ISDN decommissioning spurs growth opportunities for IP communications throughout Europe, finds Frost & Sullivan’s Digital Transformation team
LONDON – 17 May 2017 – European telecom carriers’ initiatives to discontinue integrated services digital network (ISDN) services are driving carrier and customer migration to Internet protocol (IP) connectivity services. The move is also fuelling adoption of next-generation business communication solutions, such as hosted private branch exchange (PBX) and unified communications as a service (UCaaS). Increasing availability of compelling cloud communications offerings and expanding feature sets, including advanced collaboration and mobility, will further boost market growth. However, customer inertia due to significant investments in premises-based communications infrastructure can curb growth, despite awareness of UCaaS benefits.
European Hosted IP Telephony and UCaaS Market, Forecast to 2023, a part of Frost & Sullivan’s Enterprise Communications Growth Partnership Service program, finds that in addition to international expansion, value-added services (e.g., implementation, integration, customisation) and channel development, including white-label and platform as a service (PaaS) partnerships, will represent key growth opportunities. The study explores European hosted IP telephony and UCaaS market and technology trends as well as drivers and restraints, forecasting growth potential for the next six years.
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“The expansion of US providers into European markets will increase price pressures as they offer both lower prices for basic services and the delivery of more comprehensive service bundles,” said Digital Transformation Vice Principal Elka Popova. “National boundaries in European markets are relatively small compared to the US and do not allow providers to sufficiently scale their operations. To succeed and maintain high growth rates, European providers must seek to expand throughout Europe and internationally.”
Key trends in the European IP telephony and UCaaS market include:
- Availability of feature-rich, inexpensive cloud collaboration solutions comprising team messaging as well as real-time communications functionality; providers must leverage options like a “freemium” model to attract businesses that are not yet ready to move their entire UCC to the cloud.
- Enterprise demand for custom-tailored solutions and communications integration with other business software to directly influence key business processes, and gain more tangible business benefits from communications investments. In response, technology developers and service providers are providing flexible application program interfaces (APIs), software development kits (SDKs), and communication PaaS (CPaaS) environments.
- Service providers seeking to ride the “API economy” wave by enabling integration with popular third-party software, including productivity suites, customer relationship management (CRM), helpdesk, and vertical apps, in order to improve UCaaS stickiness and customer satisfaction.
- Strong market penetration in the Nordic and the Benelux regions due to highly mobile workforces and limited installed base of premises-based systems.
- High growth rates in Central and Eastern European countries due to relatively limited UCaaS penetration and high demand for flexible and economical communications solutions. With their large workforce and population, France, Germany and the UK will account for the largest installed base.
“To enhance market share in a competitive market, hosted IP telephony service providers must optimize their sales, provisioning, and customer engagement processes based on their target customer audience; for instance, introduction of highly automated e-commerce portals for SMB customers and development of greater consultative skills to address large enterprise needs,” noted Popova. “Further, they can enhance onboarding, training and customer support capabilities to ensure greater customer satisfaction, and expand customer reach by acquiring technologies or partnering with third parties for solution resale and/or app integration.”
Major players in the European hosted business communications services include BT, Elisa, Hrvatski Telekom, KPN, Netia, NFON, Orange, TDC, Telefonica, Telenor, Telia-Sonera, Verizon, and Vodafone. Among US providers targeting European markets, 8×8, Fuze, Microsoft (with Office 365 E5 bundle), and RingCentral have strong potential with their feature-rich, competitively priced UCaaS solutions.
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Anna Zanchi
Corporate Communications – Europe
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