It's been a hectic year for the global telecom industry. Unexpected political results have caused much uncertainty the world over, with the full repercussions of the UK’s Brexit vote and Trump’s election victory yet to be seen. At the same time, we’ve seen major investment in fibre roll out programmes to implement broadband networks globally; and that is only set to continue as the world’s key markets look to fully embrace the digital era. The US Government’s Connect America Fund (CAF) is progressing well, with Phase III of the scheme – designed to roll out fibre to rural areas - being implemented by 2020. World’s largest rural broadband connectivity initiative - National Optical Fibre Network (Bharat Net) of the Indian Government, though riddled with challenges is critical to the success of Digital India. Complementing it, is the Digital Addressable System (DAS ) which is in its last phase in India, with an extended deadline of March 2017 to enable 100 percent digital broadcast. Looking ahead however, what do the next 12 months hold for the world’s major carriers and network operators?
Increased investment in cloud and data analytics
2017 will be the year when the Internet of Things (IoT) truly comes to the fore. As consumers, we already own an average of 3.64 connected devices each, and this is set to grow, as more of our home appliances are connected to the internet. Each of these devices generates bytes of data, causing volumes of traffic to grow exponentially.
This is impacting carriers in two ways: Firstly, they’re investing heavily in cloud hosting services. As data volumes continue to grow, so too does the need for robust infrastructure to store these terabytes of valuable information about customer behaviours, spending patterns and usability trends. If this infrastructure can be hosted in the cloud, the carriers can not only significantly reduce their operational costs, but also find new ways to manage their networks more efficiently. Secondly, they’re increasing their investment in consumer data analytics. Consumer habits are shifting, and to understand how their customers are using their connected services, carriers are ploughing time and money into analysing this data.
Smart cities projects to be rolled out on a global scale
The Government of India has plans to have 100 smart cities by 2022. The leading smart city integrators are moving cautiously but investing time and resources with the right alliances and partnerships, given the issues surrounding business model viability. Telcos play a vital role in creating the communication backbone and conducting successful pilots on their existing networks. However, there needs to be increased collaboration between different sectors and industries for cities to be considered truly smart. Carriers will need to connect public transport, healthcare, local government, utilities and so on, to enable more joined up, seamless services for citizens
Crowded and competitive marketplaces
In this increasingly volatile landscape, telecom providers are constantly on the lookout for new ways to compete and grow their market share. Stiff competition is shaping some key markets across the world, such as India. In September this year, Reliance Jio was launched, offering free lifetime voice calls to new customers. Threatened by the announcement, many of the other network service providers in the country have slashed their own tariffs and data plans in a bid to attract and retain more customers – which, when fighting for the business of 1.2bn people, represents serious revenue gains. The silver lining is improved QoS for existing subscribers of serious operators by investing in Integrated Service Fulfilment & Assurance stacks, etc. Call drops continue to be frequent problem. The fringe players will be impacted the most and will need to exit the telecom sector. On the other hand, MSOs who enjoy slightly better ARPUs than telcos are waiting to see revenues coming in from Broadband over cable ( DOCSIS ) from their investments in Co-axial assets. But MSOs must transform customer experience for broadband services to stay relevant in the market.
M&A activity to continue
Thanks to Reliance Jio. From a market like no other with 10 operators, it heading to become an oligopoly. We saw RCOM acquiring MTS and Aircel. As consumer demands for quad-play services rise, we’re set to see increased activity in mergers and acquisitions, with the major carriers recognising that future profits lie in content. Besides M&A between connectivity providers, it will be interesting to see Content providers acquiring a telco in times to come. In the future, I see each market as being dominated by just a couple of major carriers, rather than the several small to medium carriers we see today.
Security in the spotlight
As smartphones become more sophisticated, consumers are increasingly using them to not only make calls and send messages, but also to social network, make payments and navigate their way around. The recent demonetization in India has given a boost to cashless transactions and use of mobile wallets. Apart from cost, comfort and convenience, security will be key factor to enable widespread adoption of digital services. With services increasingly being converged on to a single device therefore, network operators will have a major responsibility to secure their customers’ data. Cyber-attacks are becoming all too common, with hackers targeting network providers for maximum impact, rather than individual users. The onus therefore lies with these players to batten down the hatches and invest in solutions to protect both corporate and customer data.
For an industry that touches every other market sector, 2017 is set to be just as frenetically-paced for telecoms providers as the last 12 months. A series of disruptive technological developments will define the year, and it will be interesting to watch as the space evolves. Consumers will continue to dictate the pace of change, and it will be those carriers that can deliver their services most efficiently that will come out on top.
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