The State of Telco: Players, Challenges, and Opportunities

April 17, 2020

It’s an exciting time to be in telecommunications. The world’s top ten telecommunications (or telco) companies each have a market capitalization of over £32.4 billion; the industry is expected to expand as emerging markets sign up for telco services and as developing countries increasingly use telco technology.

That doesn’t mean the industry is without its challenges. From navigating the new world of 5G to meeting customers’ ever-changing expectations to capitalising on market opportunities before competitors do, there’s a lot to keep telco decision-makers on their toes. In this state of the telco industry report, we take a look at the top players, challenges, and opportunities in the telco industry to help you stay ahead of the competition.

Players

Here are those top ten players in the telco industry who are each worth over £32.4 billion:

●      AT&T

●      China Mobile

●      Verizon Communications

●      Vodafone

●      Nippon Telegraph & Tel

●      Softbank

●      Deutsche Telekom

●      Telefónica

●      América Móvil

●      China Telecom

In a competitive, quickly growing industry, these ten companies have made it to the top. Clearly, they’re operating under business strategies that work, including acquiring companies with in-demand capabilities and being among the first to adopt new telco technologies. Telcos are also expanding beyond telephony and internet services to stay competitive. Let’s take a closer look at the company closest to home, Vodafone, to see what this company is doing right.

 

Headquartered in Berkshire, Vodafone has a market capitalization of £31.10 billion, as of 6 April, 2020. Their strategies for growth include expanding their geographical footprint, offering a wide range of telco services, focusing on new technologies and acquiring companies who can help them achieve their goals.

For example, in 2019, Vodafone acquired two companies: GrandCentrix GmbH, a provider of interactive mobile value-added services, and Liberty Global, an international cable company. In March 2020, Vodafone “launched a new cyber-security managed service called Vodafone Cyber Enhanced for critical infrastructure business such as utilities.” This managed service will combine cyber-security expertise with defence-grade technology with the goal “to protect the resources and digital estates of critical national infrastructure providers.”

Challenges

The telco industry is facing several challenges, including a widespread misunderstanding of what 5G can deliver, heightened customer expectations, data privacy and security, and an antitrust backlash against big data companies.

Widespread Misunderstanding about What 5G Can Deliver

5G is more than just a better internet connection, but it’s not a panacea for all technology frustrations either. While it will enable technologies that haven’t been possible before, there are security and technical concerns still to be handled.

For example, 5G will help enable autonomous cars, which is an impressive capability. But it’s not as simple as turning on a switch.

“Many elements are required, ranging from the physical infrastructure (microcells, antennas, backhaul, fiber) to contractual agreements,” according to a report from Deloitte.

From a technical standpoint, “the biggest challenge is 5G’s high-bands or millimeter waves, which tend to have limited range and lower penetration,” according to Deloitte. “This has hampered some pilot tests. Another issue is overheating of some 5G devices while in use.”

With so much hype around 5G, customer expectations are exceptionally high. But the technology has hurdles to overcome, from infrastructure to legal agreements to technical roadblocks. Managing customer expectations is something all telco companies will have to do. More than that, emerging technologies like 5G and SD-WAN “are evolving the market and making the competition fiercer” for telcos.

Heightened Customer Expectations

As telco technology improves, customer service needs to improve, too. That’s because as technology becomes more advanced, customers will have higher expectations and require more support. For example, as 5G takes hold, more and more customers will reach out via multiple channels to ask questions about their ability to tap all the potential of 5G. With all these questions, customer service and support calls are bound to increase.

 

Are the telco customer service agents and systems ready to take on that increase in tickets, both from a service and support standpoint? The problem is that many telco companies are still using manual reporting and workflows or limited and inflexible systems, which take away from time that staff could be spending on tasks that matter more to customers. This inflexibility becomes a problem when unusual circumstances arise.

