The current economic crisis could "overturn the
established order" in the global IT industry, according to
aUN report.
A report from the UN's International Telecommunications Union
(ITU) says the recession will challenge many firms, but will also
revitalise the industry and allow "new entrants with new
technologies to thrive".
While there will be challenges for many, the report predicts
opportunities for "disruptive technologies and/or business plans",
which are "unlikely to come from traditional players".
The report says, "In some ways, it will reassert the old order
with those ICT companies with sustainable business models, stable
cashflows and deep pockets regaining some of the ground they have
lost to new market entrants. But it will also create new
opportunities for firms with disruptive technologies to prosper,
especially where prices are falling and where technology is
changing."
Better than 2001
The industry is better placed to weather this recession than
when the dot com crisis hit in 2001.
"The internet is now a mainstream feature of modern life; global
communication networks underpin international trade; and modern
working methods are based on constant connectivity."
One main challenge for IT companies is the current lack of
available funding. The report says funding issues for innovative
ideas are unlikely to be resolved until the banking sector is
recapitalized.
It adds governments may even need to step in, saying, "The
financial difficulties faced by the private sector could add to
pressure for government intervention in the financing of national
backbone infrastructure."
Operators
According to the ITU, mobile operators are better placed to ride
out the storm than fixed operators, because of greater flexibility
in their cost structure.
And the demand for basic IT services is likely to stay robust,
while demand for more advanced applications is less certain.
Telecom services will come under greater pressure to fight for
cost-focused consumers, and operators will have to cut costs by
internal efficiency measures such as reductions in headcount and
infrastructure-sharing.
Growing pressure
With demand for broadband capacity expected to exceed supply by
2012 and a funding shortfall exacerbated by the financial crisis,
it may be necessary for governments to step in here as well.
The report says, "There is growing pressure on governments to
help finance the build-out of broadband networks on the basis that
these represent important national infrastructures."
The ITU says investing in innovative technologies during a
recession is more important than ever, and could help provide a
solution to the problems.
"Investing in innovation and knowledge is even more vital in
times of crisis, not less so, and could enable the global economy
to navigate its way out of this crisis."