A new report from ITU, highlights some harsh realities for the global ICT industry. The report, Confronting the Crisis: Its Impact on the ICT Industry, considers how the industry can position itself for recovery in the future.
Confronting the Crisis: Its Impact on the ICT Industry draws on analysis from leading industry experts and international institutions. As the established order is overturned, it says, convergence in the ICT industry will accelerate, with the emergence of new players with new business models. Firms’ ability to weather the economic storm will depend on their ability to invest for the future and explore new opportunities to benefit from the eventual upturn. For an industry founded on innovation, the current turmoil will create openings for nascent ICT companies.
Confronting the Crisis finds that although credit is now less abundant and more expensive, with financing costs for operators on average 3 − 4 per cent higher year-on-year, savvy operators can take advantage of the economic turmoil to reposition their services for the upturn. Funding is still available for players with sound business models, established demand and early projected cash flows. Alternative sources of financing are now needed, with a growing role for government financing and economic stimulus packages.
Many analysts contributing to Confronting the Crisis underlined the need for ICT as vital services and suggested that fixed-mobile substitution and consumers’ decision to switch to mobile telephony may gain momentum in developed markets during a prolonged recession. The report also notes that long project lead times for the satellite industry mean that it has been less affected in the short term, with strong recent growth in demand from developing countries. The financial difficulties facing the private sector could add to pressure for government intervention in the financing of national backbone infrastructure. Governments are already stepping in to diminish the impact on the transition to next-generation networks (NGN), which can carry voice, data and media services simultaneously. Several administrations have announced commitments to invest in their national backbone infrastructure, while others, such as the European Union, have included the roll-out of broadband networks in their economic stimulus packages. Although the financial crisis may delay investment in NGN, it has also led to a widespread reaffirmation of the importance of building advanced telecommunication infrastructure as part of an economic stimulus package.
See the full press release from 16 February 2009.
The report is available for download here.