time high during the COVID-19 pandemic, are anticipated to drive the mobile data segment.

The fixed data segment accounted for a significant revenue share in 2019 and is likely to witness substantial growth over the forecast period. The fixed data communication includes cable fiber-to-the-home, modems, Digital Subscriber Line (DSL), terrestrial fixed wireless broadband, satellite broadband, and other fixed broadband subscriptions for connecting radio and a receiver. Although mobile data solutions are growing at unprecedented rates, fixed data lines are highly preferred by commercial spaces in the automotive, retail, Information Technology (IT), and various other sectors that require an exchange of huge information at a relatively higher bandwidth and lower latency as compared to mobile data.

Traditional global telecom services markets have been turned upside down as the development in mobile solutions outperforms the fixed-line, as well as the internet, is gradually replacing fixed voice connection. The fixed voice segment is likely to foresee an abrupt decline in revenue shares over the forecast period. Internet penetration through the wireless mode and the copper-laid network is anticipated to supplant the fixed voice traffic in the coming years.

Application Insights: Global Telecom Services Market

Based on application, the global market is segmented into residential and commercial sectors. In 2019, the commercial segment accounted for the largest revenue share of the overall communication networks business and is projected to maintain its lead over the forecast period. This may be attributed to the growing emphasis of businesses on the reliability and quality of their data delivery and voice calls with their clients. The MNCs are exceedingly spending on their communication network infrastructure, especially for VAS portfolios, such as video-conferencing, high-security intracompany networks, and corporate calling and texting plans.

The global market by the commercial sector is further bifurcated by type into Small & Medium-sized Businesses (SMBs) and large enterprises. SMBs are likely to foresee exponential growth over the next few years. SMBs with limited internal IT resources are deploying more comprehensive IT infrastructure and are majorly prioritizing speed and mobility, followed by easy to set up and use communication framework. Cisco Systems, Inc., one of the prominent international network infrastructure providers, targets interactions with around 25 SMBs a day to offer its cloud-based collaboration and security systems.

The commercial sector is further bifurcated by solutions into the internet, network, voice, unified communication and collaboration, and other services. The internet service segment held the largest revenue share in 2019 and is poised to witness the fastest growth from 2020 to 2027. Accessibility of internet on cellular phones, game machines, digital televisions, computers, personal digital assistants, and various other modes of entertainment and communication makes it highly usable for end customers.

The residential segment is anticipated to expand at the fastest CAGR of 5.2% from 2021 to 2027. The proliferation of smartphones worldwide is expected to majorly drive the development of telecom services for the residential segment. According to the GSM Association (GSMA), an industry organization providing the socio-economic impact of cellular devices, there were approximately 5,000 million unique mobile subscribers worldwide in 2017. The subscriber penetration was the highest in Europe, followed by North America. The private network providers account for a larger subscriber base as compared to government-owned companies. In addition, growing demand for OTT applications is contemplating the users to subscribe to wireless internet offerings, thereby significantly contributing to the deployment of communications network at a broader level.

Regional Insights: Global Telecom Services Market

The Asia Pacific captured the largest revenue share in 2019. The region is likely to attract more than half of the new mobile subscribers by 2025 as estimated by GSMA. The regional market is primarily driven by e-commerce and retailer buy-in platforms, smartphone ubiquity, and investments in 5G networks. China, Japan, and India have emerged as significant contributors to regional market growth.

According to the statistics published by Our World in Data, China and India were ranked among the top internet users worldwide with 765 million and 391 million users respectively in 2017. Furthermore, rising government initiatives on digital integration through Information Communication Technologies (ICT) are anticipated to fuel the communication network growth in the Asia Pacific. For instance, the Indian government spent over USD 600 million on the development of 100 smart city projects, where IoT plays a integral role in those cities qualifying as ‘smart cities.’

The Middle East and Africa is envisioned to witness the highest growth over the forecast period. This can be attributed to the abrupt migration of existing 2G subscribers to mobile broadband networks and the adoption of 3G as well as 4G networks by younger demographics from the outset. Rising deployment of big data solutions to track and respond to issues relating to disease outbreaks, urban planning, and monitoring air pollution levels is anticipated to contribute to the substantial progression of communication networks in the region.

North America is expected to account for a considerable revenue share in the years to come on account of high consumer spending on mobile phones, coupled with the early adoption of digitized technologies. The current launch of 5G in South Korea, Australia, Germany, the U.K., and the U.S. is anticipated to drive the market. According to GSMA, 20.0% of communication connections worldwide will incorporate 5G networks by 2025 with a strong presence in North America and Europe.

Key Companies & Market Share Insights: Global Telecom Services Market

The global market is highly dominated by both international as well as regional players operating within specific expanses. Key companies are investing aggressively in improvising their spectrum so as to ensure high-speed data connectivity to their end-users. An inter-industry partnership is a major trend comprehended amongst the players of this industry. For instance, in January 2019, KDDI Corporation collaborated with Toyota Motor North America and AT&T Inc. to enable 4G LTE connectivity for selective new models of Toyota and Lexus cars and trucks.

Furthermore, communication service providers are taking endless efforts to offer technologically advanced services to their customers. For instance, in January 2019, NTT Group’s NTT Communications Corporation established the Media Pipeline Factory, a toolkit that allows easy extension of its Enterprise Cloud WebRTC Platform Skyway functionality. The Media Pipeline Factory proposes instantaneous connectivity of Skyway's video and voice data with a variety of cloud solutions, comprising voice recognition AI, machine-translating AI, and live transmission. Some of the prominent players in the telecom services market include:

Key companies Profiled: Global Telecom Services Market Report

 	
Verizon
 	
 AT&T, Inc.
 	
China Mobile Limited
 	
 Nippon Telegraph and Telephone Corporation
 	
SoftBank Corp.

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Trusted Business Insights has segmented the global telecom services market report based on service type, transmission, product, application, and region:

Service Type Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Basic Communication
 	
Value-added

Transmission Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Wireline
 	
Wireless

Product Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Mobile Data
 	
Mobile Voice
 	
Fixed Data
 	
Fixed Voice
 	
Others

Application Outlook (Revenue, USD Billion, 2016 - 2027)

 	
Residential
 	
Commercial
 	
By Type
 	
Small & Medium Enterprises (SMEs)
 	
Large Enterprises
 	
By Solutions
 	
Internet Service
 	
Network Service
 	
Voice Service
 	
Unified Communication & Collaboration
 	
Others