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The Future Internet in 2025

  • November 2014
  • -
  • IDATE
  • -
  • 120 pages

The Internet, combined with digitisation, has brought about some elemental shifts in evolution to the ICT industry. They have homed in mainly on the standardisation of technologies, the marginal cost of information, unlimited reach and network agnosticism.

The rollout of standardised and open technologies

Many technologies have become progressively cheaper to use, with the chipset, to name but one, following Moore’s law. Among the major technologies that have been notably standardised are networking technologies (IP, TCP), network technologies (Ethernet, GSM, LTE, xDSL and Wifi), presentation technologies including HTML and XML, and programming languages such as SQL, Java, Perl, Python and PHP. Beyond the scope of the Internet, there are even standards around specific technologies, as with big data (Hadoop), the Internet of Things (RFID, QR Code or NFC), sensors (GPS and similar) and video technologies (H.264, HEVC). Additional standards are expected in the short term around, for instance, SDN or IoT management.

Conclusions and uncertainties

The main evolutions and disruptions expected around governance and regulation issues relate thus to, first, data concerns (security, privacy) which could prompt more regulations and, second, to local regulatory and policy frameworks for competition, covering tax, specific rules or standards promotion. The capacity of Western governments, contrary to many in Asia, to develop further regulations around taxes and privacy, beyond pure security, is quite unclear, as there is often a serious gap between their intentions and their real actions on these topics. Processes are quite long and leading players are often one step ahead of government.
Governments are also trading the need for, on the one hand, more advanced regulation to give better protection to citizens and consumers with, on the other, the benefits induced by Internet market development such as local employment for sales or product delivery and the degree of competitiveness with other countries

