Gartner: Three Major Shifts to Transform Telecommunications in Europe

Speaking at its Symposium/ITxpo in Cannes today, analysts at Gartner Inc. (www.gartner.com) said stable revenues in the fixed telecom operator market in Western Europe mask significant shifts in the market.

"While the telecoms sector has recovered from the financial debt crisis in the last three years, it is now facing significant new challenges to secure sustained profitability," said Jean-Claude Delcroix, research vice president for telecoms at Gartner.

Traditional fixed voice service revenues continue to decline and operators are under increasing pressure to find new revenue streams. Gartner highlighted what it considers the three key industry shifts that will transform telecommunication operator businesses.

• Convergence of fixed and mobile voice services
• Collision of telecommunication services and IT services
• Voice becoming an IT application

Gartner said traditional legacy services such as fixed voice accounts for around 60 percent of the total fixed operators' revenue and forecasts a stable revenue growth rate of 1.6 percent in 2005 (growth expressed in Euro).

However, fixed voice is facing a declining trend with growing competition from next generation services such as voice over IP (VoIP), mobile, broadband, e-mail and data.

Operators urgently need to secure additional revenue streams to counter the fall in traditional voice services. Broadband, managed services and mobile represent the three fastest growing areas. Gartner predicts these services will grow at 25 percent, 13 percent and 8 percent respectively in 2005.

"On the surface, the fixed telecom market is stable, but competition is intense. Revenues will dry up unless operators find new sources of revenue that meet business demand for low cost and fast end to end solutions."

"Fixed mobile convergence means each of us will for example only require one handset, have one number, one voice mail and that we can receive one bill for all our telecoms services," said Katja Ruud, principal analyst at Gartner.

Telecom operators are entering the IT services market offering shared IT services and management of large public projects to generate new revenue streams. The two industries are beginning to consolidate around core capabilities such as infrastructure, applications and business processes.

Gartner, Inc. is provider of research and analysis on the global information technology industry. The Company focuses on delivering objective, in-depth analysis and actionable advice to enable clients to make more informed business and technology decisions.