© demarco Analysis | August 12, 2013

Steady growth for Chinese telecom industry

IDC expects the market size of the China telecom industry IT solution to increase from RMB 13.87 billion in 2012 to RMB 22.76 billion in 2017, with a CAGR of 10.4%.
According to China Telecom Industry IT Solution 2013-2017 Forecast and Analysis (Doc# CH8037314V), the overall IT investment of the China telecom industry is expected to maintain steady growth in the next five years. This is attributed to the steady IT input from China’s three telecom operators in 2012 and the issuance of the 4G licenses.

However, IDC cautions that the rationale behind IT investment may require rethinking. Carriers are shrinking their less competitive business areas, such as wireless value-added services, and learning from new business developments of Internet companies instead. They are gradually moving away from conventional investment philosophies of providing small services, including telephone and mobile communication, to larger investments.

IDC recommends that the key to transforming the telecom industry is to explore the value of existing customers, followed by smart pipeline construction for Internet traffic management and Big Data analysis.

Meanwhile, cloud computing may assist in the centralization and intensification of the OSS (operation support system). The implementation of China Unicom’s U-cloud project will also influence the future market direction of the OSS field.

In addition, market trends of major IT solutions reveal that BSS (Business Support System) and BI (Business Intelligence, including Enterprise Data Architecture) investments, which support business development, are expected to maintain a steady growth.

On the other hand, OSS and VAS (Value-Added Services System) markets are likely to have structural adjustments, while the MSS (Management Support System) market is estimated to remain at its current size.

IDC believes that with the increasing competition among IT solution suppliers, technological innovation and cost control capabilities will be critical factors for success.

"With the advent of the mobile Internet and Big Data era, telecom operators are confronted with a more complicated industry environment. After breaking the closed value-added service ecosystem of carriers, the OTT service further impacts the traditional cash flow service of telecom operators, such as SMS and voice," says Jialin Jiang, Senior Market Analyst of IDC China Vertical Industry Research and Consulting.

Jiang explains that the opening of mobile service resale and deepening of government and enterprise information construction have caused a shift from intra-industry competition to inter-industry competition.

"Hence, telecom operators must further adjust their transformation strategy and development path. As the carriers' dominant innovative services are facing many uncertainties, IT investments that can improve carriers' basic competitive abilities and operational efficiency will continue to maintain steady and fast growth."

According to Jiang, the IT investments include smart pipelines, Internet traffic management, carriers' ability opening, cloud-based centralized resource management.


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