As we close out the decade, there’s much to reflect on. The telecoms, media, and technology (TMT) industries have driven substantial innovation that changed everything from the way businesses solve problems to how people engage with their friends, families, and the wider world. In this special edition of our year-end letter, we take a moment to consider some of the most impactful developments of the last ten years.
A Decade in Review
The Digital Content Avalanche | Video
It’s hard to imagine that just ten years ago “cord-cutter” was a fringe term with little meaning to the typical household. Yet over the past decade, consumers overwhelmingly embraced over-the-top streaming video services as a complement – and in many cases a substitute – to traditional Pay-TV subscriptions.
Several converging TMT trends have helped accelerate consumer adoption of these services:
Content: Netflix led the way with a large portfolio of licensed content from the big studios and networks. However, it quickly became apparent that original content would be critical to compete, and by 2013 both Netflix and Amazon had launched ambitious, original programming line-ups. While the long-run economic viability of this “streaming only” original content strategy was initially questioned by some industry experts, the market continues to trend in this direction. Going into 2020, original content is a key differentiator for nearly every streaming video provider vying for a share of consumer wallets.
Technology: While early OTT adopters were satisfied watching content on computers, it quickly became clear that better viewing solutions were needed to catalyze faster adoption across broader audiences. New companies such as Roku faced off against Apple, Amazon, and Google to develop streaming hardware; TV manufacturers developed internet-connected platforms; and an ecosystem of mobile apps flourished. A new form of “coopetition” emerged, as Pay-TV incumbents worldwide embedded Netflix and other content apps in their platforms.
Speed: Download speeds – averaging just 5 Mbps in the US in 2010  – were initially a constraint on streaming video, limiting high-definition content availability and forcing many consumers to experience long load times and frustrating buffering events. However, average speeds increased by 39% per year to reach 130 Mbps by the end of 2019 , enabling reliable and high-quality 4K streaming video experiences for consumers in many countries.
Other forms of video content that would have been considered niche ten years ago have also undermined the traditional dominance of linear entertainment. Examples include eSports, vlogging, and social media video content. Over the decade, YouTube shifted from a hobby to a serious money-making endeavor for some, with top-earning YouTubers taking in upwards of $25M in 2019 .
Despite a decade of growth, the video market showdown is only just beginning. In 2019, many of the largest content owners reinvigorated their streaming video strategies, with notable announcements including Disney+, Warner Media’s HBO MAX, and NBC’s Peacock. Apple also finally jumped into the fray with Apple TV+, a new service that combines original and third-party content. As these firms gear up for even greater OTT competition, they’re protecting their high-demand content (e.g., Friends and The Office will both be pulled from Netflix in 2020) and exploring differentiating go-to-market strategies (e.g., Apple TV+ is free with new iPhones, Disney+ is bundled with Verizon mobile plans for the US launch).
Consumers now have access to more high-quality content than ever before, with many choices regarding how and where they watch. The heavy competition of providers creates strong incentives for the industry to continue innovating in ways that improve consumer experiences and deliver a steady flow of compelling content. However, despite consumer preferences for simple, streamlined experiences, today the streaming video technology landscape is fragmented without a clear platform leader. This evolving market increasingly necessitates a multitude of streaming subscriptions, and it remains to be seen if there is a limit for how many separate services consumers are prepared to purchase.
The Need for Speed | Connectivity
Over the past decade consumers and businesses alike benefited from substantial increases in broadband speeds, with the global average download speed topping 70 Mbps in 2019 , up 35x from under 2 Mbps in 2010 . These advances enabled countless new services, ranging from AI-powered smart assistants to enterprise-grade cloud computing applications.
Increasing speeds are a product of competition, ambitious investment and thoughtful innovation. US-based Verizon was one of the first telcos to make bold investments in consumer Fiber-to-the-Premise (FTTP), with much of the build out occurring between 2005-2010. Some critics at the time questioned the economics of the decision , particularly in less dense areas. Since then, fiber investment has become a mainstream choice for incumbents and new entrants worldwide. Many are now deploying FTTP, and others – including cable operators (MSOs) and wireless providers – are extending fiber further into their access networks to deliver faster speeds.
