Global Telecoms MR

International Congress & Convention Association
The Global Telecoms Industry
45 th ICCA Congress & Exhibition
Monday 30 October 2006
www.iccaworld.com
The Global Telecoms Industry
What are the big growth sectors? Who are the biggest players?
Which parts of the world will see increased activity that can
stimulate meetings?
Malcolm Ross, Principal, Merlin Consulting Ltd.
PO Box 153, 75 Old Bakery Street, CMR 01, Valletta, Malta Tel: +49+177625 2656 Fax: +4917799625 2656
Skype: callmalcolm eMail: malcolm.ross@gmail.com Web: www.consultmerlin.com
The Global Telecommunications Industry, 11:00 – 12:30
2006 ICCA, Rhodes, Greece 30 th October 2006
Summary
Telecoms is the biggest share of GDP, but relative to its size
produces only a tenth the congresses & meetings of HealthCare
n Telecoms is a €1,000 B industry, growing twice as fast as GDP
n Telecom is a major source of Congresses and Meetings
àITU Telecom World every four years, is a megaevent: 2006 (Hong
Kong): 42k – 57k visitors, of which 2,600 in the Congress
à3GSM Barcelona: 50,000 visitors, of which over 5,000 in the
Congress; plus regional events in Asia, Africa, etc.
àGlobalComm (Chicago) 20000 visitors; PTC (Hawaii) 1000 delegate
àOperators and vendors hold many training and promotional events
àCorporate and enduser congresses such as INTAUG etc.
n Positive correlation of travel with telecoms (cause & effect?)
n But is only fourth largest source of megacongresses: 8% (2005) –
10% (2004) of International Congresses in Vienna
The Global Telecoms Industry, ICCA Rhodes. 30 th October, 2006 3
Malcolm Ross, Merlin Consulting, Valletta, Malta eMail: malcolm.ross@gmail.com Web: www.consultmerlin.com
Summary
However, the Telecom industry is halfway through 10 years of crisis
fed by 6 paradigm shifts
n Stockmarket value of network operators (Vodafone, Deutsche
Telekom, Verizon etc.) and sales of equipment (Nokia, Siemens,
Ericsson etc.) halved since 2000; mergers of Siemens/Nokia
Networks, Alcatel/Lucent; bankruptcy of MCI; Benq Germany;
n It is assailed simultaneously by many powerful internal and
external drivers and paradigm shifts
àFrom the stable monopolies on the 1980, every country now has
many operators, fiercely competing
àMarkets, technology, players and rules of the game changing at least
as fast as the computer industry.
àNew paradigm shifts continue to change the industry and generate
an increasingly dense fog of uncertainty
Summary
Will this crisis change where Telecoms congresses and meetings will
be held, their number and size and what they will be about? Can we
multiply them by ten (to match relative size of HealthCare)?
Chinese character for „Crisis“
Wei = „Dangerous“ Ji = „Opportunity“
Summary
We suggest 32 clues and hints ICCA Members look for now in these 6
shifts, to seek out over the next 3 5 years the new telecomrelated
congress & meeting business, and to manage the increased dangers
1. The shift of buying power, manufacturing capacity and innovation
to Asia is accelerating – 6 clues and hints
2. Technology change is at least as fast and broad as in IT – 8 clues
and hints
3. Even the big directions for the telecoms industry are foggy – 7
clues and hints
4. The financial industry has a strong, growing influence – 4 clues
and hints
5. Power is shifting from operators to equipment, device and service
vendors – 3 clues and hints
6. Other industry sectors are shifting by embedding telecoms – 3
clues and hints th
The Global Telecoms Industry, ICCA Rhodes. 30 October, 2006 6
1. The shift of buying power, manufacturing capacity and innovation to Asia
is accelerating
Possible impact of the shift to Asia in the Telecom sector on the
Conference and Congress industry
1. Higher demand in attractive Asian cities for congress center and
meeting capacity of all sizes for telecomrelated meetings
2. Higher demand in “safe” African & MiddleEast cites for capacity
for telecomrelated meetings
3. Fewer and smaller megaconferences in telecom in Europe and US
4. More “satellite” conferences regionally to augment global mega
events, and some of these will grow bigger than the parents
5. More demand for translation services in events and backoffices
(e.g. Mandarin into English)
6. US and Europeanbased Congress Bureaus and Congress
Centers sales staff have to travel, as traditional event organisers
and association/organisation leaders more often in Asia
is accelerating
Telecom‘s center of gravity has shifted to Asia, so that Asia will soon
become the dominant force driving telecoms
n Telecom is growing faster than GDP everywhere, is growing
fastest where penetration is low, with the biggest markets being
China and India
n China Telecom (220 M fixedline and 27 M broadband customers)
is the world’s biggest fixed operator. China Mobile with 280 Million
users rivals Vodafone as biggest mobile operator.
n Developing markets are leaping directly into the latest platforms
n Asian buying power means new products are being launched there
first and are influenced more by Asian customer needs
n Telecom manufacturing has already shifted to Asia, and there are
signs that innovation and standardssetting will follow
n Bangalore is the world capital of callcenter outsourcing
is accelerating
Telecom is growing faster than GDP everywhere, is growing fastest
where penetration is low, with the biggest markets being “Chindia”
n The total number of mobile telecom users will rise from 2B to 3B
by 2010 (43% of world population). 1.5B fixed phones. Goal 6.5B!
n China and India will make up 30% (370M) of that growth
n MiddleEast and Africa will add 200M by 2010
n Over 50% of telecom infrastructure and mobile handsets sales are
to mainland China, so Asia dominates markets
n India commits to the two largest ever network procurements
à Oct 2006 BSNL receives bids for 60 million GSM lines ($4.8B)
à Adding 1.6M users in July 2006 Bharti buys $1B network expansion
n Europe may be 100% penetrated with mobile, but total spend still
is rising faster than GDP; broadband still growing fast
is accelerating
Western European telecomm market growth is declining
139%
140%
97%
100%
51%
50% 37%
25%
30%
17%
9%
Broadband a
10% 7%
5% 5% 4%
2%
Mobile
Voice & Data b
0%
0% 1% 2% 2% 3% 3% Fixed Voice c
10% 2002 2003 2004 2005E 2006E 2007E

