BELTUG Market Study The Belgian Business ICT Market An exclusive report for BELTUG members

June 2014

About BELTUG With over 1200 members, BELTUG is the largest Belgian association of ICT managers, with a specialised focus on corporate networks, mobile communications, unified communications and cloud computing. We defend the interests of our members with public entities and authorities, develop positions and support knowledge exchanges between our members. Each year, we organise more than 30 events for exchanging experiences. BELTUG also plays an active role in INTUG, which represents business ICT users at the European and international levels. www.beltug.be

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BELTUG Market Study on the business ICT market Contents 1

Introduction: Why a market study by BELTUG? .......................................................... 5

2

The Mobile Wave ...................................................................................................................... 7

3

4

2.1

Mobile device evolution ................................................................................................. 7

2.2

BYOD adoption ................................................................................................................. 8

2.3

Mobile device management concerns ..................................................................... 9

2.4

Mobile Device Management (MDM) and tools .................................................... 10

2.5

Penetration of the mobile OS for mobile devices ............................................. 10

2.6

Supported applications................................................................................................ 11

2.7

The future of fixed phones ........................................................................................ 11

2.8

Employee-installed software on the PC ................................................................ 13

2.9

Virtual Desktop Infrastructure (VDI) ..................................................................... 13

2.10

Machine-to-machine M2M .......................................................................................... 14

E-mail and Unified Communications............................................................................... 17 3.1

E-mail in the cloud ........................................................................................................ 17

3.2

Negotiating cloud contracts ....................................................................................... 18

3.3

Unified Communications (UC) market .................................................................. 19

3.4

Integrating UC and telephony .................................................................................. 20

3.5

Market shares of UC products in Belgium ........................................................... 21

The telecoms market ............................................................................................................ 23 4.1

Hosted (I)PBX ................................................................................................................. 23

4.2

Mobile calls between employees included in the flat fee ............................... 24

4.3

Roaming costs ................................................................................................................ 24

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5

4.4

SIP trunking .................................................................................................................... 25

4.5

“One number” ................................................................................................................. 26

4.6

‘Classic’ leased lines ..................................................................................................... 27

Belgacom market share – National communications ............................................... 29 5.1

Unique vs multiple providers .................................................................................... 29

5.2

Belgacom as unique provider ................................................................................... 30

5.3

Belgacom market share in the national market ................................................ 30

5.4

Contract duration – national ..................................................................................... 31

5.5

A single provider for fixed and mobile services................................................. 32

5.6

National competition .................................................................................................... 33

5.7

BELTUG comments ....................................................................................................... 35

5.8

Conclusions ...................................................................................................................... 36

6

International telecommunications ................................................................................... 38

7

Methodology............................................................................................................................. 41 7.1

Participants ...................................................................................................................... 41

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1

Introduction: Why a market study by BELTUG?

The BELTUG Market Survey was carried out as part of BELTUG’s ongoing efforts to expand the ways in which it fulfils its three primary objectives: To inform our members: Currently, very little data is available for the Belgian ICT market. This BELTUG survey is an effort to remedy this and to allow BELTUG, its members and public bodies such as the BIPT/IBPT to identify the ICT management market trends. Identification of these trends is essential for preparing the Belgian ICT professionals for the future evolutions. To support our positions and lobbying efforts: BELTUG develops and publishes positions on a number of our members’ priorities. The information from the survey will help us to develop these positions and provide objective data for our lobbying activities. Sharing information between members: With over 1200 members, there is a wealth of knowledge and expertise available within BELTUG. The survey gives our members the opportunity to confidentially share their information and experiences with their peers.

To maximise the value and depth of the quantitative data collected in the survey, we gathered comments of a panel of BELTUG members on the results. This survey would not have been possible without the valuable input of all the participating members. We would like to take this opportunity to thank everyone who participated in the survey: your time and input are greatly appreciated! Thanks to the wealth of data we collected, we have decided to issue a Premium version as well, with a more in-depth analysis of selected topics of interest to specific ICT providers.