Table Of Contents

The Future Internet in 2025
1. Executive Summary ...................................................................................................... 10
1.1. Major trends.................................................................................................................................................... 11
1.2. Major uncertainties ........................................................................................................................................ 12
1.3. Scenarios for 2025 ......................................................................................................................................... 12
2. Methodology.................................................................................................................. 14
2.1. General methodology of IDATE's reports .................................................................................................... 14
2.2. Scenarios ........................................................................................................................................................ 15
3. The fundamental disruptions induced by Internet development ............................... 16
3.1. Drivers............................................................................................................................................................. 16
3.1.1. The rollout of standardised and open technologies.................................................................................................... 16
3.1.2. The economics of information.................................................................................................................................... 18
3.1.3. Network agnosticism.................................................................................................................................................. 18
3.1.4. Reach........................................................................................................................................................................ 19
3.2. Barriers ........................................................................................................................................................... 20
3.2.1. Proprietary technologies ............................................................................................................................................ 20
3.2.2. Cost structure of non-software-based services.......................................................................................................... 22
3.2.3. Network interoperability and access .......................................................................................................................... 22
3.2.4. Local and commercial barriers................................................................................................................................... 23
3.3. Overall impacts for service provider activities............................................................................................ 24
3.3.1. Service Development: Lower cost per unit................................................................................................................. 24
3.3.2. Evolution of the ecosystem: New value chains? ........................................................................................................ 24
3.3.3. New market environment........................................................................................................................................... 25
4. Technologies................................................................................................................. 27
4.1. Key technologies............................................................................................................................................ 27
4.1.1. Network infrastructure and standards: Fibre, LTE, QoS, SDN ................................................................................... 27
4.1.2. Traffic management and optimisation solutions: CDN, DPI/PCRF, small cells .......................................................... 29
4.1.3. Cloud infrastructure and data management: The cloud and big data......................................................................... 31
4.1.4. Internet of Things: M2M, RFID, wearables, sensors .................................................................................................. 32
4.1.5. Mobile technologies: GPS, NFC, QR code and augmented reality ............................................................................ 34
4.1.6. Security ..................................................................................................................................................................... 35
4.2. Analysis of technology trends ...................................................................................................................... 37
4.2.1. Main disruptive technologies ..................................................................................................................................... 37
4.2.2. Other disruptive technologies .................................................................................................................................... 40
4.2.3. Other technologies .................................................................................................................................................... 40
4.3. Conclusions and uncertainties ..................................................................................................................... 42
5. Usages and user expectations..................................................................................... 43
5.1. Key usages and user behaviour ................................................................................................................... 43
5.1.1. The shift online .......................................................................................................................................................... 43
5.1.2. Mobility ...................................................................................................................................................................... 47
5.1.3. IT consumerisation .................................................................................................................................................... 48
5.1.4. Personalisation.......................................................................................................................................................... 48
5.1.5. Free Internet.............................................................................................................................................................. 49
5.1.6. Sharing data .............................................................................................................................................................. 50
5.2. Analysis of usage trends............................................................................................................................... 51
5.2.1. Main disruptive trends................................................................................................................................................ 51
5.2.2. Other disruptive trends .............................................................................................................................................. 54
5.2.3. Other trends .............................................................................................................................................................. 56
5.3. Conclusions and uncertainties ..................................................................................................................... 58
6. Business Models........................................................................................................... 60
6.1. Current market situation................................................................................................................................ 60
6.1.1. Revenue models: Advertising, paid services and E-commerce.................................................................................. 60
6.1.2. Competition: Cross subsidies, bundles ...................................................................................................................... 62
6.1.3. Data monetisation: Internet giants' ARPU low ........................................................................................................... 63
6.1.4. The role of device manufacturers: direct revenues from personal data are secondary .............................................. 64
6.2. Analysis of main business models trends................................................................................................... 65
6.2.1. Main disruptive trends................................................................................................................................................ 65
6.2.2. Other disruptive trends .............................................................................................................................................. 67
6.2.3. Other trends .............................................................................................................................................................. 69
6.3. Conclusions and uncertainties ..................................................................................................................... 70
7. Policy, Regulation and Governance............................................................................. 72
7.1. Current regulatory framework....................................................................................................................... 72
7.1.1. Internet Governance.................................................................................................................................................. 72
7.1.2. Net Neutrality - Access ............................................................................................................................................. 73
7.1.3. Piracy ........................................................................................................................................................................ 75
7.2. Analysis of trends .......................................................................................................................................... 76
7.2.1. Main disruptive trends................................................................................................................................................ 76
7.2.2. Other disruptive trends .............................................................................................................................................. 78
7.2.3. Other trends .............................................................................................................................................................. 79
7.3. Conclusions and uncertainties ..................................................................................................................... 80
8. Scenarios for 2025 ........................................................................................................ 81
8.1. Current picture ............................................................................................................................................... 81
8.1.1. Regional breakdown.................................................................................................................................................. 81
8.1.2. The weight of local industry ....................................................................................................................................... 81
8.1.3. Major market segments ............................................................................................................................................. 83
8.2. Major uncertainties ........................................................................................................................................ 84
8.3. Main scenario for 2025: Platform wars......................................................................................................... 86
8.3.1. Scenario characteristics............................................................................................................................................. 87
8.3.2. Technologies ............................................................................................................................................................. 88
8.3.3. Usages ...................................................................................................................................................................... 88
8.3.4. Business Models ....................................................................................................................................................... 88
8.3.5. Regulation ................................................................................................................................................................. 88
8.3.6. The moves necessary to attain this scenario ............................................................................................................. 88
8.3.7. Major players in such a scenario ............................................................................................................................... 91
8.4. Alternative scenarios..................................................................................................................................... 91
8.4.1. Open Innovation ........................................................................................................................................................ 91
8.4.2. Low-cost Islands........................................................................................................................................................ 97
8.4.3. Pay per Trust........................................................................................................................................................... 100
9. Main results ................................................................................................................. 106
9.1. Overall market sizing ................................................................................................................................... 106
9.2. Breakdown per category ............................................................................................................................. 107
9.2.1. Main scenario overall vision..................................................................................................................................... 107
9.2.2. Comparison of scenarios ......................................................................................................................................... 108
9.3. Breakdown per revenue model ................................................................................................................... 109
9.3.1. Main scenario .......................................................................................................................................................... 109
9.3.2. Comparison of scenarios ......................................................................................................................................... 109
9.4. Focus on major Internet services ............................................................................................................... 110
9.4.1. Cloud....................................................................................................................................................................... 110
9.4.2. Search..................................................................................................................................................................... 110
9.4.3. Social....................................................................................................................................................................... 111
9.4.4. Video ....................................................................................................................................................................... 112
9.4.5. Mobile...................................................................................................................................................................... 113
9.4.6. Vertical .................................................................................................................................................................... 114
9.4.7. Communications...................................................................................................................................................... 114
9.4.8. RTB......................................................................................................................................................................... 115
10. Data book..................................................................................................................... 116
10.1. Platforms Wars scenario ............................................................................................................................. 116
10.2. Low-cost Islands scenario .......................................................................................................................... 117
10.3. Open Innovation scenario ........................................................................................................................... 118
10.4. Pay Per Trust scenario ................................................................................................................................ 119