Several key developments throughout 2019 will help maintain this momentum, and may further shake up the landscape as we enter the coming decade:
Wireline Investment: In the US, FTTP penetration continued to grow at a strong pace, largely driven by AT&Ts massive build out reaching 14.5M+ households in 2019 , bringing total US residential fiber availability to well over 30% of households. Additionally, with the deployment of DOCSIS 3.1 across the largest cable footprints, an estimated 90%+ of US households now have access to broadband 100 Mbps or faster . In the UK, 2019 was effectively a fiber boom, with fiber-to-the-home coverage increasing to 7%  after languishing at just 1-3% in prior years. Political will to push this figure higher clearly exists, with £5Bn government spending already pledged to support full fiber in rural areas.
5G Deployment: All major US and UK carriers officially launched 5G in 2019, with additional deployments seen in China, South Korea, and Germany. Despite years of hype and anticipation, it’s safe to say these were soft launches. At the time of writing, 5G services are generally only available at specific locations, in a limited number of cities, and on select few devices. But with carrier roadmaps and deployment strategies now firmly in place, along with key learnings from initial launches, the rollouts will accelerate next year as more 5G capable devices come to market.
Low Earth Orbit (LEO) Satellite Launches: Affordable, high-speed, low-latency satellite broadband has seemed out of reach for the communications sector for years. The substantial cost of launching the hundreds – or even thousands – of satellites required to build such a network was prohibitive. In 2019 there was renewed energy for the concept, as SpaceX, OneWeb, and Amazon all released plans to deploy LEO broadband service via LEO deployments. SpaceX’s Starlink may have an advantage in leveraging their reusable rockets to deploy satellites at a lower cost than rivals. They are off to a fast start, launching their first 120 satellites this year and announcing plans for Starlink internet to US consumers in 2020.
Consumers and businesses are quick to find new use cases and applications that fill the data pipe as capacity and speeds increase – streaming 4K video, VR/AR, and AI to name just a few. Continued competition between providers, ranging from wireline services to 5G rollouts, should create a buyer’s market with rising speeds and continued innovation throughout next decade.
The World in Your Hands | Mobile Device Evolution
The 2000s saw many iconic devices launch – the indestructible Nokia, Blackberry Quark, Motorola RAZR, and of course the first iPhone – but the 2010s took mobile devices to another level. Both the iPhone 4 and the first Samsung Galaxy S set the tone for the decade, launching days apart in June 2010. The Galaxy S was particularly important as it firmly entrenched Samsung as a primary competitor to Apple’s flagship devices.
Notably, the 2010 handsets each featured their first iteration of the front-facing camera, paving the way for the selfie craze that ramped up throughout the decade. The technical specs and pricing for Apple and Samsung devices were initially similar, and future iterations saw a technology arms race to win over consumers:    
While the contrast in hardware specs is significant, those details barely capture the scale of innovation in functionality that occurred. New hardware materials, video recording capabilities, personal AI assistants, facial recognition, fingerprint ID, battery improvement, wireless charging, mobile payments, and growing app ecosystems are just some of the advances that increased our reliance on our mobile devices.
One of the most substantial improvements in our handheld technology was of course the evolution of wireless connectivity. The 2010s welcomed 4G/LTE connectivity that made video calling, content streaming, mobile gaming, and transfers of large files on mobile devices a part of everyday life. As we close out the decade, we’re just beginning the next connectivity leap in the form of 5G rollouts.
Rising prices may have slowed consumer demand for premium phones, with fewer than 10% looking to spend more than $1,000 . However, as 5G is rolled out, we could see a flurry of upgrades in enabled markets. The anticipated wireless network performance improvements could be a catalyst that changes consumer behaviors. Improved speed and reliability for current use cases is a given, but connected machines and sensor networks, augmented reality, and automated transport may well revolutionize of how we interact with the world at our fingertips.
Rise of the Machines | AI & Automation
Stock trading, news curation, ad placement, and content recommendation are all notable examples of once human-driven activities now largely overtaken by machines, with this trend showing no signs of abating.
The 2010s saw machine learning algorithms – first developed in the 1970s and 80s – successfully applied to a host of new challenges. Machines now recognize cats, beat professional Go masters , recommend music or video content, order your groceries, and even build other machines in a fully automated factory line. Certain types of pattern recognition, classification, recommendation generation, and repetitive activities are now often more efficiently completed by machines than humans, especially at scale.