is accelerating
Developing markets are leaping directly into the latest platforms
n The vast majority of new users in markets with low telecom
penetration go for personal mobile rather shared fixed phones
n Operators in emerging markets have little investment in legacy
(previous generation) equipment, so move straight to next
generation (Internet Protocol), so are best equipped to offer
advanced services, best quality and low cost to build and run
n Korea has the highest broadband penetration in the world
n Japan has high broadband penetration and the fastest widely
available broadband anywhere
n Several Taiwanese, Singaporean and Hong Kong operators are
building ultrahigh capacity fibercable to every work place and
every urban household nationwide, and Taipeiwide next
generation wireless broadband
is accelerating
Asian buying power means new products are being launched there
first and are influenced more by Asian customer needs
n Local script languages need larger displays, touchscreens, stylus
writepads and voice response
n Mainland China instigating a project to provide all students with an
electronic writingpad based distancelearning computer
n Local content is taking off (e.g. Japanese and Chinese music and
video, ringtones)
n iMode (Japanese mobile Internet) is often cited as the model for
the West to copy (although its success is based on different
cultural environment that doesn’t exist elsewhere)

is accelerating
Telecom manufacturing has already shifted to Asia, and there are
signs that innovation and standardssetting will follow
n The European GSM standard is used in 80% of all mobile phones
and produces the biggest Telecom Congress (3GSM), but Asia buy
more than 50% and is producing the next standards!
n The U.S. graduates 70,000 engineers a year vs. 350,000 from India
and 600,000 from China (there is dispute over definitions)
n Taiwan (including mainland factories), Korea and Japan dominate
supply of IT and telecom components: displays, diskdrives,
displays, mother boards, WLAN modules
n Taiwan (and now China) are not just copying, they are innovators
for example monopoly suppliers of all next generation wireless
and are putting it into digital cameras, game consoles, hifi etc.
n Strong in device software (although still weak in application
software)
is accelerating
Summary: Possible impact of the shift to Aisa in the Telecom sector
on the Conference and Congress industry
1. Higher demand in attractive Asian cities for congress center and
meeting capacity of all sizes for telecomrelated meetings
2. Higher demand in “safe” African & MiddleEast cites for capacity
for telecomrelated meetings
3. Fewer and smaller megaconferences in telecom in Europe and US
4. More “satellite” conferences regionally to augment global mega
events, and some of these will grow bigger than the parents
5. More demand for translation services in events and backoffices
(e.g. Mandarin into English)
6. US and Europeanbased Congress Bureaus and Congress
Centers sales staff have to travel, as traditional event organisers
and association/organisation leaders more often in Asia
2. Technology change is at least as fast and broad as in IT
Possible impact of fast technological change in the Telecom sector
7. Events have to be more often for delegates to keep up with
changes
8. Megaevents fragment into more parallel sessions
9. More events, each more specialised and smaller
10. Peernetworking at events and between events is key
11. More demanding and expensive stateoftheart support facilities
are key to selecting Congress location/facilities
12. Telecom and IT services to delegates become a major source of
revenue to Congress centers
13. Many more corporate and internal training events
14. Telecom will be a key theme in Congresses in many other sectors
What is possible will be limited more by our imagination rather than
by computer and telecom technology
n Performance, cost and pervasiveness of IT/telecom devices and
bandwidth are highly predictable, even if specific products are not
n Moore’s law: computer power/price doubles every 18 – 24 months
n We cannot predict success for specific products, but Moore’s law
means ubiquitous and affordable communications devices by 2010
n Advances in price performance of IT/Telecom can provide
powerful tools previously limited to very specialised purposes
n Software developments are more difficult to quantify, but some
trends are at least qualitatively predictable
n Optical fibre cables offer unlimited bandwidth, eliminating distance
and giving advantage to the firsttomarket
n In most urban environments, along roads and in most private and
public buildings telecoms capacity will exceed our ability to use it
n High GDP/km 2 countries will signpost the way forward
The future is limited by our imagination, not by the performance, cost
and pervasiveness of IT/telecom technology – and Congresses are a
good way to stimulate our imagination!
n Moore’s Law: microchip power doubles every 18 months, and
cost decreases 30% true since 1975 (annual doubling before
that) and no barrier over next 10 years
n Data traffic doubles every year (not every 100 days, as in the 1995
– 2000 myth of “Internet Time” that created the bubble)
n Capacity of a fibreoptics cable doubles every 12 – 18 months
n Fibreoptics cost is 90% trenching/ducting which is $80/m – with a
budget of $1,200/user, all desks closer than than 15m and 4
person households closer than 60m apart will be served
n Will fibreoptics and next generation wireless be the standard for
Congress stands and seats?

