Industry analyst Shara Evans, Chief Executive Officer at Market Clarity, shares her view on emerging trends and challenges facing the telecommunications industry.

What do you see as the emerging trends and next 'big things' in the industry?

There seems to be an investment surge in anticipation of the National Broadband Network (NBN) with carriers and vendors apparently working to position their networks and equipment which would form part of the private investment inputs if the NBN is completed as planned. If the NBN goes ahead, I believe growth in network investment will go far beyond the dollars required just for the network itself — telecommunications vendors, carriers, service providers and professional services firms will all see benefits from an improved investment environment.

If the NBN process is successful, it will feed into other important trends. For example, Australians will get the full benefit of the developing cloud computing environment. A pervasive, fast network might also be an attractor to Australian-hosted content. If that were to happen, it would represent a spin-off benefit to the industry, since so much of the cost of the Internet in Australia is influenced by the cost of getting content from overseas.

Another potential benefit of the NBN process is better coordination of civil infrastructure projects, for example, leveraging the civil works affiliated with building roads, rail, water and electricity infrastructure for telecommunications networks — something that Market Clarity has been advocating for some time.

I also believe the growing interest in “smart grid” technologies and applications is important because it means the industry can start putting forward real environmental credentials. This is yet another example of how electricity and telecommunications networks can be used for dual purposes.

What do you see as being the biggest growth area/s in the market?

I see a dramatic expansion in the diversity of mobile broadband devices, but unlike many analysts, I don’t view this as a substitute for fixed line broadband. Rather, people are becoming accustomed to using multiple broadband services, depending on circumstances. There’s overlap, and some subscribers will choose one over the other, but mobile broadband is also a new and different category in its own right.

We’re only at the very beginning of this trend, because there are still only a handful of device types: 3G phones, mobile broadband modems, and an emerging class of multi-purpose devices such as the iPhone and Blackberry. The consumer electronics market has a history of diversifying its devices and that means multiplying the number of devices people use and carry. Furthermore, research labs are doing a lot of work with sensors which can be embedded in objects, clothing, and ultimately people. I see a future where all of these sensors connect into the Internet, or its successor.

If the NBN is a success, there will be a shift in the Internet service market away from the deployment and management of access infrastructure provision, towards a retail service focus. With a level wholesale/infrastructure playing field, telecom companies will need to focus on servicing consumer and business needs rather than building networks.

And, of course, fast pipes to the premise will drive an explosion in Australian bandwidth usage — in both directions.

But that’s not all. I would also hope to see Australia take this opportunity to position itself as a leader in areas like remote medicine, remote education, and remote working -, all on the back of the NBN.

What do you see as the biggest challenges facing the global telecommunications industry in the future?

Globally, the biggest challenge will be to maintain investment in the face of the global recession. Telecommunications services have historically been fairly resistant to downturns, but there’s no guarantee it will always be so. As happened in the last downturn in this industry, companies with too much debt and not enough to sell will get into trouble.

The downturn is also likely to have a lasting impact on investment psychology in this industry. Investors will be impatient — they will be demanding three-to-five year ROI for infrastructure investments that might have a life of 20, 30 or 40 years.

User education is also going to be a challenge, especially as the industry starts looking for ways to bring the Internet to the “other three billion” — in some cases, people on the wrong side of the digital divide might jump directly from not having a telephone to the full broadband experience!

And there is the looming exhaustion of IPv4 addresses. The industry needs to find ways to justify the shift to IPv6, if only to make sure that its own growth isn’t stunted by a lack of capacity.

What do you think the industry will look like in ten years?

In Australia, it will depend on whether the NBN works or fails.

If the NBN project succeeds, Australia will have a fibre-to-the premises network already built. If properly architected, this network would be capable of incremental capacity upgrades as Australia’s bandwidth requirements grow.

With the resulting focus on retail services rather than infrastructure ownership, we’ll see some concentration of the market at the top end, but with a continual churn of new company launches in the retail market. And, just like today, that churn of retailers will occasionally create new success stories that eventually join the ranks of industry leaders.

But the industry will also be underpinning a transformation in Australia. We’ll have the chance to be a global leader in network infrastructure and content; and ultimately the industry will be the engine room behind an Australia that is a global economic leader.

The views expressed in this interview are those of Market Clarity CEO Shara Evans.