 

For example, in the COVID-19 pandemic, customers have not been able to enter buildings to ask questions. They have had to use phone, chat, and social media. These channels are getting overwhelmed, and it’s likely that they aren’t being handled within one system. For the customer, this means long wait times and a negative view of the company. For the company, this means a lack of visibility into the customer, including account entitlements and service-level agreements.

In the age of Amazon, customers are used to being put first. They’re used to being self-sufficient by using service portals, having visibility into their tickets, and getting proactive notifications. When telco companies are using complex, siloed systems, providing this expected level of customer service is difficult.

Data Privacy and Security

Customers are more concerned than ever about identity theft, financial fraud, and unauthorised use of sensitive data. That’s because the incidence of cybercrime is increasing, with a 2019 Accenture study finding that cybercrime increased by a staggering 31 percent between 2017 and 2018 in the UK.

With these mounting concerns, consumers don’t want their data privacy to be something someone else takes care of: they want to take control of it themselves. Digitally-savvy telcos have digital environments and platforms where customers feel safe and are safe. For example, several social media platforms are now employing experts as well as artificial intelligence solutions to identify and remove spam and other offensive content.

5G isn’t immune to these security concerns, and for good reason. “Telecoms security doesn’t pay,” says Dr. Ian Levy, technical director of the National Cyber Security Centre (NCSC). “That’s true of the basic network security and business processes that support it. But it’s also true of the enhanced mitigations we ask operators to – voluntarily – do when using a high-risk vendor such as Huawei.”

Unfortunately, fiscal motivators don’t align with the NCSC’s security advice. That’s why the government decided “to significantly uplift the baseline telecoms security and formalise the handling of high risk-vendors putting it all on a robust footing.” The goal of this decision, says Levy, is to “help operators make better security risk management decisions.”

Antitrust Backlash against Large Tech Companies

With industry giants being accused of abusing their power, all tech companies are taking a bit of heat. The UK government is taking steps to regulate the internet,”‘with executives at internet firms potentially facing substantial fines or even prison sentences if they fail to protect users from ‘harmful and illegal content’ online.” These regulations would require internet companies to publish annual transparency reports, enforce terms of use more proactively, and use age verification in certain cases.

Opportunities

In addition to the challenges, telcos have great opportunities. These include 5G (a challenge and an opportunity!), economic boosts, and the Internet of Things.

5G’s New Use Cases and New Apps

5G may just open up many more industries to telco services.

“It could transform the way we interact with critical services,” says NCSC’s Levy, “from energy and water, to transport and healthcare. It should also drive the adoption of new technologies such as driverless cars, remote healthcare, and the ‘smart’ devices we increasingly use in our homes and at work.”

These new use cases are possible because of 5G’s faster download speeds and better network reliability, but also because 5G will make new apps possible. Experts don’t yet know what 5G’s groundbreaking apps will be because it will likely bring about new kinds of apps that no one has seen before.

Economic Boosts

With the economic uncertainty that many industries have faced in early 2020, it’s especially great news that 5G will probably boost the economy. According to Barclays, 5G internet “could increase annual UK business revenues by up to £15.7bn by 2025.” That number represents a massive opportunity for telcos to find out exactly what consumers are looking for with 5G and deliver it. Those efforts will likely pay off.

Additionally, streamlining customer service operations helps individual telcos boost their own finances. With more efficient customer service systems available, telcos can reduce service costs and increase upsell opportunities. With reduced internal costs and happy customers, companies are setting themselves up for success.

Internet of Things

The Internet of Things (IoT) looks to be a growing potential source of revenue for carriers. The International Data Corporation estimates that by 2025, “there will be 41.6 billion connected IoT devices, or ‘things.’” The industrial and automotive equipment industries represent the largest opportunity for connected devices, but household and wearable devices are growing as well. People want their homes to be connected, and telcos can help with that.

With competitive players, difficult challenges, and wide-open opportunities in the industry, it’s an exciting time to be in telco. The solutions for exemplary telecommunications experience and customer service are here. Visit our blog to learn more about how ServiceNow can keep your customer service and IT management top notch so you can stay ahead of the competition.

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