Three advances produced the rapid shift we’ve seen over the past decade:
- Rising volumes of connected devices – 25 billion globally in 2019  – with gains in chip and memory functionality allowing for increasingly complex applications to be deployed.
- Improved speed, bandwidth and latency allow remote machines to process information in near real-time based on live input.
- Data collection, storage and processing power advances enabled by cloud computing put significant decision power within close reach of endpoints, with edge computing driving further improvements.
2019 saw several trends that drove progress towards a machine-led future:
Automation-Driven Productivity Gains: Enterprise deployment of AI and automation increased, and Robotic Process Automation became the fastest growing market in enterprise software . Many sectors, including telecommunications, began to unlock meaningful productivity gains from automation, even with legacy systems still in place, and private sector investment in AI keeps rising on the promise of future business benefits .
AI Democratization: The number of machine learning applications offered as an on-demand service by cloud providers rose, democratizing technologies previously confined to tech giants. The next generation of AI-optimized chips have been unveiled by Google, Graphcore and NVIDIA. Alignment on 5G standards could further unlock industrial applications that need consistent low-latency connections.
Societal Concern: Governments and businesses considered the potential implications of a machine-driven future; particularly, the impact on employment. Universal basic income was discussed as a policy option in multiple countries , and experiments such as Microsoft’s trial of a reduced working week in Japan – resulting in productivity increases  – may be on the rise. The ethics of AI applications were increasingly a concern, including the small but real risk of humans “losing control”.
AI developments present opportunities and risks in equal measure. New applications, industries and business models will undoubtedly emerge, while questions on societal impacts remain as we adapt to a new technological reality. Exposure to security threats will increase as connected devices proliferate, so new security measures may be required to combat the heightened risk. Governments and enterprises have a chance to seize the opportunity presented by the machine-led world but must tread carefully to avoid pitfalls.
In Security We Trust | Data Privacy & Protection
The importance of data has grown rapidly over the past 10 years, as have the risks posed by data mismanagement. Today, technological innovation is linked to data privacy and protection concerns, with regulators finding themselves at the center of the debate as we enter these uncharted waters.
Several factors have shaped the importance of data privacy and protection:
The Rise of Big Data: At the start of the decade, internet and social media giants were collecting petabytes of data per day. “Big Data” was a hot buzzword with businesses attempting to collect and analyze data at scale, and fluency in Hadoop, Spark, and Giraffe quickly became table-stakes skills for data pioneers. As innovation progressed, the ascent of cloud computing drove the costs of Big Data down by removing a dependency on expensive infrastructure. This led to “on-demand” and “pay-for-use” models that reduced barriers to entry and expanded big data capabilities. Suddenly, focus shifted from “how do we collect data?” to “how do maximize the value of data?”
Data Monetization: Data quickly became one of the most valuable assets for companies. Actionable insights lead to informed decisions and higher profits. Companies began monetizing data through operational efficiencies, personalized customer relationships, and productivity gains. Data analysis became a pillar of corporate strategy, and there was an increasing emphasis on hiring skillsets to measure, translate, and communicate data insights. Inevitably, innovation outpaced regulation, and a predictable surge in large-scale data breaches and privacy violations followed.
Backlash & Regulatory Response: Customers learned the difficult lesson that sharing personal data online can be a substantial risk. Many companies experienced massive data breaches, and tech giants such as Google, Amazon, and Facebook were accused of abusing consumer trust to engage in microtargeting, price discrimination, and intrusive data collection methods. Gradually, as consumers demanded stronger data privacy and protection standards, regulators responded. Notably, the EU set a global benchmark of protections by enforcing General Data Protection Regulation (GDPR) in 2018. Business sentiments on these standards have been mixed, but ultimately, they set a new precedent: privacy before profits.
Despite progress in privacy and security made over the course of the decade, 2019 was a landmark year for data breaches with over 3,800  significant incidents globally. In the US, the much-anticipated California Consumer Privacy Act (CCPA) will set new standards for US consumer data protection and will likely help guide US federal policy development. Security protection remains a top priority for both companies and regulators, with the Global Managed Security Services Market projected to grow 14.5% annually over the next several years . Leading tech companies like Apple are using data security to differentiate, but as we enter the age of Analytics 3.0 and Hyper-Personalization, continued regulation will be critical to keep up with risks associated with greater data exposure on a consistent and reliable basis.