Tables and Figures

Table 1: Mobile network performance levels …………………………………………………………………………………………… 28
Table 2: Status of regulatory debates and policies, by country, in 2014 ………………………………………………………. 74
Table 3: Various graduated response measures on piracy implemented by in some countries ………………………. 75
Table 4: Key uncertainties presented in previous sections ………………………………………………………………………… 85
Table 5: Characteristics and impacts of uncertainties in Platform Wars scenario………………………………………….. 87
Table 6: Characteristics and impacts of uncertainties in Open Innovation scenario ………………………………………. 93
Table 7: Characteristics and impacts of uncertainties in Low-cost Islands scenario………………………………………. 97
Table 8: Characteristics and impacts of uncertainties in Pay per Trust scenario…………………………………………. 101
Table 9: Internet markets, 2013-2018 and 2025 - Platform Wars scenario ……………………………………………………. 116
Table 10: Focus on major Internet markets, 2013-2018 and 2025 - Platform Wars scenario……………………………… 116
Table 11: Breakdown of Internet market by business model, 2013-2018 and 2025 - Platform Wars scenario………. 116
Table 12: Internet markets, 2013-2018 and 2025 - 10.2. Low-cost Islands scenario ………………………………………… 117
Table 13: Focus on major Internet markets, 2013-2018 and 2025 - Low-cost Islands scenario………………………….. 117
Table 14: Breakdown of Internet market by business model, 2013-2018 and 2025 - Low-cost Islands scenario…… 117
Table 15: Internet markets, 2013-2018 and 2025 - Open Innovation scenario………………………………………………… 118
Table 16: Focus on major Internet markets, 2013-2018 and 2025 - Open Innovation scenario………………………….. 118
Table 17: Breakdown of Internet market by business model, 2013-2018 and 2025 - Open Innovation scenario…… 118
Table 18: Internet markets, 2013-2018 and 2025 - Pay per Trust scenario…………………………………………………….. 119
Table 19: Focus on major Internet markets, 2013-2018 and 2025 - Pay per Trust scenario………………………………. 119
Table 20: Breakdown of Internet market by business model, 2013-2018 and 2025 - Pay per Trust scenario……….. 119
***
Figure 1: Four main scenarios for 2025 …………………………………………………………………………………………………… 13
Figure 2: Fundamental drivers of Internet ………………………………………………………………………………………………… 16
Figure 3: Some networking standards in the OSI model…………………………………………………………………………….. 17
Figure 4: HTML5 APIs and related technologies: Taxonomy and specification status…………………………………….. 17
Figure 5: Disk cost-per-byte, 1990-2020………………………………………………………………………………………………….. 18
Figure 6: From network silos to agnostic network ……………………………………………………………………………………… 19
Figure 7: Growth of fixed and mobile Internet penetration worldwide, 2013 and 2017 ……………………………………….. 19
Figure 8: Fundamental barriers to Internet……………………………………………………………………………………………….. 20
Figure 9: Evolution of market share of mobile OS……………………………………………………………………………………… 21
Figure 10: Total voice and data traffic per device in Canada ………………………………………………………………………… 22
Figure 11: The technological process of FBX …………………………………………………………………………………………….. 23
Figure 12: Distermediation and Reintermediation……………………………………………………………………………………….. 25
Figure 13: Evolution of user bases of the most important mobile messaging apps ………………………………………….. 26
Figure 14: Short-term growth of major technology markets ………………………………………………………………………….. 27
Figure 15: Throughput, latency and connections required for 5G services ……………………………………………………… 28
Figure 16: Data in the cloud, seen by Tekelec……………………………………………………………………………………………. 29
Figure 17: Major technologies for traffic management and network optimisation …………………………………………….. 30
Figure 18: Cloud computing market segments …………………………………………………………………………………………… 31
Figure 19: Cloud computing in a smart city………………………………………………………………………………………………… 32
Figure 20: Umbrella of Internet of Things covers many concepts and markets ……………………………………………….. 33
Figure 21: Forecasts for the different components of the Internet of Things……………………………………………………. 34
Figure 22: Use of mobile payment services in the USA, Q2 2014 …………………………………………………………………. 35
Figure 23: Possible security breach locations and impact ……………………………………………………………………………. 36
Figure 24: Cyber-attacks, by technique and by country, in 2013 …………………………………………………………………… 37