By 2010 everyone, everywhere will have affordable Telecoms – so it
will be a key to all other sectors, so expect a telecom stream in all
Congresses?
n 3 – 6 billion mobile phones compared with 1 billion PCs and 0.5
billion cable TV subscribers
n By 2010 a mobile phone the size of a Eurocoin and costs 10 Euro;
next generation wireless Bluetooth and WLAN on a chip are
already here
n Internet routers the size of a Eurocoin and costs 10 Euro
n At least as ubiquitous as embedded microprocessors today,
wirelesslinks will be in consumer electronics, cars, Coke
machines, appliances as well as communicators and computers
n Singlechip WLAN soon standard in every PC, mobile phone, PCs,
digital cameras, DVD players etc as the “wireless memorystick”
n Every such device will be within 5 metres of at least one other
What Telecom devices people wear or carry in 2010 will impact how
business and social life is done (and Congresses!)
n Microchip and digital storage will be 30 times today’s, and unit
prices will sink to 1/6 th of today’s, so for the same price, a PC has
5 times the performance and 5 times the storage capacity of today
n For the same price a PC would be 1/5 of the size and volume,
leading to PDAs with the power of today’s laptops and mobile
phones and other personal consumer electronics with the power
of highend PDAs
n Increased disc storage density can put 30 times more on a CD or
DVD, or 30 feature films could fit on a thumbnailsized microdisc,
in a wearable personal entertainment server or mobile phone.
n A businesscard sized memory could carry 100 hours of
promotional videos
n Virtual presence, social/business networking via telecoms gives
virtual and continuous meetings/Congresses anytime/anywhere
th
The Global Telecoms Industry, ICCA Rhodes. 30 October, 2006 19
Advances in price performance of IT/Telecom can provide powerful
tools previously limited to very specialised purposes
n Arcade game computers and highend home computers become
30 times more powerful, opening up potential for virtual
reality/simulators for lifelike interactive games.
n Simulators play a major part in the education of airline pilots. Will
wide access to PCbased virtualreality simulation and rollplaying
lead to their use for
à education in Business Studies, Languages, Engineering, Medicine,
etc.?
à entertainment – interaction and involvement in movies
à virtual presence in meetings (Congresses!), soccer matches, rock
concerts, massively multiple participant games

Software developments are more difficult to quantify, but some trends
are at least qualitatively predictable
n You will be able to search sound and video archives such as
YouTube, all past BBC TV programmes from your notebook
n Interactive searching, learning, commenting during a Congress!
n Digital Copyright and Flickr/Zazzle commercialisation enables
everyone to be an author wherever they are, protection their new
intellectualproperty and PayPal ensures you get royalties paid
n Authentication schemes ensure content is going to the intended
party and that the response is truly from them
n Studioquality graphics, video and audio production tools are
cheap and easy enough for individuals to produce professional
material and broadcast it through Internet bypassing the current
media sector. Some music artists only commercialize their work
through the Internet

Optical fibre gives unlimited capacity, eliminating distance and giving
advantage to the firsttomarket
n Fibreoptic cable have over 100 fibres, each with 64 laser
”colours”, each colour can carry 5,000 CDquality telephone calls
n Such a cable pays back at 2,000 voice channels (0.001% fill)
n Such a cable offers 10,000 full broadcast quality simultaneous
twoway video channels, or 10 million simultaneous video
conferences
n Every year advances in the electronic links to the cable doubles
the number of laser colours that an existing cable can transmit,
growing capacity faster than demand, at negligible extra cost
n This surfeit of capacity may mean late entrants won’t get market
or financing: telecom again becomes a “natural monopoly”

In most urban environments, along roads and in most private and
public buildings telecoms capacity will exceed our ability to use it
n Fibre cables economically serve large office buildings along the
main streets of most financial centres in major cities, even in the
developing world
n Office workers links to the corporate network are 20 – 50 times
faster than DSL – the bottle neck is in the database or terminal
n WLAN “hotspots” in public locations along the fibre cable or DSL
branches from it can give 50m circles of 100 Mbps (megabit per
sec.) access, 50 times the capacity of DSL at home
n Fon (www.fon.com) is just a few months old, in alpha test, yet has
built a community of 100,000 “fonderos” with private wireless
access points who allow others to use their spare capacity free
n WLANs chain “peertopeer” can give 100 Mpbs everywhere in
urban areas leapfrogging traditional telecom infrastructure
Cost reductions and performance enhancements will bring this
capacity at much lower costs than voice today e.g. the UK
n UK has 393,000 km of A, B and minor roads. If fibre laid on every,
then 393 Million metres at €80/metre = €32 B over 60M pop =
€500/pop. A WLAN every 50m = 8Million times €50 = €400M =
€7/pop
n Singapore municipal WLAM project: 5,000 hotspots: for $US 63M
= $12,000/hot spot = 700km2 = 1 every 300m, 4.5M people =
$14/pop
n Today’s telephone network cost around $1,200 per phone to
install