199 BELTUG members completed the questionnaire. The results are representative for companies with more than 200 employees located in Belgium. For companies with fewer than 200 employees, the results are to be seen as an indication, rather than a representative sample.

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The Mobile Wave

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2 The Mobile Wave The so called ‘mobile wave’ is only the latest in a long line of technological innovations that have significantly changed society and the economic reality. With this survey, we wished to determine how the mobile wave is influencing the Belgian business ICT market.

2.1 Mobile device evolution The mobile wave continues to gain speed. Our results confirm what everybody expected: the reign of the desktop PC is coming to an end, and the use of portable computing devices will keep advancing. The Market Survey results reflect the fact that the way in which people work is still evolving. Portable PCs support home and mobile work, as well as workspace concepts such as ‘free seating’. At the same time, many users currently have both a tablet and a portable PC. Some of these users may in the future continue to use both, or retain only one. As tablets become more powerful, and desktop tablet docking stations with full-size monitors and keyboards become more available, they are expected to replace portables for certain user profiles. But the evolution will also be affected by the increasing support provided for business-relevant applications on tablets and smartphones. Either way, the shift will take time.

At the same time, the ‘classic’ mobile phone is also on the way out, as smartphones and tablets take over. This trend is driven by a continuous stream of new, cheaper and smarter mobile devices. In fact, based on the movements of the manufacturers, the BELTUG panel believes that the smartphone adoption will happen even faster than the survey respondents think. Positively for BELTUG members, manufacturers are increasingly targeting business users, while at the same time the cost of mobile data communications is decreasing fast.

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For the panel, it is clear that the frequency of smartphone replacement has been increasing: mobile phones are now replaced at about once every 1½ years in most companies. Not so long ago, the mobile phone lifetime was generally about 3 years.

2.2 BYOD adoption 18 percent of employees bring their own device (BYOD) and this adoption is increasing The survey revealed that BYOD (Bring Your Own Device) has become important within many companies: 18% of employees use their own device for business purposes, and this proportion is increasing. By the end of the year 2014, the respondents expect a quarter of their employees to use their own smartphones for work purposes. And while the use of tablets lags slightly behind the use of smartphones, the gap will shrink, respondents say.

The BELTUG panel confirms these results: many companies embrace the BYOD trend. But the shapes the policies take vary widely, e.g. ⋅ All platforms are allowed, but no support is given by the organisation for the employee-owned devices ⋅ A limited set of platforms are allowed on which calendar, e-mail and agenda applications are officially supported by the organisation ⋅ Specified groups of employees are allowed to use employee-owned devices to access a limited set of business applications via the corporate network. Financial support by the employer varies as well, from no intervention at all, to “the employee pays for the device, but the employer pays for the business-related communications costs”, to “the employer subsidises the employee’s purchase of a mobile device with a budget or a voucher”.

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Importantly, the benefits of BYOD are not cost related, say companies. In other words, this is not a way for companies to save money by decreasing the number of devices they must purchase and provide for their employees. Rather, BYOD offers easier and ‘better’ infrastructure support. It is also good for employee satisfaction. An increasing number of people appreciate the free choice of their mobile device. Simultaneously, however, BYOD raises a lot of new issues such as software licensing. E.g. what are the implications of employees using their own devices for work purposes, but without having software licenses intended for business usage? The other BYOD-related issues are similar to those regarding the management of mobile devices in general.

2.3 Mobile device management concerns When dealing with the fast evolution and increasing penetration of mobile devices, companies overwhelmingly indicate that security is the main concern.

Additional concerns raised in the survey include: ⋅ Device compatibility with the existing ICT infrastructure (hardware, software, network, etc.) ⋅ Organisation of support/helpdesk ⋅ Knowledge of different systems and functionalities ⋅ HR policies ⋅ Performance ⋅ The complexity of implementing BYOD in multiple countries with difference regulatory environments ⋅ How BYOD fits in a subsidiary company in which IT is managed by the mother company. So the variety of individual issues companies deal with when managing mobile devices is wideranging indeed.

