Industry Overview: Telecommunications

The technology and telecommunications industry moves quickly as it innovates and evolves. Technology devices and infrastructure are becoming more intelligent and connected, supported by emerging technologies such as 5G and artificial intelligence (AI) in the Internet of Things (IoT). Digital transformation within businesses and the broader economy is supported by advancements in IT service provision, notably the adoption of cloud and edge computing technologies.

The technology and telecommunications industry features several globally recognized players, including Apple, IBM, Intel, Microsoft, and SAP, as well as an array of telecommunications providers. Fierce competition exists between firms as they look to maintain their lead in the market and continue efforts to develop innovative products and services. As a result, many of the leading companies in the technology and telecommunications industry are among the world’s largest and wealthiest companies.

This article will outline 3 considerations you need to wrap your mind around regarding telecommunications.

CONSIDERATION 1: Challenges in Telecommunications

Data is driving massive change in every industry. However, communications companies face strong headwinds as they prepare for 5G and Open RAN deployments. Whether building new 5G enable services, defending against cyber threats, or improving personalization for customer experiences – data is the key to driving industry transformation.

Data is a critical component of the telecom industry. Streaming data and the ability to understand their subscribers and become data-driven to deliver customer service and AI-powered self-service technologies for frictionless services.

We also know risk and fraud are increasing, and communications companies are a big target. As 5G services come online, the attack landscape grows, especially with the addition of Open RAN architecture to support 5G Core deployments.

We know subscriber expectations are escalating, searching for a best-in-class experience. And communications companies need to leverage data to drive decision-making, accelerate growth, and foster the adoption of services across lines of business.

The telecom industry will face new opportunities and challenges from a dynamic regulatory, technological, and competitive environment. And while the telecom sector continued to make progress in augmenting its network capacity with additional fiber and wireless deployments to meet the constant demand for higher-speed networks, we see an emerging set of issues presented by a dynamic regulatory, technological, and competitive environment that may influence the sector’s progress in the coming year:

1. The potential for more competitive broadband markets. Faster mobile and fixed wireless connections create more viable alternatives to wired connections and new opportunities for bundled service offerings and business models for service providers. In addition, consumers will enjoy enhanced flexibility in purchasing and consuming services in the new year with ever-expanding options for high-quality communication and internet services from telecom, cable, wireless, and satellite internet providers. However, these trends may also lead to a more competitive environment ahead.
2. A shift to more decentralized government broadband infrastructure funding. The $1 trillion Infrastructure Investment and Jobs Act (IIJA) passed in November 2021 earmarks $65 billion for continued broadband adoption and deployment. While government programs dedicated to expanding and improving telecommunication infrastructure and services have traditionally been managed at the federal level, the bulk of the bill’s federally allocated broadband dollars will flow through more decentralized state-based models.
3. Rising interest in multi-access edge computing and private cellular networks. The enterprise market for private cellular networks and edge computing is gaining momentum. The market is still nascent but promises to be competitive, with many players vying for their share. Network operators will have to compete against other players, who may prove critical partners in delivering their solutions. Ecosystem players will likely begin to identify and define their role in this emerging market in the coming year.
4. The need to reassess cybersecurity and risk management in the 5G era. While the widespread adoption of 5G offers many benefits, it also creates new security concerns and challenges. However, as operators have taken steps to evaluate and minimize threats arising from 5G and software-centric networks in their organizations, they are uniquely positioned to offer 5G security services to enterprises seeking to deploy their advanced wireless networks.

