featured

COVID-19: Its impact on the telecommunications industry

 | 
Last Updated on September 23, 2020
 | 

The global economy has been reeling from the shock and the lasting impact of the novel coronavirus (COVID-19) outbreak. Buzzwords like “work from home” and “social distancing” have become a norm in today’s business landscape, and the telecom sector is the invisible force steering this shift. 

The sector has become “key-resource” in keeping economies across the world moving under the lockdown in different ways viz: 

  • enabling business-critical connectivity and resiliency; 
  • Remote working arrangements;
  • Individuals and societies are well connected and informed, with access to medical, financial, commercial, and other essential services like grocery shopping, education, etc.

Pre COVID-19 era:

Wireless technology is the new favourite of the telecom majors like AT&T, Verizon, and T Mobile, and they have already started migrating to it. This has impacted in depletion of the revenue in the wired telecom services in the US at a rate of ~7% yoy.

Chart
source: Statista

The constant drop in wired revenue can be attributed to the reduction in the cable network. $112 billion garnered in 2015 could drop to $62 billion by 2025

As per eMarketer, the US telecom industry was forecasted to increase its digital ad spending by 15.8% to $15.58 billion. The major contributions would be the computing products and consumer electronics advertisers with a spend amount of $10.35 billion on digital ads. Apart from these Summer Olympics and US Presidential elections were supposed to be the most significant contributors as well, with an estimated spend of an amount of $14.7 billion. However, the total US digital ad spend was forecasted for a growth of 17.1%.

Chart
source:eMarketer

Post COVID-19 era:

Although riding on the back of the Telecom industry, the Digital ad spending in the US will grow this year, but not much. It is now expected at 1.7% growth. Instead of an incremental $22 billion in advertiser spending going to digital, new forecasted value is pegged at just $2.2 billion in additional investments this year.

Source: eMarketer

The Telecom industry is taking the heat of the pandemic as follow:

  • Financial Impact:
    • Telecom companies (“telecos”) may face issues with cash flow in the long-term. For instance, Verizon’s consolidated operating revenue for Q1-2020 is $31.6B, which is off by 1.6% from last year’s Q1. 
      The negative impact of Covid-19 may intensify in Q2 – 2020 as well. For instance, T-Mobile expects to incur close to $550 million in related costs.
    • Telecos who are interlinked with sports-related media may see a negative impact on advertising-driven revenues, because of the various sports league cancellations viz. Summer Olympics 2020, EURO 2020, Copa America, US Open, etc.
  • Network Usage and Resiliency:
    • The surge in digital payments amid the Covid-19 crisis will accelerate mobile data or 4G penetration to build an ecosystem of services. This is also beneficial in terms of the telecos investment in 5G.
    • The voice traffic and data traffic have spiked by 50% and 30% respectively on broadband networks since mid-March 2020.
      Chart
      source: statista
      B) Changes for Customers:
  1. Telecos with increased capacity is offering for unlimited minutes and providing anonymized data to aid the tracking of COVID-19 spread.
  2. Telecos are also providing networking tools for free or at a discounted rate to facilitate customers in working from home.
  3. Although the stores are closed across the globe the e-commerce firms have gained and have been able to service the customers even more. 
  4. Many of the streaming service providers like Netflix, has limited their streaming to a lower rate to reduce the strain on the network infrastructure.
  5. Data is increasingly being used by Governments and organizations to track and contain the spread of COVID virus. For instance, Indian governments’ COVID Safety app – “Arogya Setu” and “SAMPRAC” are used to track the COVID patients and also warns the individuals if they come in proximity of someone who has tested positive for Covid-19, and also provides prevention tips.

Road to fight the crisis:

In the face of the uncertain future, telcos are trying to strike a balance between expanding to meet higher demand and preserving cash to weather a rambling economic downturn.

Our digitized, connected world is generating a humongous amount of data which is an asset for the telcos to take advantage of volume and variety of information to derive actionable insights to differentiate their offerings, address customer issues, sell and cross-sell more. 

The Big Data market size is expected to grow from 33 Zettabytes (ZB) in 2018 to 175 ZB by 2025.

Source: statista

According to a report from Tractica, the adoption of artificial intelligence (AI) technologies can combat the crisis by augmenting for 

  • network automation and management, 
  • customer experience management (CEM) and service delivery, 
  • virtual assistants for customer service and marketing, 
  • intelligent customer relationship management (CRM), and other key applications.

Tractica forecasts that telcos AI in telecom revenue will grow to $11.2 billion annually by 2025, at a CAGR of 59.8%.

Chart
source: statista

The various areas where the AI can contribute significantly are:

source: Tractica
  • Network/IT Operation Monitoring and Predictive Maintenance
    • Predictive models system for device failure and Network Usage
    • Predicting network/device failures
  • Customer Experience Management/Service Delivery
    • Customer Churn Prediction
    • Customer acquisition campaigns
    • Predicting drop in the number of customers and factors influencing it
  • Customer Service, Intelligent CRM system and Marketing
    • Campaign Analytics
    • CSAT Analysis
    • Chatbot
    • Recommendation Systems
  • Prevention against cybersecurity threats and Fraud Mitigation
    • Fraud Analytics
    • The anomalous behaviour detection system

Conclusion:

Amidst the COVID-19 crisis, the Telecom industry is likely to be positively impacted but would have to prove its resilience. For instance, digital media giants like Netflix or YouTube have limited the quality of their content streaming to avoid network congestion during worldwide lockdowns. This could favor additional and larger investments in the existing network infrastructure and the upcoming 5G network, which in turn would also help generate jobs. Many broadcasters have seen ad revenue decline, which could remain low until economies fully recover. Apart from all these, Artificial intelligence holds the potential to reshape the telecommunications industry and can prove advantageous for telecos. AI can automate network management, eliminate traffic overload, avert critical cyber-attacks in advance, and efficiently service the endless flow of customer inquiries.This will significantly improve customer satisfaction. In a nutshell, the expected rise in remote work, remote training, and digital entertainment – with a trend towards remote and efficient production would further strengthen the revenue expectations in the Telecom sector. Also, by leveraging AI telecom companies will be able to maximize the efficiency of their enterprises and networks.

This site uses cookies to give our users the best experience on our website. By continuing on our website, you are agreeing to the use of cookies. To learn more, you can read our privacy policy.