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2.4 Mobile Device Management (MDM) and tools

With the increase in mobile devices, mobile device management is becoming both more critical and more present. Within a year, based on respondents’ expectations, 60% of all the respondents’ companies will have an MDM system, with more to come. The MDM software programs most used by the respondents are (in order of importance) from MobileIron, Airwatch, Blackberry and Microsoft (Intune).

2.5 Penetration of the mobile OS for mobile devices

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The leading penetration of iOS for both smartphones and tablets is no surprise: Apple is leading, but Android has been catching up fast, especially for smartphones. Windows is clearly lagging behind, but, as it was a late starter in the market, its evolution can go in any direction. For BlackBerry, the near-absence for tablets is no surprise. For smartphones, BlackBerry continues to hold onto a core group of customers. But quite a lot of respondents commented that they have started to phase-out or intend to phase-out the BlackBerrys.

2.6 Supported applications Companies tend to support e-mail, agenda and contacts on multiple platforms, but offer much less full support including business applications. And while the playing field among OS is close to equal for the more ‘limited’ support, iOS clearly comes out ahead for complete support.

According to the member panel, Android in particular had a slow start compared to iOS because of early problems with its image (security, multiple versions, etc.). But Android is expected to play catch-up with iOS for the more extended usage. It should also be kept in mind that BlackBerry began supporting Android applications for its latest smartphones in 2013. The panel is curious to see what will happen to Windows. As the penetration of business applications increases, Microsoft has an important advantage. The prominent use of Microsoft software in companies for PCs could well be a relevant factor for considering Windows for mobile devices.

2.7 The future of fixed phones Are companies looking at alternatives for the fixed phone? To gather relevant info, we specified replacement of “a significant portion”. In this way, we aimed to collect information on the general changes, uninfluenced by the situation of a specific groups of employees, such as call centre agents.

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About 60% of respondents intend to maintain the status quo for fixed phones. Over 33% are replacing employees’ fixed phones, divided between ‘softphones’, which allow telephone calls via the PC, and mobile phones. Interestingly, just as many respondents indicate that their company will use a ‘mix’ of fixed+ mobile as will completely replace fixed with mobile. So it appears that the fixed phone still has a place in the company, although it now has to share the space.

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2.8 Employee-installed software on the PC 70% of respondents say their company does not allow employees to install software on their PCs

Nearly 1 out of 3 organisations indicate that regular users are allowed to install software on their work PCs. This situation perhaps leaves employees with too much freedom. We assume that organisations that allow employees to install software have a policy that stipulates what can and can’t be done. The panel notes that, while in many companies employees may not install software on the PC, with the coming of the mobile devices ( and especially BYOD), this approach will need to change completely. It is or will no longer be possible to prevent the installation of software. An important question for every organisations is: “Are users allowed to install non-approved applications on their own initiative?” The way this is managed is very important.

2.9 Virtual Desktop Infrastructure (VDI) VDI can be defined as software technology that separates the desktop environment and associated application software from the physical client device that is used to access it. So it is very interesting for companies that are increasingly using homeworking or ‘desk-free’ workspace concepts. But it has some significant ‘look-outs’ as well, including high license and infrastructure costs. On the other hand security is managed centrally, which is an advantage.

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Desktop virtualisation (VDI) is of interest to about half of the respondents, with just over 1/4 indicating they already use it. But almost half have no plans to deploy VDI.

2.10 Machine-to-machine M2M

It is remarkable that already 36% of the respondents’ companies use M2M applications, whether for national or international use. This percentage is higher than the panel expected. For BELTUG it is important that companies are able to change the mobile operator they use for M2M without having to physically change the SIM card. We will continue to lobby on behalf of our members on this important issue. This includes at the national level of BIPT and the Minister of ICT, and internationally at the European Commission, ITU, GSMA and OECD, via INTUG.