High GDP/Capita countries enable operators to rollout nationally very
high bandwidth services to every office and every urban household:
even if only voice services were purchased, revenue covers costs
n These operators can install dense fibre meshes to explore needs
of the Information Society, at very low risk, and will discover
demand for high speed and advanced services first
n Such operators are lead customers for next generation networks
n There are operators pursuing this strategy at least partially in all
the critical markets, but most are holding back to fiber MANs and
backbones, or ADSL “try it and see”
n Candidate nationwide “showcases” of this new information
centric world include Hong Kong, Singapore, Taiwan,
Netherlands, (Malta) – signposts if the broadband future emerges
n US, UK, France, Germany etc. will lag except in small parts of
large cities
High GDP/km 2 markets are signposts: Hong Kong, Singapore, Taiwan,
Netherlands, Malta can put in ubiquitous broadband riskfree so as to
experiment with knowledgebased working & the information society
n Massive savings in local loop costs, due to dense populations
n Local loop is 0.5 km, compared to European average of 4km and
US 8km; ($70/m trenching costs and $10/m fiber cost local loop)
n The cost of a dense urban mesh wiring up all businesses nation
wide pays back with 10 – 20% of today’s voice traffic
n A business customer in these countries has an easy choice:
àADSL from the incumbent, not available everywhere, expensive,
subject to poor quality and a delay in installation
àVoice services from the next generation carrier, with ondemand
upgrade to 10 MBPS “alwayson” to the desk, or any higher data
service up to the fibre limit (10 million simultaneous video
conferences), with entry price the same as incumbent’s POTS
Summary: Possible impact of fast technological change in the
Telecom sector on the Conference and Congress industry
7. Events have to be more often for delegates to keep up with
changes
8. Megaevents fragment into more parallel sessions
9. More events, each more specialised and smaller
10. Peernetworking at events and between events is key
11. More demanding and expensive stateoftheart support facilities
are key to selecting Congress location/facilities
12. Telecom and IT services to delegates become a major source of
revenue to Congress centers
13. Many more corporate and internal training events
14. Telecom will be a key theme in Congresses in many other sectors
3. Even the big directions for the telecoms industry are foggy
Possible impact of fogginess in the Telecom sector on the
15. There is money in journalists and conference organisers who are
early trend spotters/setters, whether right, or more often wrong
16. Telecom decision makers have a herd instinct – are they migrating
to new pastures or “5 million Lemmings can’t be wrong”!
17. More shortterm changes in size and nature of congresses
18. More shortterm cancellations, fewer longterm contracts
19. New conferences move in a few years from obscure to fashionable
to obsolete
20. Diversify away from dependence on megatelecom conferences,
have backup plans and contingencies
21. Get paid in advance!
The technology base might be clear, but there is uncertainty in market
demand, competitive structure, business models
n Multiple dramatic changes will cloud and confuse the IT, telecoms
and content industries for the next five years
n The industry is uncertain about convergence vs divergence, IP vs
switched, data/voice, local vs longdistance, optical vs copper,
mobile vs fixed, so beware of jumping on the “next big thing”
n The industry did a great job penetrating the global population, but
getting overcapacity used is a more fundamental challenge
n When dramatic change hits an industry, who emerges from the
chaos as leader often depends on the size of the commercial
consequences
n The leaders should prioritise their attention to ensure they are
ready for high uncertainty, highimpact drivers

Multiple dramatic changes will cloud and confuse the IT, telecoms
and content industries for the next five years
§ Performance, cost and pervasiveness of IT/telecom devices and
bandwidth are highly predictable, even if specific products are not
§ AsiaPacific buying power will influence product and service design
§ The 'ation crisis will continue to destabilise the telecom sector:
liberalisation, globalisation, privatisation, reregulation, consolidation .....
§ The financial industry will drive a stronger business culture
§ It is unclear which future structure and winners will emerge from shifting
boundaries between IT/content/fixed & mobile telecoms;
operators/serviceproviders/vendors/customers; consumer/professional
§ Markets will be driven more by customerneed and less by technology
and economics of networks
§ The biggest money and growth is in the businesses that apply Internet
and Intranets, rather than in the telecom/IT sector
The industry is uncertain about convergence vs divergence, IP vs
switched, data/voice, local vs longdistance, optical vs copper, mobile
vs fixed, so beware of jumping on “the next big thing”
n Many cases of mobile and fixed diverging in both market and
technology, show convergence is not a law of nature
n Convergence of voice and data in technology or market is also not
a law of nature
n The myth of „Internet traffic doubling every 100 days“ when in fact
it was doubling annually led to five years of overinvestment in
capacity, leading to 2 3.65*5 overcapacity that it will take a decade of
growth to use up
n ISDN, India, China, ADSL have been hypes that yielded no
sustainable profitability for telcos
n So the industry needs to learn: solid research, futureproof
planning, fast payback, with conservative demand prognoses
The industry did a great job penetrating the global population, but
getting overcapacity used is a more fundamental challenge
n Got a fixed phone into every (Western) home and office by 1980
n Phase 1: 1978 – 1985: Prove the technology for automatic cellular
mobile telephone systems – analogue carphones. Demand many
time what expected, despite high prices for service and handsets.
n Phase 2: 1985 – 2000: Digital cellular puts a mobile phone in
everyone’s hand. Supply finally catches up demand.
n Phase 3: 2000 – 2010: The quest to fill capacity: how to stimulate
consumers to use mobile as their principal communications media
n Broadband will follow this model well within a decade
n Phase 1: growing number of small, specialised congresses
n Phase 2: global megacongresses, promotion, sponsorship
n Phase 3: focussed training, optimisation, costsensitive meetings 32
The Global Telecoms Industry, ICCA Rhodes. 30 th October, 2006
(Mobile) operators are so focused on desperately seeking revenues
from broadband and content, they are overlooking the opportunity to
double or more revenues from voice, at low risk and low cost
n Mobile penetration is saturating in terms of % pop with a mobile
n Saturation is unproven in terms of
ànumber of minutes of voice conversation per person
àroles that mobile communications can play in people’s lives
àthe share of wallet 52% of under 16 UK kids are spending less on
burgers & chocolate to buy mobile topup cards for chatting and SMS
n Most waking minutes are spent silent. 98% of talking minutes are
facetoface. 80% of phone minutes are spent on the fixed phone.
n We don’t need to debate how much of this is realistically available
to mobile as just 1% of this potential captured as mobile voice
traffic would double mobile voice usage
When dramatic change hits an industry, who emerges from the chaos
as leader often depends on the size of the commercial consequences
Digital Watches = n Minor product
1970: Swiss 1997: Swiss performance
rule the Chaos almost rule improvements
watch the watch
industry industry n Minor growth in total
market size
Airplanes n Travel speed multiplied
1930: Railways 1997: Airlines by ten
rule long Chaos almost rule
distance longdistance n Total travelling public
transportation transportation multiplied by ten
1970: 40 Digitisation n Massive R&D costs

telecom 1997: 5 telecom
vendors rule vendors rule n Change in skills required
Chaos
the switch the switch
industry industry n No change to operators
Most of the changes facing Telecoms either favour consolidation or
newcomers, so it is likely the major customers for meetings and
congresses will change dramatically
Paradigm Shift Change In Change In Who Wins

