A “triumvirate of change” will sweep the Asia Pacific region's telecommunication and networking industries and the impact of these changes will be felt in 2010 and beyond, a new report said.

In a report, research firm IDC said this triumvirate of change culminates from three overarching themes that will affect Asia (excluding Japan).

First, the desire for de-capitalization and dematerialization of the Information and Communications Technology (ICT) sector will result in a fundamental shift in the way service providers (SPs) and enterprises provision as well as consume ICT services, IDC said.

Second, the competitive environment, in both the networking and SP markets, will be altered as Chinese networking vendors and Indian telecoms operators formally take their seats on the global stage.

Third, the unrelenting desire to create an "intelligent X" environment will form the building blocks for an ubiquitous computing and mobility landscape.

"There is a triumvirate of change that will be the main drivers of innovation and change in the industry in 2010 and the years ahead," said Adrian Ho, program manager for telecom and managed services for IDC Asia/Pacific, said. "ICT investments will remain both cautious and prudent over the next 12 months. Limited incremental budgets will be diverted to specific transformational technologies that meets key business objectives as determined in part by the triumvirate of forces propelling change in the industry."

In terms of market performance for the year, IDC said it expects the telecom, managed services and networking market to show moderate growth in 2010 helped by the revival in the global economy and improvement in the overall business climate.

The APAC telecom services market is expected to reach US$252 billion in 2010, representing a growth rate of 6.0%, IDC said. It added that mobile and fixed data services will lead the growth in the telecom services industry.

Spending in enterprise networks is forecast to grow by over 14.8% in 2010 to reach US$12.8 billion.

Growth will be driven by continued spending in datacenter networks, continued migration to an all-IP platform and branch office network investments. Carrier equipment market is expected to decline moderately by –0.8%, with the total market reaching US$55.7 billion.

"The recession accelerated the changes that were already taking place in the industry including how enterprises view technologies and their SPs," HO said.

The analyst said "the new 'normal' in the recovery period include expectations of higher and quicker return of investments, lower total cost of ownership which may include almost no or little ownership of capital and the expectation that SPs can help drive change and transformation."

“At the same time, SPs that kept their eye on innovation throughout the recession will be in the best position to take advantage of the recovery. It was the one currency that never lost its value during the crisis,” he said.

In its report, IDC further indicated the following telecommunications predictions in 2010. These represent major trends with either the most significant financial impact or long-term market influence across the region, IDC said.

According to IDC, the first triumvirate of change will involve de-capitalization and dematerialization of ICT.

Under this, IDC cited maturing cloud computing and multilevel service level agreements (SLAs), which will be the new "killer application" in cloud services.

IDC further said with the onset of the global economic crisis, enterprises were suddenly faced with the predicament of operating with fewer resources.

Unified communication tools and its ability to improve productivity of a geographically distributed workforce came into the limelight within the CIO's scheme of things. Data center is also part of this first triumvirate, IDC said.

Any organization that is planning a major datacenter upgrade in 2010 will have a hard time escaping vendors pushing converged fabric products.

Vendors have been refreshing and adding converged fabric to datacenter solution portfolio over the last 12 months.

IDC believes that converged fabric solutions will significantly address some of the IT sprawl and its resulting large amount of expenditure on maintenance.

The second triumvirate of change will involve competitive landscape changes highlighted by Chinese technology dragons - Huawei and ZTE which continued to prosper despite the global downturn in 2009.

The progress charted in 2009 sets the precedence for growth in 2010 for Chinese vendors. India will also pitch in, as Indian carriers join inner circle of Global Service Providers (GSPs). India telecom carriers led by Reliance Global, Tata Communications, Bharti, and BSNL embarked on a journey to extend their presence outside India and have set out on their global ambitions.

IDC further said the third and last triumvirate of change will involve ubiquitous computing and mobility.

Smartphones in emerging markets will rise. The key driver of smartphones in the emerging markets is the increasing sophistication of mobile users. By the end of 2009, mobile penetration exceeded 50% in China and approached 40% in India.

Android arrived in the APEJ region in the first quarter of 2009, and IDC expects the operating system (OS) to make a big leap forward in 2010, when shipments are predicted to swell to over 2 million units.

As fixed broadband subscribers come to a slower growth after nearly reaching saturation, telecom operators are looking at mobile broadband as the key in growing revenue.

Long-Term Evolution (LTE) is being promoted by the industry as the all-IP migration path for UMTS and EV-DO operators, and as the next step in migration to a future IMT-2000 Advanced or 4G architecture. IDC believes that most early LTE deployments in Asia-Pacific will occur at 3G networks that are already suffering serious utilization problems and need bandwidth relief, which LTE should be able to deliver.

The year 2010 will see the first wave of early business models for Machine-to-Machine (M2M) interaction as most major operators are assembling marketing and business development teams to address this potentially huge opportunity.