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E-mail and Unified Communications

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3 E-mail and Unified Communications Unified Communications offers many benefits for companies to integrate and maximise the potential of their real-time communications tools. But the difficulties of implementation remain a real barrier to the adoption of UC. We wanted to check the progress of UC in the Belgian market, to see at what stage it is now.

3.1 E-mail in the cloud The market shares of e-mail products in organisations in Belgium clearly show e-mail in the cloud has begun.

For more than 12% e-mail in the cloud is a reality, within one year this should be 36%

Both Office 365 and Google are cloud e-mail applications. That means that more than 12% of respondents’ companies are using cloud for e-mail. At the same time, we see that Lotus Notes is clearly falling behind. The panel was not really surprised by the small number of respondents who

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indicate they still use Lotus Notes, and our company contacts confirm that it is declining, as organisations move away from it. Even among the companies that do not currently use e-mail in the cloud, we see that around 50% intend to in the future, whether within 1 year or within a longer time span:

Adding this figure with the 12% that already have e-mail in the cloud, this means about 36% should have e-mail in the cloud within one year (12% + 27.1 x 88%). On the other hand, 44% have no intention of moving their mail to the cloud (50.3% of the 88% not currently using e-mail in the cloud).

3.2 Negotiating cloud contracts Negotiating cloud contracts is possible Amongst those respondents using cloud services, over 1/4 tried to change their contract. And when they did, almost 3/4 were successful. Exit clauses (longer transition periods) and SLAs were cited as areas for which companies attempt to negotiate.

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As we have seen for other products and services in other surveys (notably for the Mobile Data Index), negotiating contracts pays off. Here, companies indicate that they have attempted to negotiate mainly contracts for e-mail in the cloud, i.e. from Microsoft and Google.

3.3 Unified Communications (UC) market It is remarkable that only about 12% of the organisations have no intention of introducing UC. This situation changed quickly the last few years.

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Larger organisations tend to have a lot of legacy from different vendors. The international dimension can also be a strong factor increasing the complexity, due to varying regulations and possibly different vendors being used in different countries.

3.4 Integrating UC and telephony For the organisations that already implemented UC:

More than 60% of all respondents already use UC, but from these organisations not even half have integrated it with telephony, although most want to. But from our various BELTUG roundtables on best practices on the implementation of UC, we know that introducing UC with telephony is a different level of complexity than implementing UC without voice. The panel comments that one decisive factor is the company’s internal organisation: are the voice and data teams working closely together? This is certainly not the case in every company. Another important consideration is the status of the PBX: has it reached end-of-life? And finally, is the infrastructure necessary to integrate voice available (structured cabling, power over Ethernet, redundant servers, etc.) and if not, is the company willing to invest in it?

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3.5 Market shares of UC products in Belgium

Amongst UC products, Lync is very popular, with over 50% of respondents using or considering it. Cisco comes in a distant second, indicated by more than 15% of respondents, thanks to its lead on VoIP. No other product even comes close. An important remark: when a company installs UC, it isn’t necessarily made available to all employees from the beginning. It should be kept in mind that the use of different UC tools is not representative for the market share of the suppliers. A company using Lync for its UC may also use other tools and solutions for voice services.

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The telecoms market

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4 The telecoms market We know that the situation of the “telecoms market” has a big impact on companies’ ability to develop, grow and compete. How is the market evolving to meet the specific needs of the business user?

4.1 Hosted (I)PBX With a hosted PBX, the company connects via IP to the provider for voice service. The PBX features are hosted at the service provider location.

The survey shows that hosted (I)PBX is considered to be a solution for certain companies only. A rather small percentage of 14.9% already use it. And while more foresee implementing it in the future, the overwhelming majority of respondents - 63.8% - simply say “no hosted (I)PBX”. The panel finds this is quite a logical result, as most respondents are using or foresee using UC, and want to integrate voice. In this context, considering a hosted PBX is not needed. But what we clearly see from this study is that many companies are interested in implementing (or already have implemented) hosted UC.