Market Performance
‘ation Crisis Minor Minor Consolidation
Mobile Growth Major Major New Comers
CustomerDriven Minor Major Uncertain
Data/IP Growth Major Major New Comers
Electronic Commerce Minor Major Consolidation
Asia Markets Key Moderate Minor Consolidation
Distance Eliminated Minor Major New Comers

Any one of four extremely different futures is believable so could
happen; each would have a different impact on meetings and
congresses!
Click To Chat, Information Society
Anytime, Anywhere Supply: Knowledge‐based working
Few, global players
n Telecom seen as flat‐rate monopoly n IT, Telecom, content „High priest“ More of „sexy
Functionspecific utility bundled with water & power ‐ practitioners highly esteemed
(e.g. „Association essential but not valued; mainly voice n „Unlimited bandwidth, everywhere“ technology“ Mega
of Wearable Phone n Large communities reject IT/telecom real‐estate has premium price Congresses
custom, intense product / service

with fear of „big brother“/privacy & n Logical rather than geographic
Marketeers“) technology „communities“ and „nationalities“;
n Supply exceeds demand; like airlines, virtual corporations
simple, generic, free
„high tech“/sexy industry still attracts n Eight global operators who have earned
newcomers, but none are profitable their monopoly: Microsoft, Sony,
n Slower innovation cycles, longer life of Citibank, Shell, China Telecom,
Demand:
Demand:
infrastructure and services Carrefour, Hutch
n WLAN embedded in devices (toasters, n Everyone can create their own network
camera) & services (Banking) and service mix to match their needs
and can dynamically change it;
n Peer‐to‐peer meshed networks bring Telecom/IT architecture taught as
universal broadband; Telecom is creative arts not engineering
ubiquitous;
n Telecom embedded or bundled into
No TelecomSector n „Operators“ only link communities’ customized applications giving Massively multiple
wireless access points; Verisign,
meetings but Macrovision manage content rights and
specialized benefits with very high value small very
specific to niches
telecomstreams in royalties; everyone can author
n Thousands of suppliers of specialized
specialieds
all meetings n “Click to move” if plan extensive devices, installers for specific „Artisan“ meetings
mobiliity during a call applications
Supply: My Own
Meshed Many, everyone can do it Network
Community
Summary: Possible impact of fogginess in the Telecom sector on the
15. There is money in journalists and conference organisers who are
early trend spotters/setters, whether right, or more often wrong
16. Telecom decision makers have a herd instinct – are they migrating
to new pastures or “5 million Lemmings can’t be wrong”!
17. More shortterm changes in size and nature of congresses
18. More shortterm cancellations, fewer longterm contracts
19. New conferences move in a few years from obscure to fashionable
to obsolete
20. Diversify away from dependence on megatelecom conferences,
have backup plans and contingencies
21. Get paid in advance!
4. The financial industry has a strong, growing influence
Possible impact of financial industry influence in the Telecom sector
22. Stricter criteria on who and how many can attend meetings, what
value is expected from attendance, where is acceptable
23. Higher pricesensitivity
24. Shift of themes from exciting technology to market needs,
optimised operations, business cases, innovative business
models, futureproof strategies
25. Opportunity to stimulate “professionalisation” of Telecoms, hence
stimulating many new congresses
26. Telecom again becomes a key topic in financial and investor
congresses

The financial industry is seizing control either through Private Equity
M&A of telcos or through pressure on incumbent management
n Private Equity does not see telecom management maximising
enterprise value by balanced their attention and the companies
resources on all the parameters that make up that value
n Measured on the 7 capabilities/functions key to be successful,
operators are mediocre compared with leaders in other industries
n 2005 saw $ 200 Billion of M&A activity in Europe telecoms, 20% of
all M&A.
n This is only scratching the surface of the potential as most
incumbent telcos worldwide share the characteristics that make
them so interesting for PE

Private Equity does not see telecom management maximising
enterprise value by balanced their attention and the companies
resources on all the parameters that make up that value: (Illustrative)
Parameter Driving Value Management Financial Analyst
Attention Attention
Discount Interest rate Moderate Low
Rate
Financial analyst confidence in industry Moderate High
Track record Low High
Revenue uncertainty Low High
Cost uncertainty Low Moderate
Technology uncertainty High High
Competitive intensity uncertainty Moderate High
Revenue No. of customer groups Low Moderate
Pop. of customer group High High
Market share High Moderate
Lifetime of customer Low Moderate
Portfolio of product/services High Moderate
Value of product/service to customer Low Moderate
Unit price High High
Intensity of use Low Moderate
Cost Capex Moderate High
Opex High High
Accounting Rules High High
Measured on the 7 capabilities/functions key to be successful,
operators are mediocre compared with leaders in other industries
such as P&G, Sony, Nokia etc, (scores out of 5)
Capabilities / Functions Operator 1 Operator 2 Operator 3 Best In Class
1) Understanding customers and their needs 2 3 2 P&G
2) Developing products/services to meet customer needs 2 2 3 Sony
2a) Bring value to customers, value>price, price doesn’t matter 2 2 2 Sony
2b) Customer perceives get the best offer (product, tariff, care”) 3 3 3 Avis
2c) Select and develop sales channels 3 3 3 P&G
3) Acquire and retain the high NPV customers 2 3 2 Dior
3a) Build desirable brand 3 4 2 Coke
3b) Create Image and communicate to customers 2 3 2 Beneton
3c) Create emotional relationship to customer 1 2 2 Nike
4) Serve customer through operational excellence 2 3 2 FedEx
4a) Address all customers 3 3 2 Coca Cola
4b) Develop/maintain best in class staff 2 3 2 IBM
4c) Network quality/coverage 3 3 3 McD
4d) Provisioning/billing 3 3 3 Dell
4e) Cost efficient 2 2 2 Dell
5) Ease of use of services 12 12 12 Postits
6) Partnerships – get and mange partners 2 2 2 Visa
7) Financial predictability – Having clear business model(s) 2 2 1 J&J
Executives should balance their attention across all the elements that
make up shareholder value (in telecoms as in any business)
n Look to match bestinclass benchmarks productivity across all
parts of the Telco
n Pay more attention to discount rate and customer lifetime to
balance the recent emphasis on cost and revenue elements that
create shareholder value
n Reverse overemphasis of management attention
à Less on customer acquisiton, more on retention and usage
à Less on next generation, more on today‘s services (e.g. Voice)
à Less on „content“, more on „contact“
à Don‘t believe that mediahype correlates with real potential