Figure 25: Social network penetration 2013, fixed and mobile………………………………………………………………………. 38
Figure 26: Breakdown of mobile Internet revenue: advertising vs. Applications……………………………………………….. 39
Figure 27: Stages in data treatment process ……………………………………………………………………………………………… 39
Figure 28: Major API players, by calls/day…………………………………………………………………………………………………. 41
Figure 29: Likelihood of main technologies………………………………………………………………………………………………… 42
Figure 30: Percentage of Europeans who have used Internet at least once a week ………………………………………… 43
Figure 31: Internet use in the USA, over time (1995-2014)…………………………………………………………………………… 44
Figure 32: Social networking site use by age group, over time (2005-2013) …………………………………………………… 44
Figure 33: Use of Internet for communications by age group in EU, in 2013 …………………………………………………… 45
Figure 34: Use of Internet for access to information and learning purposes by age group in EU, in 2013……………. 45
Figure 35: Internet activities in the UK, in 2007 and 2013…………………………………………………………………………….. 46
Figure 36: Numbers of Internet users, by access, 2011-2016 ………………………………………………………………………. 47
Figure 37: Mobile Internet users in the UK, in 2013…………………………………………………………………………………….. 47
Figure 38: Mobile services adoption by 2018……………………………………………………………………………………………… 48
Figure 39: Consumer tools in enterprise ……………………………………………………………………………………………………. 48
Figure 40: Interest for personalization in retail and banking………………………………………………………………………….. 49
Figure 41: Willingness to pay for content …………………………………………………………………………………………………… 49
Figure 42: Consumer preparedness to share personal data, by conditions …………………………………………………….. 50
Figure 43: Online hardware purchase considerations of US consumers, in 2013…………………………………………….. 51
Figure 44: Online purchase considerations of Chinese consumers, 2014 ………………………………………………………. 52
Figure 45: Evolution of contributors to Wikipedia, 2001-2014……………………………………………………………………….. 52
Figure 46: Taxonomy of the sharing economy……………………………………………………………………………………………. 53
Figure 47: Consumer attitudes towards the sharing economy, 2014 ……………………………………………………………… 53
Figure 48: Main companies operating in the sharing economy……………………………………………………………………… 54
Figure 49: Netflix catalogue examples ………………………………………………………………………………………………………. 54
Figure 50: Nike Plus community Growth, 2012-2013…………………………………………………………………………………… 55
Figure 51: People using tracking mechanisms (including non-electronic ones)……………………………………………….. 55
Figure 52: Sharing economy 3D-printing …………………………………………………………………………………………………… 56
Figure 53: User online privacy-protection strategies……………………………………………………………………………………. 57
Figure 54: Screenshot of the Lightbeam interface ………………………………………………………………………………………. 58
Figure 55: Likelihood of main consumer behaviours and usages ………………………………………………………………….. 58
Figure 56: User preparedness to share personal data…………………………………………………………………………………. 59
Figure 57: Worldwide advertising markets breakdown in 2013……………………………………………………………………… 61
Figure 58: Internet services revenue breakdown in 2013 …………………………………………………………………………….. 61
Figure 59: Worldwide revenues of digital content in 2013…………………………………………………………………………….. 62
Figure 60: Top Internet players all over the board in 2014……………………………………………………………………………. 63
Figure 61: Estimated annual per-user revenue for Internet services worldwide, 2011-2013………………………………. 64
Figure 62: Apple sales breakdown, 2009-2012…………………………………………………………………………………………… 65
Figure 63: Impact of cloud model on opex reduction …………………………………………………………………………………… 65
Figure 64: The Real-Time Bidding process………………………………………………………………………………………………… 66
Figure 65: Spotify rate card (UK) ……………………………………………………………………………………………………………… 68
Figure 66: Spotify premium and free users ………………………………………………………………………………………………… 68
Figure 67: Capital expenditure of Google, Amazon and Microsoft for their data centers, 2011-2013 ………………….. 69
Figure 68: Likelihood of main business models ………………………………………………………………………………………….. 70
Figure 69: Google attempts at territorial expansion …………………………………………………………………………………….. 71
Figure 70: Global governance of the Internet……………………………………………………………………………………………… 73