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4.2 Mobile calls between employees included in the flat fee

Mobile calls between employees included in the flat fee have become a standard market practice, with over 80% of respondents already receiving this.

4.3 Roaming costs BELTUG has highlighted in positions, letters and papers the economic cost of high roaming rates. We consider that the use of mobile data is less developed than companies prefer, in particular due to the excessive charges they must pay for travelling business users.

Roaming costs are hindering the roll-out of mobile applications at 45% of the organisations with an international scope For about 30% of the respondents the roaming costs are not applicable because they don’t have international applications. This graph shows the results for the organisations with international applications.

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The results from this Market Survey strongly support this conviction. While a third of all respondents are outside of the scope of the question (as they have no international applications), among those that do, almost half say that the high roaming costs are hindering their roll-out of these international applications. In Europe measures are being taken and more will follow, but roaming costs remain a problem, and we will continue to lobby on behalf of our members on this important issue. This includes at the level of ITU and OECD, via INTUG.

4.4 SIP trunking SIP trunking is a VoIP and streaming media service based on the Session Initiation Protocol (SIP) by which Internet telephony service providers deliver telephone services and UC to customers equipped with SIP-based private branch exchange (IP-PBX) and UC facilities. Most UC software applications provide voice, video and other streaming media applications such as desktop sharing, web conferencing and shared whiteboard. (Source Wikipedia) SIP trunking is moving forward at a surprisingly fast rate. Already, over half of the respondents indicate they use it. And of those who don’t yet use SIP trunking, over half expect to use it within the next 2 years. This means that the total percentage of users who use or expect to use it in the near future is over 70%.

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Many companies use SIP trunks within their company networks, to connect different PBXs, and to connect to the data centre.

4.5 “One number” There is a large potential for “one number” With one number, employees are reachable on one unique number (mostly fixed), which can be communicated outside of the company (e-mail signature, business cards, etc.). Depending on where they are, employees can take incoming calls on their fixed or mobile. For outgoing calls, the same CLI (calling number) is displayed regardless of whether the employees are initiating the call from the fixed or the mobile phone.

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Although few companies are already using “one number”, it is clear that this is what they want. But it is only cost acceptable when the company has the same operator for fixed and mobile, because otherwise for each incoming call the company pays an extra outgoing call to the mobile operator, for the calls that need to be routed to the mobile phones.

4.6

‘Classic’ leased lines

Almost half of the respondents indicate that their companies use classical leased lines.

Although the definition of ‘classic’ leased lines may be confusing, it was nonetheless important to check the intentions on the business market regarding their phase-out. Ethernet leased lines and xDSL connections are alternatives, and of course many companies use fibre. For future regulatory decisions it is important to see how companies are planning to stop using them. Of those companies that have classic leased lines, about 38% have no intention of replacing them. The majority - almost 70% - intend to keep them for more than 2 years.

Based on these results, as well as the input from members in our daily activities, BELTUG estimates it is too early for the regulatory environment to stop monitoring the leased lines market.

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Belgacom market share

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5 Belgacom market share – National communications On 1 January 1998, the market for electronic communications was liberalised. Business users had high expectations. After the monopoly of Belgacom, they looked forward to healthy competition from newcomers on the market. This would bring them ⋅

Fair prices

⋅

Better quality

⋅

Innovation/new products based on customer requirements.

Now, some 16 years later, BELTUG has been receiving comments from business users (companies and public services): “We don’t get enough bids when we launch a Request for Proposal.” “There is not enough competition in the business market.” BELTUG therefore decided to dive into the topic, to see how companies and public services really experience competition. This survey gave us an excellent opportunity to estimate the market share of Belgacom in the Belgian business market.

5.1 Unique vs multiple providers

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Overwhelmingly, for national fixed voice, fixed data and mobile communications, companies have a single provider. This approach is less complex, and puts the company in a position to negotiate better conditions.

5.2 Belgacom as unique provider

For fixed and mobile voice, next to Belgacom, there is no other player with a significant market share. The other part of the market is divided between different players.