As high margins come under pressure, the Telecom industry must
move to optimising each function, and customerspecific which will
lead to professional standards, training and so new professional
associations & specialised Chapters: analogous to Cardiography,
Radiography; Cardiologists; Paediatrics; Pharmacy; examples:
n Financial and controlling diagnostics
àRevenue leakage forensics – revenue operators cannot collect
n Understanding customer needs
àFieldsales force application analysts
n Advising the customers on the best solution for them
àTelecoaching customers to upsell mobile + fixed + media + Internet
n Dispencing best solutions for the customer‘s needs
àVenders of custom handsets
Telecoms is 20% of mergers & acquisitions (M&A), a big driver of
corporate events, to reeducate staff and realign partners/channels.
By increasing order of cash available for telecom M&A:
n Telcos: “Two dinosaurs do not produce a mammal” but still telcos
buy other telcos: In 2005/6 SBC bought AT&T $ 16 B; Telefonica
O2 for GBP 18.5 B and $3.6 Billion for 51% of Cesky; FT paid € 10.6
B for Amena.
n Private Equity: six PE funds clubbed to buy TDC for $12 B. The top
20 PE firms have $300 B to invest.
n MiddleEast: Orascom bought WIND $ 12 B; MTC bought Telecel
$3.4 B; Etisalat (Dubai) paid $ 2.9 B for the 3rd Egypt mobile
license and has $4 B “to be ready for the 3rd mobile license in
Saudi Arabia”; MTN paid $5.5B for Investcom.
n China: Profits far exceeding domestic expansion needs means
China Telecom ($ 4 B) and China Mobile ($ 6 B) in the last year.
The temptation is to use this to expand globally or risk having their
government owners extract the cash 44
The Global Telecoms Industry, ICCA Rhodes. 30 th October, 2006
This is only scratching the surface of the potential as most incumbent
telcos worldwide share the characteristics that make them so
interesting for PE:
n Massive fixedassets that can be monetised (e.g. sell and lease
back of buildings)
n High and stabile cash flow, with good credit ratings to raise debt
n High potential for productivity improvements
n Out of favour with investment analysts: historically low stock
ratings and so cheap(er) to buy
n Many lines of business that can be split and sold separately if
possible
n Lots of potential buyers

Summary: Possible impact of financial industry influence in the
22. Stricter criteria on who and how many can attend meetings, what
value is expected from attendance, where is acceptable
23. Higher pricesensitivity
24. Shift of themes from exciting technology to market needs,
optimised operations, business cases, innovative business
models, futureproof strategies
25. Opportunity to stimulate “professionalisation” of Telecoms, hence
stimulating many new congresses
26. Telecom again becomes a key topic in financial and investor
congresses

5. Power is shifting from operators to equipment, device and service vendors
Possible impact of this power shift to vendors in the Telecom sector
27. More megaevents sponsored by specific megavendors and
vendor rather than operator associations
28. More vendor sponsorship in events and more “tradeshow”
flavour
29. Telecom seen as an enabler rather than the main theme of events
over a wider range of events featuring specific equipment, device
and service themes

Dominant for decades, operators are now showing signs of weakness
n The telcom operator sector is very fragmented, with the largest 31
operators making up 30% of the total $US 5,000 Billion stock
market valuation, and the largest having just 2.5%
n The vendor sector is highly concentrated, with ongoing
consolidation and rising Chinese vendors (HuaWei & ZTE not
quoted)
n Telecom operators are valued for their profitability, but Internet e
commerce on much higher rated for growth and expectations of
future profitability
n Vendors are beginning to demonstrate their power relative to
incumbent operators
n New businesses enabled by telecoms emerge suddenly
However, operators have show in the past they can use their size and
cash reserves to buy themselves out of trouble
The telcom operator sector is very fragmented, with the largest 31
operators making up 30% of the total $US 5,000 Billion stock market
valuation, and the largest having just 2.5%
Rank Telecom Operator $US Billion % of total Rank Telecom Operator $US Billion % of total
1 Vodafone 126 2.53% 18 SingTel 27 0.54%
2 ATT 105 2.11% 19 Etisalat 25 0.50%
3 China Mobile 104 2.09% 20 Alltel 25 0.50%
4 Verizon 100 2.01% 21 KPN 24 0.48%
5 Saudi Telecom 87 1.75% 22 KDDI (Japan) 24 0.48%
6 Telefonica 77 1.55% 23 BCE (Canada) 22 0.44%
7 NTT 76 1.53% 24 Amtel (Mexico) 20 0.40%
8 Sprint 74 1.49% 25 Swisscom 20 0.40%
9 Deutsche Telekom 72 1.45% 26 Telenor 18 0.36%
10 NTT DoCoMo 69 1.39% 27 Chunghwa (Taiwan) 18 0.36%
11 BellSouth 62 1.25% 28 Bharti (India) 18 0.36%
12 France Telecom 58 1.17% 29 MTN (S. Africa) 17 0.34%
13 Telecom Italia 55 1.11% 30 Etihad Etisalat (Saudi Arabia) 16 0.32%
14 America Movile (Mexico) 43 0.86% 31 SK Telecom 16 0.32%
15 Telstra 34 0.68%
16 BT 32 0.64% Others 3481 70.00%
17 TeliaSonera 28 0.56%
Total 4973

