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The future of the telecommunication industry: agility is key

Telecommunications Software Solutions

The future of the telecommunication industry

The introduction of new technology and devices is changing the telecommunication industry as we know it. This means that the telecom industry needs to adapt, change, and develop in order for Telcos to remain competitive and relevant. Agility is key for the future of the telecommunication industry and requires telecom operators to look beyond connectivity, complexity, and towards new growth opportunities that offer end-to-end solutions for both enterprise and consumers.

The Scope of the Telecoms Industry

The telecommunications industry is one of the most dynamic and rapidly growing industries globally. But in recent years, the industry has seen a decline in revenue which is primarily related to the increase of competition in the market, changing business and customer needs as well as the effect of digital transformation and not being able to adapt fast enough.

Even with the decline, the market is still expected to see growth. In 2019 the global telecom market size was valued at USD 1.74 trillion but is expected to grow at a compound annual growth rate (CAGR) of 5.0% between 2020 to 2027. Mobile continues to play a significant role in this, with increases in mobile service subscriptions, which are currently sitting at 67% of the global population, which is 5.2 billion people. Mobile technologies and services generated $4.1 trillion of economic value added (4.7% of GDP) in 2019 and it is estimated that by the end of 2020 this number will increase to $5 trillion (4.9% of GDP).

Several elements are set to impact growth in the future of the telecommunication industry and will require Telcos to innovate their service offerings, change their business models, and move towards being more flexible, agile, and connected. These elements include the impact of 5G technology on bandwidth, reliability, and high-speed connectivity, growing demand for value-added managed services, the value of IoT, enhanced customer service, and a need for end-to-end solutions. These elements are not only providing growth opportunities but are some of the biggest challenges Telcos will need to navigate with regards to the future of the telecommunication industry. We examine this in more detail below.

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Technology advances and trends making an impact on the future of the telecommunication industry

Digital transformation and the introduction of new technology is rife, providing a significant opportunity for Telcos to expand on their service offerings and solutions to add greater value to both enterprise customers and consumers. Innovative technology, if used and harnessed correctly, can help Telcos differentiate themselves in the market, reduce customer churn, and enhance productivity. This will require Telcos to think outside of the current connectivity box and innovate. Some of the technology and trends set to impact the future of the telecommunication industry include the following:

The Promises of 5G

5G is the 5th generation of mobile wireless communications technology and will account for 20% of global connections according to GSMA. Operators and carriers across the globe are supporting the shift towards 5G with an expected investment of around $1.1 trillion in mobile CAPEX between 2020 and 2025. This technology is set to change the way many businesses operate as it allows for faster connectivity, low-latency, enhances bandwidth, and connectivity speed.

This impacts more than just connectivity as it paves the way for IoT and edge computing which enables digitisation, automation, and the remote monitoring and management of business processes and operations. 5G networks will allow Telcos to target enterprises with 5G related applications specifically built for industries, for example, telemedicine solutions for the healthcare sector.

Internet of Things (IoT) expansion

IoT continues to gain traction and impact different industry verticals globally, especially since we are seeing shifts towards smart cities, vehicle telematics, industrial automation, and smart manufacturing. It is estimated that the total operator-billed revenue from 5G IoT connections will reach $8 billion by 2024, this is a growth of over 1400% over the next five years.  This move towards IoT provides an opportunity for Telcos to innovate their offerings and utilise 5G capabilities, like network slicing and multi-edge computing solutions, to add value to their customer base with end to end solutions that talk to the changing needs of customers.

Telecom business metrics

Data and analytics are at the centre of business success and at remaining competitive in a crowded market. Analytics provide insight into customer behaviours and patterns, thereby giving you a better understanding of your customer. It provides insight into ways to enhance customer interaction and satisfaction and identifies opportunities for new offerings that talk to their needs with the aim of reducing churn and increasing retention and revenue.

Partnerships and diversified ecosystems

The future of the telecommunication industry entails partnerships, mergers, and acquisitions with other service providers. This will provide Telcos with a way to differentiate themselves, build new and enhanced service offerings, and create new business models that aim to provide customers with the value-added services that they are looking for. By aligning with other network service providers, Telcos can deliver effective services and remain competitive.

Telecom companies can also look to collaborations with different industries to develop industry-specific service offerings that answer to the needs of that specific sector as a way to create new and successful revenue streams. These partnerships and collaborations allow for the creation of new diversified ecosystems that can work together to advance the industry and create more profitable business opportunities.

Technology advances and trends

Artificial Intelligence (AI)

Artificial Intelligence is being used in the industry to positively impact customer experience and service. By using AI, Telcos can process and analyse large volumes of big data and gain access to actionable insights that can be used to enhance customer experience, improve operations and profitability. This is done by using AI technology for network optimisation and automation which will enable Telcos to detect or predict any problems or issues with the network and will allow them to identify and fix the problem before it negatively affects customers.

AI is also being used to connect, engage, and support customers through the use of virtual assistants. This technology allows operators to implement self-service platforms and solutions that enable customers to do more themselves – cutting down the need for call centres and support resources in the future of the telecommunication industry.

Data security

Data security remains a concern for many enterprise customers and consumers who worry about identity theft, financial loss, and unauthorised use of their sensitive data. In order for the future of the telecommunication industry to be successful at driving new value-added services, it needs to ensure that the digital environment its creating is one where public safety is addressed and data is secured.

FinTech 

FinTech innovations, in the form of digital payments, mobile money, mobile wallets, etc. have become not just an innovative trend globally but an essential service. Telcos have the opportunity to connect with an estimated 1.7 billion unbanked customers. This is a market that has immense growth potential and who are looking for financial inclusion and simple and convenient ways to make payments. On the other side of the coin, the COVID-19 pandemic illustrated the need for FinTech solutions that enabled payments to be made virtually either online or via mobile phone. Both of these FinTech related trends will continue to impact the future of the telecommunication industry and provide Telcos with an opportunity to expand on their service offerings. 

The transition to digital learning and remote working

Digital learning and remote working have become popular topics of discussion in recent months due to the effects of the COVID-19 pandemic. The pandemic has accelerated the move from learning and working in physical buildings to online, and Telcos have and will continue to play a role in this. For online learning and remote working to effectively take place, there is a need for reliable and secure connectivity as well as data management. This is something that many Telcos have had to navigate and will continue to navigate. Other elements that need to be considered when looking at this trend and possible expansion opportunities include providing the same level of access and connectivity to those in remote areas.

5G, AI and IoT

Conclusion

The future of the telecommunication industry will continue being impacted by new innovative technology like 5G, IoT, and AI. For Telcos to remain competitive and ahead of the game, they need to adapt, change, and innovate their services, offerings, and business models and take full advantage of all that this technology has to offer. This agility and flexibility will enable Telcos to enhance customer experience, provide businesses with ways to improve productivity and effectiveness, and create new revenue streams – each of which will impact profitability and the future of the industry as we know it.

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