The telecoms sector has undergone extensive change in the past few years. Like every industry, new technologies have reinvented how services are delivered, and changing consumer trends have left the industry in a poor state.
After providing the foundations of modern-day connectivity, telecoms companies should be thriving in the rising digital economy. Instead, they are fighting to survive. An accumulation of problems have plagued the traditional industry that was once at the forefront of innovation.
There has never been more competition
There has been unprecedented demand for network services due to growth in new markets. Investment in modern technologies is essential in any business strategy; telco or not.
It’s hard not for businesses to hijack buzzwords and jump on bandwagons – every company is pursuing digital transformation in some way. While discovering that customer loyalty no longer exists, vendors are fighting for ways to leverage technology to capture the same audience and a fresh competitive edge.
EY’s Digital Transformation for 2020 and Beyond report found disruptive competition to be the most significant challenge facing the telco industry, with nearly three-quarters expressing concern.
While IoT and the promise of 5G have fuelled diversity in vendor product offerings, businesses using legacy infrastructure have struggled to adapt and are losing customers.
Ultra-fast wireless and large investments in fiber-optic connectivity have seen rise to Voice over Internet Protocol and cloud-based communication services, challenging traditional vendors further.
Telcos not providing these services are on a dwindling cycle; overheads stay the same, if not increase due to inflation, while service prices are cut in order to remain competitive.
Vendors across all regions have expanded their offerings in recent years, the report reinforced. But services are now tailored towards growth opportunities in technology, media and telecommunications (TMT). Cloud, IoT and TV fall under this category, so that makes sense.
Demand for traditional services is decreasing
Despite a rapid shift to mobile-first across every sector, the phone’s first use case, a voice call, is becoming less and less relevant, unless you make a change to a more streamlined service. EY’s Digital TMT ecosystem value forecast predicts that in 2020, voice and SMS will make up only 16% of the ecosystem. That’s around a 50% decrease from 2015. There is clearly a need to adapt in order to stay competitive in this space if you are to survive and thrive.
And whether your business is a consumer-facing company or a carrier, the climate is no different. But can telco weather the storm?
This means less profit but greater expectations
The third most significant challenge facing the industry is lack of return on investment, according to EY’s report.
Internet-based communication tools mean profits of traditional providers have plummeted. But profit is a key challenge for even telcos who have adapted: adjacent market segmentation can bear little fruit, offering lower margins. Vendors need to consider new ways of generating income while avoiding becoming mere data highways.
OPEX is, however, increasing. More focus on customer experience and customized solutions, alongside increasingly complex order fulfilment and billing processes, means there’s actually more to do with less money.
Existing cost-cutting methods have reached their limit and growth has long stagnated. This means telco have undergone awkward mergers to survive, adapting their value proposition to offer more modern and data-driven services. But for those who haven’t, what’s next?
Finding a solution that is affordable while ensuring fast and reliable processes and customer service feels like a fool’s errand.
But, it’s not. Automation holds the answer.
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