5.3 Belgacom market share in the national market Respondents were asked if they have a unique provider for each type of service, and if so, which one. For the organisations with more than one provider, we asked how the budget is divided between each provider for : ⋅ ⋅ ⋅

fixed voice fixed data communications mobile communications

We carried out the exercise both for the national market and the international market. To calculate the estimated market share in the business market we combined the figures for the organisations using Belgacom as their unique provider with the budget allocated to Belgacom amongst those organisations with more than 1 provider. The market share for specific operators are available exclusively in the Premium version of this report. This brings us to the estimated market share from Belgacom in the business market (more than 200 employees):

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The lower Belgacom market share for national fixed data can be explained by the large number of respondents that are internationally active. For these companies, the corporate data network is generally organised on the international level.

5.4 Contract duration – national

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In general, contracts run about 3 years, with slightly longer contract periods for fixed voice and fixed data compared to mobile voice and data. Based on the panel and our contacts within the BELTUG activities, we can state that contract duration has clearly come down over the last years. Is this flexible enough? In our “Mobile Data Index – 3rd Edition (Based on figures from March 2014)”, we note that: “The market for professional mobile data is evolving fast. We see that the 2-3 year contracts common are not flexible enough to adapt to the explosive dynamic of the market. This is why BELTUG advises companies to stipulate in their contracts that the rates must follow the market evolution.” BELTUG recommends including a benchmark clause in the contract. This way there is better guarantee that prices will conform to the market. From the roundtables we have organised, we know that quite often companies have a 3 + 1 + 1 contract format: the initial contract period is 3 years, and then it can be extended easily for 1 or 2 years, if the company wishes. Other are using 5-1-1 to get better conditions.

5.5 A single provider for fixed and mobile services About 30% of the respondents feel that sourcing fixed and mobile services from one provider is “necessary” or “important”. For 1/3 it is not important at all.

The panel believes that, with the growing importance of “one number” and UC, the perceived importance of having a single provider will increase as well. We should also remark that most companies now work with Belgacom for fixed and mobile services. It is difficult to judge how this is influencing the figures.

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5.6 National competition The competitive situation on the national market remains weak To make good decisions about telecommunications, companies must have adequate choices. How do respondents view the level of competition in the market? To find out, we asked about responses to RfPs. 62% of the respondents have carried out an RfP comparing national operators in the past two years.

Among those, we then asked how many proposals they had received, for the different types of services.

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National mobile voice and data resulted in slightly more than two, on average. This is because all RfPs are sent to Mobistar and Proximus, and sometimes to a third party. In the larger professional market, the other mobile players - while well-known in the consumer market - play essentially no role. For both national fixed data and national fixed voice, respondents indicated an average of fewer than two responses to their RfPs. These very low figures are not surprising to BELTUG. But most important is whether the companies themselves consider the number of proposals they receive adequate for making their choice. We compared the figures of the organisations with more than 3 sites with the general results. From our daily contacts with our members and our previous research we know that organisations with multiple sites have difficulties obtaining multiple proposals, because of the importance of the “last mile” in most solutions.

Was the number of proposals adequate? No 35% 30%

31% 27%

25%

25% 21%

20%

21%

20%

15% 10% 5% 0%

National fixed voice

National fixed data +3 sites

National mobile voice and data

all

The above graph shows the percentage of respondents who answered “no” – they are not able to make a good choice based on the number of responses to the RfPs. It is clear that the lower the average number of RfP responses received, the lower the satisfaction of the respondents. In all, almost 1/3 of companies with 3 or more sites indicate that they cannot make an adequate decision on suppliers for national fixed voice based on the number of RfPs they receive. Even for national mobile voice and data, with its higher average of RfP responses, 1/5 of respondents feel they cannot make a good decision. For fixed data at the organisations with more than 3 sites, this rises to 1/4. More than one out of four organisations in Belgium can’t make a good choice for national voice services

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5.7 BELTUG comments The results prove that in a lot of cases the objective of competition, i.e. to have enough possibilities to compare offerings, is not being met. Some factors that influence how many bids a company receives for an RfP: ⋅ ⋅ ⋅ ⋅ ⋅

The number and locations of sites to connect Whether the company is based in an area where there is no alternative to the Belgacom infrastructure Whether the company specifies its requirements (SLAs) in such a way that only Belgacom can meet them The type of services and the combination of services The scale of the company: if you have enough people and knowledge in-house, it is easier to split the RfP in parts. This way, there is more competition for some parts of the RfP. However, it is clear from the reactions we received that this doesn’t always work.

