Barriers to Horizontal Development

Abstract

The growth of telecommunications has recently been based on mobile services and broadband data. According to OECD statistics (OECD 2005) the number of mobile subscribers of all telecom operators in 2003 was 828 million and in 2006 the number exceeded 2 billion. So the number of mobile connections exceeds by far the number of fixed access lines, which was 503 million in 2003. Already in 2006 the number of VoIP users exceeded 100 million, which is 20% of all fixed connections. It is expected that the Internet Protocol (IP) based traffic will soon grow tenfold compared to the amount of traditional ISDN based traffic. The transition from the existing services to Internet based ones will change the service infrastructure as well as the telecom market.

Traditional telecom and content services are vertically integrated. Each service depends on a dedicated network and corresponding terminals. Examples of such vertical services are fixed telephone services, traditional data services, mobile services and TV broadcasting services. Internet changes the vertical structure to a horizontal one, as described in Figure 1 in chapter “Analyzing the Current Phase of the OSS/BSS Software Market”. All terminals and services will be Internet compatible. Instead of vertical service “pipes” there will be a horizontal structure of services, network and access (Fig. 1).