The telecoms industry has a bad reputation for innovation and is seen by many to have missed out on the major new, digital opportunities of the last three decades. This is broadly unfair as telecoms operators have provided the hyper-connectivity foundation that is enabling all of these services.
Operators have worked within the constraints of the traditional market place, bringing ultra-robust, high-availability services to market rather than the best effort, beta products of the digital age that rely on customer-led development. More recently, alternatives to operators’ traditional core business – voice and messaging – have arrived and it’s now time for the telecoms industry to reinvent these offerings for a new dawn, writes Trending Tech managing editor George Malim
In common with many industries, telecoms faces substantial and complex challenges in digital transformation. Core products have been commoditised or challenged by apparently free alternatives from rivals that don’t operate under the same regulatory and commercial conditions. Over-the-top (OTT) providers can offer voice and messaging in exchange for access to personal data or at a lower quality than operators and consumers have found this appealing.
However, telecoms operators’ networks still carry the vast majority of data traffic and provide the international links that underpin global trade. Monetisation and revenue generation are changing shape and core consumer products such as voice and messaging have commoditised as part of bundled offerings. Even internet connectivity is in a fierce price war in many markets so operators need to focus on areas in which they can demonstrate their value and provide better service at still competitive cost.
Still more than a trillion
Telecoms is still a massive global sector worth well over US$1 trillion a year and with adjacent services such as IT for enterprises and content for consumers added, there is a strong future for operators. The Covid-19 pandemic has impacted revenue growth but this is expected to return this year. Analyst firm, Analysys Mason, has projected that telecoms service revenue worldwide in 2020 was US$43bn less than it was in 2019 – a year-on-year decline of 2.7%. However, the firm predicts growth of US13bn in 2021 which is up about 1% on 2020 but it does not see revenues exceeding 2019 levels until 2023.
These figures are borne out by research firm IDC, which has reported that the worldwide market for telecoms and pay-TV services experienced a recovery during the second half of 2020. That recovery meant the global services market was worth US$1.53 trillion last year, the same as in 2019, with the Americas the largest region, accounting for US$583bn in services revenues, 38% of the total market. Asia-Pacific operators generated US$482bn from services while those in EMEA generated services sales valued at US$471bn.
For 2021, IDC expects the worldwide market will grow slightly, by 0.7%, to US$1.54 trillion, with slight growth during the next four years to take the market to more than US$1.6 trillion by 2025.
Analysys Mason reports that roaming, prepaid mobile and traditional business services revenues were most severely hit during 2020, but will begin to recover as economic activity, household income levels and travel patterns pick up again. Against this backdrop, operators are increasing their efforts to enable a new generation of networked entertainment services. Several operators are providing edge cloud capabilities for cloud gaming services, for example, while, in the business market, at least one operator will launch a cloud-based solution combining unified communications, security and remote access for home workers, the firm has said