2019 Prediction Review
In December 2018, we made ten predictions for 2019. Here’s how we did:
1. Fiber assets will attract more investment
Did it happen? YES. Fiber investment continued to be driven by increasing demand for high-capacity, high-speed data transport. In May, Zayo was acquired by PE firms at a 32% premium , suggesting continued optimism surrounding fiber investments. Many telco operators also achieved fiber expansion milestones this year and signaled plans to continue momentum through 2020. For example, CenturyLink deployed 3.5M fiber miles in the US as of 2019 , with plans to provision 1.2M more miles in Europe by early 2021.
2. We’ll start to see differentiation in 5G strategies
ALMOST. While there has been some differentiation, it’s been on a small scale. AT&T and Verizon unrolled limited 5G mobile offerings across select cities, with pledges to launch nationwide in 2020. AT&T’s offering was generally targeted towards businesses, while Verizon focused on individuals with compatible handsets. Additionally, Verizon’s launch of 5G Home internet service this year was an early example of go-to-market strategy differentiation.
3. In-home WiFi will become a new growth area
YES. Tech giants and ISPs made strides to improve In-Home WiFi this year. Amazon acquired hardware startup Eero in February, competing with Google’s Nest WiFi by selling mesh routers that provide more reliable home network solutions. ISPs also brought new service offerings to market this year. For example, Spectrum launched Advanced In-Home WiFi, with improved router functionality to optimizes home WiFi connectivity, and Virgin Media launched Intelligent WiFi to detect poor connection areas in the home and optimize network coverage, claiming up to 3X internet speed performance improvements.
4. Network operators will move beyond trials in NFV deployment
ALMOST. AT&T has nearly achieved its goal of converting 75% of core network operations to NFV and SDN by 2020 . In other areas progress has been slow with telcos understandably cautious. For example, in the UK, BT is extending virtualization of core network functions currently hosted within 5-10 of its exchanges, but it’s not yet clear whether this will be expanded in scope.
5. The Edge Computing market will start to heat up
YES. Amazon launched AWS Wavelength in late 2019 – a significant announcement bringing AWS to the telco edge. With KDDI, SK Telecom, Verizon and Vodafone as day-one partners, this move reinforces the need for aggregation in what would otherwise be a highly fragmented market. We’re watching closely to see how Wavelength fares against competing telco edge platforms such as Ericsson Gravity and MobiledgeX as they all seek to scale up their operator and app developer partnerships.
6. Established players will launch managed security services
YES. Established Managed Security Service Providers continued to innovate this year. Following the acquisition of AlienVault in late 2018, AT&T organized its ‘AT&T Cybersecurity’ division and launched a new Managed Threat Detection and Response service focused on early threat identification. IBM also launched their new Cloud Pak for Security product in 2019, which aims to provide a unified view of threats across multiple security tools and platforms.
7. Pay-TV providers will invest heavily in customer experience
YES. As cord cutting and content unbundling continues, Pay-TV providers are investing heavily in providing streaming-first customers with a single platform for a-la-carte video. Comcast launched Xfinity Flex, offering Roku-like integration of popular streaming apps and access to 10,000 free on-demand movies and TV shows. Similarly, AT&T launched AT&T TV to provides a streaming-first offer that includes live TV as well as cloud-DVR functionality. We expect to see continued competition and innovation as Pay TV providers fight to retain subscribers and maintain their status as a hardware staple in the home.
8. Content fragmentation will lead to more piracy and credential sharing
YES. We saw the early symptoms of subscription fatigue setting in this year, as consumers grew increasingly frustrated with the need to juggle and pay for multiple services to maintain access to content. Apple & Disney both launched direct-to-consumer OTT streaming services in 2019, the latter of which was met with immediate and widescale credential theft within just days of launch . We expect this fragmentation to carry well into 2020, driven by announced OTT service launches, and the impending expiration of many major content licensing agreements on Netflix.
9. Video gaming and eSports will appear in the scopes of service providers
YES. In 2019, Comcast and SK Telecom created a new joint venture owning multiple eSports teams in South Korea, as part of a portfolio diversification for Spectacor, Comcast’s wider sports management business. Warner Interactive has also had several major releases this year, including remastered editions of Hitman titles and a new iteration of Mortal Kombat. In the cloud computing world, Microsoft plans on collaborating with SK to launch a 5G-driven cloud gaming service.
