Observations from the market
The Covid-19 global pandemic has positioned Telcos at the forefront, in a mission critical mode as an essential services enabler, ensuring continuity in business operations during the pandemic. Advanced technology such as AI powered Digital Experiences, Automation & 5G connectivity are proving vital in delivering solutions to help fight the pandemic. While the adversity has opened up interesting opportunities, there are challenges aplenty.
In this rapidly evolving business environment, the new normal includes enforcement of physical distance and work from home that has created challenges in executing daily activities, work, supply chain and logistical delays, causing delayed initiatives and missed opportunities.
The Covid-19 pandemic has had a substantial impact on Telecoms and allied industries, though it fares slightly better than other sectors like manufacturing, and hospitality, and that no sector is immune to the pandemic, but some will suffer more than others.
Immediate Factors affecting Telco business
There are several reasons that will cause Telcos to revisit their 5G capex programs and deal with delayed timelines due to
- Global supply chain disruptions,
- Availability of 5G network devices,
- Delays in formal standards definition,
- Spectrum auction delays,
- Delays in 5G infrastructure permits and inspections,
- Closure of retail stores,
- Availability of 5G supported mobile devices,
Immediate Business Impact on Telcos
- Revenue Impact
- Communication service revenues declined 3.4% YoY in mature markets.
- International roaming revenues declined ~6% of billed revenue/year, especially in tourism heavy countries.
- Freebies and waivers offered to retain retail subscribers.
- Decline in global SME ICT spend on enterprise revenues.
- Existing network optimization to deal with surge in network trafficTelcos are spending on improving existing capacities addressing overall network resilience which was positive over the past four months with an increased focus on traffic management, absorbing 10% – 70% spike in network traffic reported across Telcos.
- Capex & Infrastructure RolloutsSupply side disruption slowed down 5G and fiber rollouts, with a reduction in capex. Potential upside in 2021 broadband demand anticipated to fast-track roll outs.
- Supply chainGlobal smartphone shipment to decline 3.1% YoY in 2020. Production slow-down in Asian manufacturing hubs impacts global supply of panels, touch sensors and printed circuit boards.Trade wars notwithstanding, and aversion to Chinese 5G equipment vendors from deploying equipment indicated by several countries globally, including India; alternate suppliers better be prepared to step in to fill in the resultant demand-supply mismatch.
Economic recession slowing down device and service upgrades and suppressed 5G demand will defer Telco plans of aggressive deployment strategies.
As per Statista, the device segment, including PCs and phones could see the steepest fall, currently projected to decline 12.4% in 2020 compared with the previous year. Infrastructure will be the least affected segment according to the adjusted forecast with projected growth of 3.8% in 2020, as businesses keep utilizing cloud deployments. Thanks to the cloud and greater inclination towards “software defined”, technology infrastructure is the only segment in global IT to grow in 2020, while other segments are projected to decline.
Imperatives for Telcos to emerge as winner in a Covid-19 hit world
In light of the new normal, leading Telcos are addressing three dimensions of managing a crisis; respond, recover, and thrive, which predominantly includes digital technologies.
Experiences that are built on a foundation of customer-first
Calibrated strategy moving from digital-first to digital-throughout
- Drive AI and automation programs broadly organization-wide and at far greater speed – network, customer, IT, front desk, and back office.
- Enhance digital customer experience through self-service channels and support journeys. Intelligent BOTs to serve more than a bridge to the call center for complex queries and increase in AI-agent customer interactions.
- Build and evolve capabilities to support new Telco value propositions, such as Software Defined Networks, Cloud networking, and Intelligence at the Edge.
- Continuous testing of network reliability through intelligent automation.
Rapid scalability and resilience of network operations in a hyper-connected 5G internet of everything world Network operations
Overall network resilience was positive over the past four months with increased Telco focus on traffic management, absorbing 10% – 70% spike in network traffic reported across Telcos.
As an instance, leading US Telco Verizon is projected to spend $18.5 billion this year on improving its network resilience, a $500 million increase over its planned spend triggered by demand surge during the pandemic.
Increased spend in building network resilience will be channelled towards modernization of legacy systems that need to scale up to demand.
Telcos and broadband providers are working overtime to cope with demand spikes and maintain reliable connectivity through capex spends, augmenting and optimizing their current wireless and broadband networks. However, the inability to monetize this investment in the short term, and deal with challenges from declining sales and roaming revenue, retail chain closures, relaxing limits and out of bundle charges are hurting the earnings.
Reduced cycle time in innovation and change deployment
The power of AI-based technology combined with 5G when blended with distributed edge computing, cloud and IT functionalities will drive the next wave of innovation. The pace of change will compel innovation cycle times to reduce drastically to make solutions relevant to the current times.
Promise of 5G technology & innovation in a pandemic
5G tech. can address prevailing connectivity and network performance challenges, more so during a pandemic, as it enables the transformation of public health and offers possibilities of new treatment methods. Leveraging advantages of speed, latency, number of connection points and range, apply to the following 5G enabled use cases.
- Real-time thermal imaging of people in motion in public spaces,
- Smart robot in Tele-medicine, remote diagnosis, consulting, and emergency treatment
- AR/VR in Tele-education and Tele-conferencing
- Smart transportation, unmanned vehicle solution
Cost optimization & efficiencies to gain prominence by moving from fixed cost to variable cost model
- Transition likely from fixed cost to variable cost model to reduce operating leverage, translating to following shifts:
- Pay-per-use for O&M, and AMC,
- Network utilization and consumer demand based site rentals,
- Retail store redundancies,
- Automation of business processes for corporate efficiencies such as finance, tax, billing and operations,
- Consolidation, mergers, and fundamental shift in market structures with formation of Netcos.
Incedo’s service offerings to engage with Telcos
Post pandemic, the economic recovery will happen at a very fast pace that will spur consumer and business confidence starting Q3-Q4. It’s a fact of life that there will be an immediate set back on the supply chain, investments, operation and delivery due to Covid-19. It is unlikely to have a lasting effect in the direction emerging for Telecoms since the middle of the last decade, which is characterized largely by high speed, low latency 5G experiences, digital transformation, AI, virtualization, automation, and accelerated transition from traditional voice to unified communications.
Overall Consulting and Technology Services like ours will need a re-calibrated strategy of delivering solutions focussed on immediate needs through digital & automation that will help tide over the current situation.
We help clients unlock the full potential of 5G as it promises to transform the industry. We leverage the client’s digital and data infrastructure to deliver world class customer experience and in optimizing their networks & biz operations.
Incedo solutions for Telco to help tide over the pandemic crisis
- Legacy Systems Modernization
- Platform re-engineering
- Application modernization
- Cloud engineering & migration services
- Digital Transformation and Analytics
Combining design thinking, data-informed decisions, iterative experimentation backed by our integrated data science, UX and innovative engineering capabilities provide clients a full-stack solution.
- Next wave of innovation & engineering will be driven by the power of AI combined with 5G, blended with distributed edge computing, cloud and IT functionalities. Incedo is at the intersection of the blend to deliver innovative engineering solutions.
- Security takes on an even larger stage with high reliance on economic activity on Telco networks. Incedo’s cyber security solutions address growing vulnerabilities in networks going by the numbers of phishing and malware attacks targeted at remote working.