[ARTICLE] Telcos Will Have Their Hands Full For The Next Decade
If there is an industry that can pose as a poster child for digital transformation telecommunications should top the list. Gone are the telephone booths that were a symbol of the 90s’ and still very present at the turn of the millennium; today nobody leaves home without a smartphone as this device is our digital lifeline. What will shape the telecommunications industry in the years to come?
There are several telecommunications industry trends at play today. And, mind you, they go far beyond wireless technology and connectivity. Let’s take a look what the future has in stock for telcos.
The 5G race is definitely on
First we should make a case for the technology that will enable new business models in the telecommunications industry that will affect just about everyone. The fifth generation of mobile networks (5G) is just around the corner and experts predict 5G architecture will stay with us almost a decade. This year we should see several pilot projects and even the first wave of commercial offerings (most probably originating in South Korea and Japan) as virtually all telecommunications companies are having their own crack at 5G technology and its implementations.
5G networks are promising not just greater mobile data transfer speeds but significantly lower latencies which make case for several new business opportunities. And not just within the telecommunications industry, the vast potential 5G technologies is being recognized by other industries as well, such as transportation (selfdriving vehicles), energy sector and agriculture business to name just a few.
Since there is great demand both from consumer and business side, topped by the support of carriers and governments, the once very ambitious goal of 5G massive rollout by 2020 looks quite realistic as telcos like to stress that most of them are becoming 5G-ready even today, starting different trials etc.
5G networks will also be the common denominator of some of the trends discussed here, such as artificial intelligence (AI), Internet of Things (IoT) and cloud computing as they deliver viability to such projects.
Adding value through content and services
With the rise of over-the-top (OTT) services of all shapes and forms telecommunication companies saw how (more) money can be made from their networks – and they want to pocket it themselves, not just provide connectivity that others are using to make money from content and data rich services. 2018 might just prove to be the pivotal year telcos choose to jump on the train carrying streaming video and analytical services.
Most telcos have the infrastructure but they lack content. But since the later can be acquired quite easily we can expect to see telcos partnering up with different service providers or even buying them out and becoming primary OTT solution providers themselves since this proves to be a lucrative business model as households all over the world are “cutting the cord”.
The report Over the Top Market by MarketsandMarkets estimates that global OTT market will be worth 62 billion USD by 2020 and telcos won’t be satisfied with breadcrumbs big names (such as Apple, Google, Facebook, Netflix, Microsoft, Yahoo and others) leave on the table.
As most telcos have possession of vast amounts of data they feel the need to monetize it. Just storing and securing data comes with a great cost, so making money of it should be an imperative. Some interesting data based value-added services are already emerging – most of the being coupled with advanced analytics and artificial intelligence.
Securing data and business translates into securing the future
Telcos are very well aware of the fact that they need to protect the data and the network. Since fixed and mobile networks are become increasingly software-defined such infrastructure is also quite vulnerable to different attacks. Establishing trust with consumers and business clients has to do with security, especially in this day and age where not a week goes by without news of a data breach or compromised network/system.
Security is a big concern for telcos everywhere. As networks grow larger and more complex, holistic network security takes over and many telcos start implementing business-wide encryption. The new EU legislation (GDPR) is also a significant driver behind broader adoption of modern security solutions and practices.
Imperative of making money just about everywhere
Investments in infrastructure (5G network), content and security all come with big price tags. So telcos simply have to make (a lot) of money and seek new growth and income opportunities. Most new growth in the future will depend on the success of IoT applications, predominantly smart factories (factory automation), households (smart home) and connected (or autonomous) vehicles as these should push mobile subscriptions even further.
Enabling connectivity will continue to be the main income source but many telcos have their targets set higher up the value chain. Today connectivity costs peanuts, but users are prepared to pay generously for great content (video, games etc.). Several telcos are therefore looking to enter media space, be it by mergers or acquisitions or partnerships and alliances with existing content providers.
There are several cross-selling opportunities in play too – telcos can link a myriad of digital services (fintech for example), lifestyle propositions or even offer home appliance control options.
Under the hood: lean and agile
One way of having more money is to spend less of it. Besides higher earnings lean operations and constant productivity gains are on the priority list of telecommunication companies worldwide. Technologies such as machine learning and artificial intelligence will also help telcos to keep cost structures in check and automate just about everything they can automate – even call centers will get “robots” to talk with clients.