The cataclysmic events taking place within the banking industry will have an effect upon us all. For some this will be severe in terms of lost savings, house repossession and redundancy, to name but a few consequences.
But as this meltdown and loss of business confidence continues, what can we within the communications industry look forward to in 2009, recognising that many companies are now setting their budgets for next year and need to make assumptions on how these current effects might play out?
Respected market analysts are reluctant, more so now than ever, to predict what might happen next year. However, looking back to what happened during past recessions and taking data from the notorious technology downturn (debacle) of 2001-2002 might provide some indicators.
One brave individual, John Lively--Ovum's chief forecaster, believes using the company's extensive database of service provider revenues and capital spending plans can provide some clues. He suggests three possible scenarios:
- The optimistic case: a brief slowdown in 2H08 with growth rates of revenue and Capex returning to 2007 levels in 2009;
- Most likely case: reduced growth rates in 2H08 continuing through 2009;
- Pessimistic case: declines in wireline revenue and Capex, with fixed Capex falling 28 per cent--a drastic but not unprecedented decline. A significant slowdown in mobile revenues and no growth in mobile Capex between 2008 and 2009.
Lively maintains the downside risk would be driven by fear of the impact of the financial meltdown, which could lead to both enterprise and consumer telecoms users reacting negatively and dramatically reducing spending more than they need to.
Whilst a sudden decline in customer spending would be amplified at the infrastructure, handset and services level, a number of telecom drivers remain firmly in place. Ovum claims mobile communication is no longer a luxury in developed countries, and this is increasingly true in many emerging markets. Also the majority of mobile service providers are cash-generating and self-funding, and not greatly impacted by the turmoil in credit markets.
Whilst European governments continue to grapple and throw astonishing quantities of taxpayer money at the problem--making many of us, albeit unwilling, shareholders in the major banks, life will never be quite the same again.
But, casting a somewhat bemused eye on situations and what we might encounter, E M Forster observed "life is a public performance on the violin, in which you must learn the instrument as you go along."--Paul