Top criteria determining whether the other operators will make a bid: ⋅ ⋅ ⋅ ⋅ ⋅ ⋅

Number of sites to be connected via Belgacom Existing relation with the business user Involvement in the pre-RfP process (e.g. information meeting, etc.), so that the operator is prepared for the RfP Sector references Whether the operator feels that they will get a fair chance from the customer Whether the operator is cross-selling.

“If we need to connect 20 to 30% of the locations via Belgacom it might be worthwhile to bid, but with higher percentages there is no business case”- a telco These factors have led the other operators towards a strategy of targeting only a part of the market. Comments ⋅ ⋅ ⋅ ⋅

⋅

The most important national players, Mobistar and Telenet, are highly driven by the residential market. The other telcos have no mobile section, which is an important handicap considering the fast growing convergence of fixed and mobile. The situation in Wallonia is worse than in Flanders, where Telenet is present. The business market is very complex; you need competent people and a lot of knowledge. Often, 6 months or more elapse between the moment a company receives the bids and the contract is signed. RfPs can be very complex, so making a bid is a serious effort, requiring significant investments. Finally, Belgium is a small country and the international players are not interested if they don’t see a promising perspective. Companies are asking for more stringent SLAs. The company network has become crucial, and must be up and running all the time. When the telco is dependent on Belgacom it is not always possible to meet the SLA demands of the business customer.

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Operators are expanding their services, and want to offer IT services (security, application, backup space, hosting, etc.). This requires additional knowledge and investments. “Having one vendor that offers everything (e.g. Belgacom Explore) will make it very difficult for another vendor to take over the full suite.” - ICT decision maker “Regarding the evolution of the market, I suspect that a number of more international operators will not activate their efforts on the Belgian market, except for a limited number of large international clients.” - ICT decision maker Companies are increasingly combining services – competition comes from other players. In fact, most companies already combine services. This allows them to: ⋅ ⋅

improve their purchasing power. When they request a bid that covers more services, they become more interesting customers for the potential provider. deal with the growing complexity.

With the advent of all-IP networks, fixed-to-mobile convergence, etc., customers are seeking to aggregate their requirements and are looking for a provider that can deliver and manage an end-toend solution. “Everything is getting linked together... it will become difficult to negotiate WAN separately from voice... and only vendors who supply everything will be interesting, which means fewer competitors will survive.” - ICT decision maker UC, VoIP, SIP, etc. changed the market: telecom became an IT- business. Companies look for service providers to help them with the management of network equipment and servers, data centre services, etc.

5.8 Conclusions It is dangerous to summarise the picture of the market in one sentence, but generally speaking we can state that the competitors of Belgacom are divided into 3 groups, targeting one of the following: ⋅ ⋅ ⋅

large international companies midsized international companies local companies.

This is the reason why companies don’t receive enough benefit from competition. Although there are quite a few existing players, they are not active in the same parts of the market. This leads to the situation of not having enough competitors in the different market segments. At the same time, to business users, change means extra risk, effort and cost. So they only will do so if they perceive it to be truly worthwhile. Belgacom is dominant for most services, and it competes in the various parts of the market. The most difficult market for Belgacom is the international market. BELTUG fully endorses this point of view. Action is needed from BIPT, the Government, the European Commission and BEREC, to give all the players a fair chance, and to invest in more competition in the business market.

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International telecoms market

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6 International telecommunications In the international market, we see a different situation.

