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Trends in Telecommunication Sector

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The telecommunications sector continues to be a critical force for growth, innovation, and disruption across multiple industries. We will see the first commercial market deployments of 5G in 2018. One of the most anticipated mobile technology platforms, 5G will be the connective tissue for the Internet of Things (IoT) and mobile media. Revenue growth for carriers is of critical importance hence it is critical to identify rapid investment opportunities across the telecom portfolio-including 5G, IoT, and cross-industry partnerships as well as a host of other growth opportunities.

5Th Generation (5G): Adoption of 5G would require huge investment on network, technology and services over the years. An analysis suggests that an investment of $130 billion to $150 billion could be required over the next five to seven years in the US alone to adequately support broadband competition, rural coverage, and wireless densification. The full, mass market 5G coverage is expected by approximately 2020

Internet of Things (IoT): The telecommunications ecosystem expects IoT to become a critical engine for future growth. These opportunities include the connected consumer and the broader universe of connected devices with applications which will dramatically broaden the reach of wireless for consumers and business users. The upswing of these devices will generate billions and trillions of new data sources and thus, it is expected that this growth will push the data to be handled by networks to zettabytes per year.

Becoming an IoT connectivity service provider and offering Machine to Machine (M2M) devices can open new streams of revenue. Gartner predicts that there will be nearly 20 billion devices connected to the IoT by 2020 and that IoT product and service suppliers will amount to a business of $300 billion in revenue.

Integration of CSP with Media and Content Players: Companies that once offered only technology and distribution are moving into content. The distinctions between print and digital, video games and sports, wireless and fixed Internet access, Pay-TV and over-the top (OTT), social and traditional media are blurring.

  • Drivers are: Larger customer base, New Sources of Revenue growth, Personalization.
  • Advanced Digital Technologies: With introduction of IoT, AR/VR, RPA, Blockchain, SDN/NFV, Cloud Services, Big Data, M2M learning there will be tremendous opportunities to build product and services to support these. CSP will need to be proficient in new approaches such as DevOps, minimum viable products and agile IT.
  • AR/VR: While they are still emerging technologies, according to research report approximately 10 percent of consumers own a VR headset, representing a relatively quick adaption curve for such a new product.
  • Some Statistics by Gartner Research

  • Through 2020, network-based CSPs will pursue 65% of digital ecosystem opportunities by principally running (co-creating or providing) technology platforms, rather than delivering through partners.
  • By 2021, acquisitions will comprise 20% of Tier 1, developed market CSPs revenue-growth initiatives in adjacent markets, up from 4% in 2017.
  • By 2022, 50% of CSPs will use artificial intelligence across multiple functions, up from 10% today.
  • By 2021, 90% of Tier 1, network-based CSPs will implement open source in their infrastructure for cost optimization and sourcing flexibility up from 45% now.

Future spend by Telecommunication Providers

Telecom is one of the most fast-paced industries. It has witnessed radical changes due to technological advancements. The latest buzz word in the industry is 5th generation wireless network technology (5G). America and Asia are expected to have commercial rollout of 5G by end of 2019 whereas Europe and Australia are expected to have the rollout by 2020. Telecom companies are expected to invest in 5G network equipment to build the required infrastructure for 5G rollout. They must partner with network equipment manufacturers like Nokia and Ericsson to prepare for successful launch.

Telecom infrastructure will also go through massive expansion and upgradation especially in developing countries in the next few years to improve coverage and data quality.

Communications service providers (CSPs) serve a mix of voice and data to its customer today. But by 2020, when an estimated 80% of all Internet traffic will consist of video, they are expected to provide this service as well i.e. video for entertainment, education, home security, e-health etc. Though their revenue is being squeezed by companies like Netflix, Amazon, and Apple today, these Internet-based companies use the Telco’s network capacity to deliver their own services, while billing consumers for those services directly. This is resulting in expansion of product portfolio by CSPs through both organic and inorganic expansion.

Another area where CSPs are expected to spend a lot of money is I.T. products and services. Global spending on I.T. products and services will reach $2.7 trillion in 2020, a 12.5% increase from the projected $2.4 trillion in sales for 2016. The telecommunication industry, along with manufacturing and financial services, will generate nearly a third of worldwide IT revenues.

It is expected that Telecom industry’s spending on digital initiatives will increase to an all-time high of $189 million, which is much higher than the cross-industry average of $113 million. The use of modern technologies and digitalization will allow companies to optimize business processes, thereby reducing costs, satisfying customers and increasing sales. Another reason behind this increased spending is the shift from landline to wireless connections. The number of wireless service subscriptions worldwide is 6.8 billion six times the number of landline phones.

Surveys in several countries have showed telecommunications to be one of the industries consumers dislike most due to customer dissatisfaction, which can be due to bad service, poor customer support etc. It is expected that CSPs will spend a large amount to improve customer service by investing in AI enabled customer support.

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