The vendor sector is highly concentrated, with ongoing
consolidation and rising Chinese vendors (HuaWei & ZTE not quoted)
Rank ITC Vendor $US Billion % of total $US Billion Rank ITC Vendor $US Billion % of total $US Billion
Market Cap Sales Market Cap Sales
1 Microsoft 281 8.57% 39.8 18 Comcast 57 1.74% 22.3
2 Cisco 133 4.06% 24.8 19 e‐Bay 55 1.67% 4.6
3 IBM 129 3.94% 91.1 20 News Corp 54 1.65% 23.9
4 Intel 115 3.49% 38.8 21 Walt Disney 54 1.64% 31.9
5 Samsung 107 3.27% 58.4 22 Apple Computer 53 1.62% 13.9
6 HP 93 2.84% 86.7 23 Texas Instruments 52 1.59% 13.4
7 Nokia 92 2.79% 41.5 24 Taiwan Semiconductor 49 1.49% 8.2
8 Qualcom 84 2.55% 5.7 25 Sony 46 1.41% 55.9
9 Siemens 83 2.53% 91.5 26 Yahoo! 46 1.39% 5.3
10 Google 81 2.46% 6.1 27 Corning 42 1.27% 4.6
11 Time Warner 74 2.26% 43.6 28 Vivendi Universal 40 1.21% 23.6
12 Oracle 71 2.16% 11.8 29 EMC 32 0.99% 9.7
13 Dell 69 2.09% 55.9 30 Softbank 31 0.94% 7.1
14 SAP 69 2.09% 10.3 31 Viacom 28 0.87% 9.6
15 Ericsson 61 1.87% 19.6
16 Canon 59 1.79% 32.0 Others 984 30.00% 398
17 Motorola 57 1.75% 36.8
Total 3280 1326
Source: http://www.ft.com/reports/ft5002006/

Vendors are beginning to demonstrate their power relative to
incumbent operators
n Leading device vendors have global and stronger brand
recognition, so higher loyalty, than operators (e.g. Sony, Nokia,
Samsung, Apple etc.)
n If embedding telecoms inside devices leads to peertopeer
meshed networks, this bypasses the telco networks
n Google, eBay, Skype, Fon, MySpace enabled by telecoms have
innovated and grown much faster than telco operators
n Virtual network operators have demonstrated they are much better
at capturing customer bases than traditional retail arms of
operators (e.g. UK‘s Virgin Mobile rated higher than host TMobile)
n Operators are saddled with debt, are under increasing competitive
pressure and are distracted by internal productivity and
organisation problems
New businesses enabled by telecoms emerge suddenly
n Yahoo! 970M streaming video sessions (mainly music) in 3 months
n Korea – TV channels charge $1 to download programmes
n Google launched upload.video.google
n Camera phones 264M sold in 2004
n Digital music 480M iTunes (mid July 2005) (7% of all music sold)
n PayPal 72M accounts, 22M active, 110M payments value $6B (38% of
iTunes)
n Online paid content $1.8B US revenue in 2004 per OPA
n 7% of 120M Internet users in USA write blogs
n 25% of searches are local and 10% or these are commercial
n Microsoft reached 1M paid subscribers to XBox live in 1st year; MM
player games

Summary: Possible impact of this power shift to vendors in the
27. More megaevents sponsored by specific megavendors and
vendor rather than operator associations
28. More vendor sponsorship in events and more “tradeshow”
flavour
29. Telecom seen as an enabler rather than the main theme of events
over a wider range of events featuring specific equipment, device
and service themes

6. Other industry sectors are shifting by embedding telecoms
Possible impact of embedding Telecoms in other sectors on the
30. Telecoms becomes a theme track in a broader range of
congresses
31. Stateoftheart telecom facilities become an important selection
criteria for a wider range of all congresses
32. Providing telecom services becomes an important revenue stream
for congress locations (€5 – 20 per delegate per day in mobile
phone revenue)

As the biggest part of the GDP, telecom growth may only come if it
finds ways of getting paid for enabling other big parts of the GDP
n Recent successes show there is room for innovative business
models and growth, although maybe under terms different from
the old monopolyoriented ones e.g. value added segment focused
MVNOs; Skype; Google; etc.
n The range of indirect opportunities is likely to be larger than the
direct telecom markets.
n Telecoms brings characteristics that change the rules of many big
industries, particularly those based on information
n These trends force Telecom to enable specialisation to better suit
fragmented segments which become increasingly different
n Many of the applications of next generation telecom services
require skill sets that NetCostyle operators are not well suited for