For mobile communications, less than 40% use just one provider. Managing and supporting international mobile communications is increasingly challenging. The challenges include managing multiple relationships with mobile service providers, controlling the ever-expanding fleet of devices, overseeing secure data applications, checking hundreds of bills and allocating costs back to departments or end-users. Operators must take a global view of multinational companies (MNCs), acknowledging their international scope and the global markets in which they operate. MNCs need to work internationally and expect mobile suppliers to have a global approach. Yet the global market is a fragmented patchwork of national mobile services. As INTUG explained in its Position “The economic and social benefits of providing business users with a single market for telecommunications”, there is no single contact for the company: “Current international mobile service offerings do not meet the needs of multinational companies. The international mobile market remains a fragmented patchwork of national mobile services. As a result, a company can end up with an international mobile framework contract with up to 15 individual annexes - one for each European country in which the company has activities. We see inconsistent tariff structures, fragmented pricing and service models and national units of international operators that are more concerned with their own growth, margins and market share than with providing a comprehensive international service to the customer. Businesses suffer from frustration, inefficiency and high costs.”

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Fixed voice and data For fixed voice and fixed data, over half of the respondents have a single provider, but here as well it is difficult (depending on the company’s geographical footprint) to find an operator that covers the countries where services are needed. Special measures for and attention to the business market are absolutely necessary. Businesses do not have the same needs as consumers. Yet, the regulatory environment does not seem to acknowledge the serious differences. Instead it considers that the business market can be dealt with by adapting consumer-oriented regulations. This isn’t the case. For example, businesses require application-aware networks that focus on performance, not just availability and bandwidth. They require bundled services with associated Quality of Service (QoS) and Service Level Agreements (SLAs), plus a wide range of optional value-added services. Furthermore, it isn’t simply relational data that is passing through the company network. With the growing role of collaboration and cloud-based services, we are more and more confronted with a high volume of non-relational data traffic: videos, document sharing, voice services, each of which requires a different approach. Last-mile connectivity causes major headaches for organisations of all sizes. While service providers deliver connectivity as closely as possible to the local site, in most cases they must deal with a local service provider, who owns the infrastructure and therefore determines the rules. Local tail is the most costly component of the circuit. Telecom operators must have access to harmonised, businessgrade, wholesale last-mile offerings that let them put together the pieces of the puzzle to build a company network. Business users need an environment in which their communications service providers have nondiscriminatory access to the dominant operators' national access circuits. European businesses – large and small – want to spend their time and resources on innovation, value creation and improving their competitiveness in world markets, not on puzzling out how to put together an effective communication strategy using a disparate set of mismatched pieces. Based on all of these factors, BELTUG/INTUG believes there is a continuing need for separate market definitions of the business market and of cross-border markets.

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Methodology

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7 Methodology The survey was carried out via an on-line questionnaire. All BELTUG members were invited to take part in the survey. The approximately 60 questions covered several subjects, broadly divided in two parts: ⋅ ⋅

the mobile wave telecommunications.

7.1 Participants In total, 199 BELTUG members filled in the questionnaire, from organisations ranging from SMEs to large national and international companies, across a broad range of sectors and activities. Because of the structure of the Belgian economy, BELTUG believes it is reasonable to claim that the results from this survey are representative for organisations, companies and public institutions with more than 200 employees. For companies with fewer than 200 employees, the results can be seen as an indication, rather than a representative sample. Breakdown of respondents by number of employees in Belgium

The breakdown of sectors shows a very broad range of 16 different activities, from public bodies, to industry/manufacturing, to service, to ICT and more. No single sector dominates the response group, ensuring that all sectors are represented.

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Copyright © BELTUG 2014. This document is for BELTUG members only. It may not be duplicated or distributed, in part or in whole, without the express, written permission of BELTUG. It may not be disassembled or modified in any way.

BELTUG vzw/asbl Knaptandstraat 123 | B - 9100 Sint Niklaas | Tel +32 3 778 17 83 www.beltug.be | [email protected]

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