Where the Telecom Industry Is Headed

By on April 9th, 2020

In the midst of this pandemic, every industry will be impacted in one way or another. Luckily, the telecom industry’s future is hopeful.

A number of factors play into this positive projection. To understand where telecom will be headed when COVID-19 passes, let’s walk through where the industry has been going in general as well as what it is facing during the pandemic.

5G

Telecom companies have purchased about $25 billion worth of spectrum in preparation for 5G. And it’s no wonder. 5G will have major dividends in years to come.

In fact, Gartner predicted that 2020 would be a year of record growth for 5G network infrastructure: 89% year-over-year growth to be exact. This year alone was predicted to bring in revenue totaling $4.2 billion for 5G suppliers.

One of 5G’s major benefits is that it will allow providers increased download speeds and monthly data limits. Deloitte says 5G will also enable more data-demanding apps in all sectors, from telehealth to distance learning to transportation.

In some areas, 5G is already in place. Verizon, for instance, announced its expansion of 5G in 13 football stadiums at the start of the 2019 season.

In rural areas where broadband is limited, 5G fixed wireless and satellite internet may help.

Satellite Internet

Speaking of satellite internet, some have characterized its development as the “new space race.” Organizations such as SpaceX and OneWeb are developing low Earth orbit satellites with the intent of bringing high-performance broadband anywhere on earth.

Edge Computing and Internet of Things (IoT)

Thanks in part to 5G, “the era of the cloud” is coming to a close as edge computing and IoT become a reality.

Edge computing is the connection of devices and networks near the end user location rather than through a distant server or the cloud. Edge computing allows providers to decrease latency and improve reliability.

IoT is enabled through edge computing and connects devices in all kinds of ways. A couple examples include preheating your oven from your phone or activating a streetlight through a motion sensor.

The International Data Corporation predicts that 45 percent of data generated from IoT will be stored, analyzed, and acted on near or at the edge of networks in three years from now.

Gartner predicts that, this year, there will be nearly 20 billion devices connected to IoT and that IoT suppliers will share $300 billion in total revenue.

Increased Network Demand, Slowed 5G Development

A significant increase in remote work during the pandemic has undoubtedly elevated demand for network connectivity and reliability.

CTIA reports recent growth in data traffic (up as much as 11.9%) and voice minutes (up as much as 19.3%) based on data from Verizon, AT&T, T-Mobile, Sprint and U.S. Cellular.

Despite increased network load, 5G spectrum auctions and rollouts are facing delays in several countries. 

Reassurance for Customers

If increased connectivity demands are not met seamlessly, the public may perceive network providers less favorably. In contrast, telcos that deliver reliable connectivity will build trust with their customers.

Telecom vendor Ericsson explains, “Where network quality is highest, we found that the lead service provider enjoys a higher [Average Revenue Per User] (+31%) and lower average churn (-27%)… Put simply, investing in network quality keeps subscribers happy.”

Time to Adapt

In this time of uncertainty, telcos’ pivoting from current operations is required. PricewaterhouseCoopers recommends telcos create a COVID-19 crisis response plan. The plan should consider stakeholders’ concerns, enable remote workers, and prioritize the maintenance of critical infrastructure. 

Additional tips for a crisis response plan include allowing as many employees to work remotely as possible, setting up remote employees with cybersafe technologies, and keeping onsite employees updated with the latest safety guidelines.

Telecom companies should also expect and plan for delays in equipment manufacturing and delivery. For example, suppliers of mobile handsets have been affected by slowdowns in Asia. Building of 5G and fiber networks will also likely slow down due to equipment delays.

PricewaterhouseCoopers recommends that telcos partner with their suppliers to ensure they, too, have contingency plans in place. In addition, telcos should maintain transparency with stakeholders to ensure expectation alignment and create plans that address setbacks and concerns.

Communicate Proactively

Providers who proactively communicate with their customers during this time may lessen load on call centers and build customer trust.

It may be helpful, for example, to communicate flexible payment options and removal of caps on data plans, if applicable, by reaching out via email, text, and/or voice.

Providing an information portal to answer common questions may also be helpful. Verizon, for instance, has launched the tagline: “We are here. And we are ready.” Part of their communication strategy includes video clips of Verizon engineers expressing their number one priority of keeping the network up and a portal of information for customers and employees to get their questions answered.

After COVID-19

FCC Commissioner Jessica Rosenworcel told IEEE, “If it wasn’t clear before this crisis, it is crystal clear now that broadband is a necessity for every aspect of modern civic and commercial life.”

We’re already seeing signs that policymakers are treating the Internet differently. Analysts with New Street Research pointed out that Congress’s recent stimulus package places the Internet on par with other utilities in terms of loan forgiveness.

When the delays from COVID-19 pass, the future of telecom will be bright due to an increased demand for network reliability as well as higher consumer and business application of digital tools. As GlobalData’s Emma Mohr-McClune points out, demand for Artificial Intelligence, such as health worker robots or virus prediction tools, will further justify the development of 5G.

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