The range of indirect opportunities is likely to be larger than the
direct telecom markets.
n Just like the internal combustion engine and trains.... cars:
suburbs, paved roads, vacations, wider range of potential social
partners, freedom to live away from work location
àRailways created realestate value (then went bust)!
n .... telecom has potential to change societal structure
àFlexibility to mix work, play location and time
àActivation of ondemand ad hoc parttime work force; intelligent car
pooling; selling downtime
àTimeshifting a rainy vacation day
àInstant intelligent dating/matching to partners
àStockless product showrooms
Telecoms brings characteristics that change the rules of many big
industries, particularly those based on information
n Logical communities with shared interests or common values replace
physical communities
à Peertopeer financing and insurance
à Education – Open University
à Meetings (and congresses!)
à Ethnicity; nationality; Government
n Telecoms decentralisation of activities that have been centralised for
physicalproximity reasons
à Dating and friendship – MySpace
à Retailing – ecommerce replaces physical stores;
à Peertopeer commerce – eBay; MyHammer;
à Resource sharing – ad hoc carpooling; transportation/delivery
à Entertainment and media e.g. No need for record companies;
everyone authors; YouTube;
n Enables activities less dependent on time and place
à Mix of work/play/relationship roles; virtual jobs; more roles;
à Fragmented/multipleroles teacher/pupil
So there is likely to be more Congress capacity required for streams
discussing telecoms as part of other sectors’ meetings than there will
be additional “application” streams in telecom meetings
n Sectors most impacted first by telecoms
àBanking, financial
àRetail and wholesale; trading; commerce
àMedia and entertainment; social networking
àEducation
àCongresses and meetings
n Such streams will require Congress Centers to offer the stateof
theart telecom facilities currently needed by ICT congresses

Many of the applications of next generation telecom services require
skill sets that NetCostyle operators are not well suited for
n Gaining and serving corporate customers
n Customer care and management
n Marketing (WAP was the industry’s first attempt, and failed)
n Content collection, packaging
n Payment (including micropayment) with low fraud rates
n Partnerships rather than vendor/supplier transactions
n Venturecapital risktaking, assessment, tracking and management
n Logistics (e.g. delivering physical goods)

Like Sabre had to be armslength to enable the development of the
richness of the travel and hospitality industry, will the Telecom
Enabler (enableco) be a necessary addition to facilitate the richness
of businesses to develop that can serve specific needs of endusers?
Telco B/C end‐users
Enabled New USD 500bn

Enableco
businesses
Netco
Serveco Old USD 1,000bn

Best is enabling with telecoms the existing relationship of a provider
with the customer that promotes loyalty, increased use of existing
services and introduces them to new services
n understands the customer’s needs and the value to them of
satisfying that need (e.g. a football fans need to feel important to
his peers by showing off his team’s goal)
n develop an application that meets that need, together with any
partners necessary to deliver parts of the service, e.g. so that the
customer can share a digital video clip with a peer without piracy
n develop a proposition emphasizing the application, the benefit
and the value to the customer
n launch this with representative early adopters to fine tune the
proposition and to evolve it to be easy to use for less committed
majority in this segment
n develop branding and promotion, distribution and customer care
for the proposition
With over 1M students worldwide, the UK Open University shows IT
and telecom for distance learning, make virtual classrooms effective
(lessons for Congresses?)
n IT, telecom and media technologies expand the richness of
content available to students, and extend the reach of distance
learning to open bigger and even more diverse markets
n They enable many "traditional" higher education institutions to
provide distance learning and so compete with you globally
n They enable customisation and personalisation, which match
changing student needs: shorter career phases, broader
spectrum of interests, fragmentation of students’ time/attention,
demand for shorter course duration, how often courses need to
be updated, needs for continuing education and update
n Interactive learning changes and blurs the relationship between
faculty, educator and student with any individual becoming
comfortable playing different roles in several/many virtual
corporations, institutions, communities, and networks
Interactive learning changes and blurs the relationship between
faculty, educator and student
n Telecommuting opens opportunities for an individual to play
different jobs/roles in several/many virtual corporations,
institutions, communities, and networks.
n This has major impact on the need for incorporating ethics,
standardizing presentation skills, basic skills in running your own
business etc. into any educational programme for professionals
n The individual can be a student one part of their life and a teacher
in another.
n In these circumstances the learning institutions can play key roles
in codifying, qualifying and certifying content and teacher, and
authenticating and certifying student performance.

Example: Media companies have all the factors to control content, so
partner with them, not compete:
n access to existing content producers, and an efficient scouting
mechanism to identify and capture new sources of content
n established distribution channels and are used to building and
exploiting new channels as they arrive
n IPR (intellectual property rights) mechanisms and contract
mechanisms for artists and content produces
n track record in adding to their rich portfolio of technical platforms
as each new media has emerged
n vast libraries of archived content
n comfort with targeting multiple market niches

Example: rather than Telcos going for “QuadruplePlay”, media
companies know where the new media(s) can be applied effectively
n Media companies know the strengths and weaknesses of existing
media
n Advertising is the customer of TV, Radio and print media, and
existing players know how to cluster “eyeballs” of particular
target groups to a particular sponsor’s ad
n Existing media players are best positioned to discover how the
new media can be more effective at manipulating eyeballs
n Existing media players have longstanding relationships with
advertisers
n They are also well placed to capture any new revenue streams that
might be generated by user’s buying content

Summary: Possible impact of embedding Telecoms in other sectors
30. Telecoms becomes a theme track in a broader range of
congresses
31. Stateoftheart telecom facilities become an important selection
criteria for a wider range of all congresses
32. Providing telecom services becomes an important revenue stream
for congress locations (€5 – 20 per delegate per day in mobile
phone revenue)

Summary
At least six shifts in the Telecom sector might influence the size,
frequency, location and themes of meetings and conferences
1. The shift of buying power, manufacturing capacity and innovation
to Asia is accelerating
5. Power is shifting from operators to equipment, device and service
vendors

International Congress & Convention Association
Thank you!
45 th ICCA Congress & Exhibition
Monday 30 October 2006
www.iccaworld.com

Global Telecoms MR

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1970: 40 Digitisation n Massive R&D costs

Paradigm Shift Change In Change In Who Wins

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custom, intense product / service

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The Global Telecoms Industry, ICCA Rhodes. 30 th October, 2006 58

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Telco B/C end‐users

Enabled New USD 500bn

Serveco Old USD 1,000bn

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