Figure 71: Evolution of consent………………………………………………………………………………………………………………… 77
Figure 72: UK tax liabilities of US enterprises, 2011……………………………………………………………………………………. 79
Figure 73: Likelihood of regulations and policies ………………………………………………………………………………………… 80
Figure 74: Google market share in China, 2012-24 …………………………………………………………………………………….. 82
Figure 75: Online services in top league of IPOs, 1999-2014……………………………………………………………………….. 83
Figure 76: Breakdown of Internet services market in 2013 …………………………………………………………………………… 84
Figure 77: Four potential scenarios of Internet evolution, to 2025 …………………………………………………………………. 86
Figure 78: Ecosystem sizes of Internet giants, 2010-2013 …………………………………………………………………………… 86
Figure 79: Evolving preferences for Google Maps or Apple Maps, October 2012 - September 2013………………….. 89
Figure 80: Diversity of acquisitions by platforms for enlargement………………………………………………………………….. 90
Figure 81: Major acquisitions from Internet giants ………………………………………………………………………………………. 90
Figure 82: Illustrative players and initiatives - Platform Wars scenario ………………………………………………………….. 91
Figure 83: Most popular social media sites with teens, 2012-2013………………………………………………………………… 92
Figure 84: Appeal and deterrents of HTML5 for mobile developers……………………………………………………………….. 94
Figure 85: Positioning of major VRM initiatives…………………………………………………………………………………………… 95
Figure 86: Illustrative players and initiatives - Open Innovation scenario……………………………………………………….. 96
Figure 87: Power plant system identified through Shodan……………………………………………………………………………. 96
Figure 88: P2P payment models………………………………………………………………………………………………………………. 98
Figure 89: The rapid rise of DuckDuckGo………………………………………………………………………………………………….. 99
Figure 90: Illustrative initiatives and players - Low-cost Islands scenario …………………………………………………….. 100
Figure 91: Search engine market shares in South East Asia and South Korea ……………………………………………… 102
Figure 92: Profiles of South Korean OTT services…………………………………………………………………………………….. 102
Figure 93: Transaction steps with Apple Pay……………………………………………………………………………………………. 104
Figure 94: World's biggest security breaches 2010-2014, by number of accounts (only >30,000) ……………………. 104
Figure 95: Illustrative initiatives and players - Pay per Trust scenario………………………………………………………….. 105
Figure 96: Worldwide market sizing for Internet services, 2017-2025…………………………………………………………… 106
Figure 97: Worldwide Internet services market breakdown in 2013 and 2025 - Platform Wars scenario…………… 107
Figure 98: Detailed breakdown of worldwide Internet services market in 2025 - Platform Wars scenarios………… 108
Figure 99: Worldwide Internet services market breakdown, in 2013 and all scenarios in 2025 ………………………… 108
Figure 100: Evolution of business models breakdown, 2013-2025 - Platform Wars scenario……………………………. 109
Figure 101: Breakdown of worldwide Internet services market by business model, by 2025 - All scenarios ……….. 109
Figure 102: Comparison of scenarios regarding advertising and paid content and apps revenues in 2025 -
Worldwide……………………………………………………………………………………………………………………………. 110
Figure 103: Worldwide Cloud markets, 2017-2025 -- All scenarios………………………………………………………………. 110
Figure 104: Worldwide Search markets, 2017-2025 -- All scenarios…………………………………………………………….. 111
Figure 105: Worldwide Social markets, 2017-2025 -- All scenarios ……………………………………………………………… 111
Figure 106: Worldwide Social markets breakdown, in 2013 and all scenarios in 2025……………………………………… 112
Figure 107: Worldwide Video services markets, 2017-2025 -- All scenarios………………………………………………….. 112
Figure 108: Worldwide Video markets breakdown, in 2013 and all scenarios in 2025………………………………………. 113
Figure 109: Worldwide Mobile services markets, 2017-2025 - All scenarios ………………………………………………….. 113
Figure 110: Worldwide Mobile markets breakdown, in 2013 and all scenarios in 2025 …………………………………….. 114
Figure 111: Worldwide Vertical services markets, 2017-2025 -- All scenarios ……………………………………………….. 114
Figure 112: Worldwide Mobile services markets, 2017-2025 -- All scenarios ………………………………………………… 115
Figure 113: Worldwide RTB markets, 2017-2025 -- All scenarios………………………………………………………………… 115

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