10. Operators will find tangible benefits in Machine Learning as the hype starts to wind down
YES. As much of the existing telecom infrastructure around the world continues to age, some providers have seen success using ML techniques to predict network issues. For example, a recent Nokia/POST Luxembourg collaboration focused on using image recognition techniques to predict specific types of breaches in their copper network with a high degree of accuracy. Meanwhile, large American operators have used machine learning methods to solve problems ranging from improving sales agent effectiveness, to minimizing customer care interactions by proactively suggesting in-home resolution actions. There’s evidence that these use cases are driving value, which should lead to proliferation and implementation of best practices going forward.
Predictions for 2020
Looking forward to the year ahead, here are our predictions for 2020:
1. Consumer uptake of trial market 5G fixed wireless propositions will be slow
As 5G buildout continues, test market fixed wireless propositions will likely suffer from line-of-sight reliability issues and be significantly limited by their service. Many consumers will stay away from these services, while operators will focus on accelerating and strengthening their mobile network buildout.
2. 5G use cases reliant on network slicing will begin to take shape
Hold-up on standards alignment has prevented network slicing to unlock low-latency industrial applications. In 2020, we will see the first steps towards realizing the potential of network slicing, with initial tests leading the way to use case development and promising early successes.
3. Low-earth orbit satellite internet services will make an impact
Services based on low-earth orbit satellites will launch in 2020 and spark fear into the broadband market. If successful, the ability to provide coverage to large parts of the world with lower latency than traditional satellite will produce a new and real threat to fixed broadband and legacy satellite internet services.
4. Traditional Pay-TV providers will continue to suffer heavy subscriber losses
Pay-TV subscriptions have been declining and this trend will continue and potentially accelerate. The growth of streaming services including more live TV options, coupled with faster speeds and changing consumer preferences, will make the traditional Pay-TV proposition less attractive. Providers will lose a substantial number of subscribers.
5. Streaming providers will increase focus on monetization
Increased content fragmentation will lead to greater piracy. Coupled with the impact of high competition for subscribers amid widespread subscription fatigue, actions to monetize usage will be a core focus. This will include initiatives for piracy reduction and prevention, and experimentation with new pricing and promotions.
6. Enterprises will seek out interpretable AI solutions
Risk-averse enterprises will shy away from black-box AI solutions that have not been able to show expected returns from investments in machine learning to date.
With increased scrutiny into the use of data more generally, investment will be made into ‘interpretable’ solutions that help reduce liability and provide strong justification for actions taken based on AI findings.
7. Consumers will be increasingly wary of IoT security risks
Prevalence of consumer connected devices as well as the sensitivity of the data they collect is on the rise. Fears over IoT security will play out in the media, bolstered by high-profile cases of instances of data exposure from other consumer products. Despite consumer concerns, market growth will remain healthy but will lead to greater investment in solutions to shore up security standards ahead of mass 5G adoption and greater device proliferation.
8. Data and privacy will be a top concern for global regulators
Scrutiny into the market power of leading technology companies will continue worldwide with increased regulatory pressure. Regulatory frameworks will begin to emerge to tackle some of the challenges, and in the US data privacy concerns will result in some form of federal action, though it remains to be seen whether it will follow a similar model to Europe’s GDPR regulation.
9. Quantum computing will find a valuable application
Google and IBM, among others, have been investing heavily in the next paradigm of computing, making significant progress with Google claiming quantum supremacy in Oct. 2019 . Technical accomplishments will continue to stack up in 2020, with industry leaders identifying and showcasing an initial application with clear commercial potential or alternatively an application that will highlight the severity of the looming security threat quantum computing could pose.
10. Global powers will draw clearer lines between technology ecosystems
Trade wars, tariffs, regulatory approaches, and divergent consumer habits will accelerate the differences between technology and applications used in different parts of the world. In 2020 we predict continued barriers to trade and globalization more generally, and distinct technology ecosystems will continue to emerge as a result of policy choices.
Do you agree with our predictions? What do you think 2020 will bring to the communications sector? Share your comments on our Year-End Letter with us <here>.
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