CONSIDERATION 2: Where Telco Is Heading

Telco companies are reinventing themselves from a commoditized connectivity provider into an interconnected data fabric, delivering personalized best-in-class services driven by data. They need unified visibility across data and information silos to achieve this state. In the U.S. market, 2021 was the year of expanding 5G coverage, building out 5G use cases, and starting the migration to 5G SA (stand-alone). In addition, this was the year telco operators began figuring out the business plans for recouping 5G investments after some tier-one operators invested more in acquiring the 5G spectrum. The following are what’s trending:

1. Increased usage of avatars (metaverse), holograms, and user-generated content on the consumer side increased the use of robots in homes and workplaces. In addition, the worker shortage will drive the usage of robots in low-wage jobs.
2. Migration to 5G Stand-alone from Non-Stand-alone. The top three US mobile operators are well on their way with 5G deployments, with claims of reaching over 300 million people with current 5G coverage. However, AT&T and Verizon still primarily leverage the 4G core with 5G and 4G radio access networks (RAN). T-Mobile has a more widely deployed 5G SA core network. In 2022, there will be more of a focus on building out the 5G core network in the cloud to enable 5G features such as network slicing and Mobile Edge Compute (MEC).
3. Optimizing operations for complete visibility into the network to improve customer experience and business services. Another prominent 5G feature is automation. Automation in deploying and optimizing the 5G network. 5G introduced much higher frequency bands which require 5 to 10x more small cells for the same coverage as the lower band spectrum. Automation is vital to managing deployment and maintenance expenses. Data integration and analytics across the network segments, such as device data, core data, RAN data, and customer interaction data, will be critical to detect, predict and prevent network degradation or outages.
4. Expansion into B2B services to enable digital transformation in multiple industry verticals such as manufacturing, supply chain, retail, healthcare, and more. Advancements in MEC architecture and private networks. In a highly competitive market with over 100% mobile subscriptions. B2B service offers will be an important segment for growing 5G revenue.
5. NWDAF (5G Network Data Analytics Function) is designed to streamline the way core network data is produced and consumed, as well as to generate insights and take actions to enhance the end-user experience. Telcos have this customer data, but how can they find ROI from their technology investments? 5G Monetization is where Telco uses all of these customer insights to drive their products and revenue.
6. Expansion of Fixed Wireless Access availability and customer uptake. Verizon led the way in its Fixed Wireless offers with aggressive plans to reach over 50 million homes by 2025; the current reach is 11.6 million homes passed with C-band and millimeter-wave. 5G Home is in 57 markets, and LTE Home is in 200 markets. 5g Home also signifies the move towards zero-touch installations.
7. Deployment of the $65 Billion Broadband Fund. Many states and communities will receive broadband funding through the NTIA programs or FCC initiatives to expand Internet access to underserved communities. In 2022, many programs to extend coverage will be underway. They will be supported by the incumbent carriers, their partners, and potential new market entrants.
8. Increase the use of Metaverse technologies in advertising and entertainment.
9. Increase the use of AR/VR in businesses such as manufacturing, healthcare, and more.
10. IoT (Internet of Things) is a significant growth area for Telcos in the B2C and in the B2B domain. In B2C, Telcos provide consumer IoT devices every household can benefit from – e.g., smart homes and smart devices. In the Automotive industry, smart cars (cars with a SIM card) are being introduced as the industry standard. In the B2B domain, Telcos are attracting a large portion of their revenue, serving some of the biggest market verticals, such as Manufacturing, Agriculture, Healthcare, Transport (including shipping containers and trucks), and Utilities & Energy. All of these big market verticals can benefit from the Security & Observability of their IoT network.
11. Content – Telcos partner with Media & Entertainment companies worldwide to bundle up Connectivity services (Phone & Data) with Streaming and Entertainment services (e.g., Netflix) to boost customer loyalty and prevent customer churn.

CONSIDERATION 3: Key Focus Areas for IT Decision Makers in Telco

There are some critical areas and advice that Telecom Decision Makers need to receive and focus on:

1. Ensure a robust data strategy is in place to enable real-time decision-making and exceptional customer experience better – Enhance service provisioning architecture
2. Improve in-building coverage
3. Defining mobile/device strategies
4. Increase Upstream/Downstream network capacity
5. Extending rural and underserved coverage
6. Improving network security and protecting customer’s data from breaches

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