The Future of Telecommunication
Public EventsIn February 2009, ZEW President Professor Wolfgang Franz had the pleasure of welcoming the CEO of the Deutsche Telekom AG Réne Obermann for a lecture on the topic “The Future of Telecommunication”. Around 180 invited guests attended the event held within the framework of the lecture series “First-Hand Information on Economic Policy”.
In his welcoming speech, ZEW President Franz emphasised the topic’s close connection to the work conducted at the institute, since ZEW is the only economic research institute in Germany that covers the diversity of the field of information and communication technologies (ICT) on such an extensive scale. In his speech, Franz pointed out that as telecommunication and innovation go hand in hand, it is only fitting, that Deutsche Telekom sponsors a doctoral position on innovations in the telecommunication sector.
In the beginning of his speech, Obermann spoke about the sentiment in the field of telecommunication during the turn of the 21st century, which was reminiscent of the gold rush in the American West. The two structural reforms (Poststrukturreform I and II), which resulted in a comprehensive reorganisation of the postal and the telecommunications sector, did not only create a new market but also made the mobile communication industry suitable for a mass market. And although the mobile market has slowed down since these reforms, it remains a very important market. He dismissed the prophecies of doom, according to which the mobile and the telecommunications market are already saturated. According to Obermann, the opposite is true; the future of the telecommunications market has only just begun.
Réne Obermann has been the CEO of the Deutsche Telekom AG since 2006. Currently, the Deutsche Telekom has an annual turnover of 70 billion Euros and approximately 250,000 employees worldwide. Telekom has approximately 150 million customers in its fixed-line branch and 144 million customers in the area on mobile communications. Around 66 per cent of Telekom’s turnovers are attributable to international operations, with the majority of business activities taking place in the US and in Eastern European states. Overall, the company has a solid foundation. The goal of Réne Obermann is to further develop the Deutsche Telekom as a provider for telecommunication services. Currently, the company has a strong focus on the provision of network infrastructure.
Digital Life and Work
The future lies in the digital life and working world, said Obermann. This refers particularly to the digitalisation of photos, music, documents and other contents. Currently, the majority of this data is being stored in end devices. However, Obermann is convinced that this data will be made available on a broad scale on the World Wide Web. “We are in the middle of a digital revolution,” said Obermann. Several industries like the music or the newspaper industry, are already exploring new opportunities and adapting to these new possibilities. As Obermann pointed out, the internet on average grows by seven million new websites every day. The information made available via networks is therefore increasing exponentially.
Against this background, the Deutsche Telekom is developing innovative services. For instance, the company is currently working on adapting the processing power in accordance to the varying needs of the customer. Telekom is also developing new, high-definition technologies in order to significantly improve the quality of video conferences. The goal is to create a feeling of personal proximity among the participants. Obermann also emphasised that the future lies particularly in mobile internet. With annual growth rates ranging from 30 to 40 per cent, this area is already a growth segment of the Telekom. What is more, mobile internet has a great potential, since there are many technical possibilities that remain untapped. In this context, he referred to the example of the communication with mobile route planners via voice command or accessing security or other household technologies via the internet.
Full-Coverage Networks Are Key to Economic Success
When it comes to the provision of broadband connections, there is much room for improvement, said Obermann. Although 96 per cent of German households meet the technical requirements to use the internet, only 80 per cent have fast connections. The federal government was therefore right to include the development of full-coverage networks in its stimulus package. The performance of the German economy depends how close links between businesses and households are. It is therefore particularly important that rural regions are not left behind. In order to connect sparsely populated regions with high-quality networks for data transmission, Deutsche Telekom is increasingly relying on the public-private partnerships with municipalities.
In this context, Obermann was convinced that the telecommunication industry would undergo further consolidation. Today, only two leading providers are left in the mobile communications market. This trend towards oligopolies is also clearly discernible in the search engines in the internet. The increasing competitive pressure is also mounting in the area of network infrastructure, which is for instance reflected in the trend towards a small number of providers in the market. In contrast to the regulation authorities in the EU, Obermann does, however, not see this as a negative development. These authorities are primarily concerned with the perspective of the consumers and expect providers to grant price reductions for customers. According to Obermann, this perspective, however, completely disregards the fact that research and development activities as well as technological innovations can only be carried out by large, capital-intensive companies due to the high costs associated with these activities.