Twelve months, and more than one lockdown ago, it wasn’t hard to predict continued uncertainty for both the global economy and the telco industry due to the (then) continuing global Coronavirus pandemic. That reality is still biting and, with the emergence of the Omicron variant, it’s biting harder than ever today.
So, what now? Once again, here at Evolving Systems we have drawn up a list of high-level trends that we believe will shape the market in the next year. Here’s how we see things unfolding:
#1: AS MODES OF COMMERCE CHANGE, TELCOS HAVE A ROLE TO PLAY
Much remains tethered to the progress of the pandemic. Will it continue? Will more new variants increase the threat? Will it finally begin to abate? Having experienced the fourth quarter of 2021, it seems blindly optimistic to predict even a partial return to pre-Covid times. For many industries, the adaption to remote working (or at least partial) that’s been engendered so far will likely become permanent. We can, at least, all be thankful we’re not in the commercial real estate market. We do envisage some return to office engagement between teams like team outings, and customer face-to-face meetings, but that’s not the same as simply returning to what used to be the status quo.
Remote working will thus remain the norm in 2022 and, if we’re right, possibly long after that. While there are some communities such as younger or newer employees needing to be in the office to train, others such as more experienced staff have proved able to function perfectly well remotely, while simultaneously achieving a better work/life balance. Especially with the growing societal focus on general and mental health at present, don’t expect recent advances to change anytime soon. Telcos can play a key role in supporting what may be these permanent transitions.
#2: FLAT GROWTH DOESN’T MEAN NO OPPORTUNITIES
B2B and enterprise market segments will be growth areas for telcos, the consumer segment less so as the growth curve remains flat. At the same time new business models and partnerships will emerge as OTT so content providers and distribution networks form, expand, and collaborate. IoT, in particular Industrial IoT, will continue to grow as global IoT chipsets become cheaper with Industry 4.0 adoption. This is also supported by innovative use cases and applications. A lack of travel over the last year plus will have an impact on roaming fees moving forward. MNOs, particularly those whose main revenue is inbound roaming, are going to need to focus on building additional revenue streams.
#3: FROM ADOPT TO ADAPT. FROM THE DIGITAL AGE TO THE AGE OF DIGITAL TOOLS
The world of digitalization will continue to evolve rapidly as people move from “adopt” to “adapt” and new ‘normal’ lifestyles, ranging from working at home to using digital payments to online grocery shopping, become the default modes of behavior. We already know that consumer behavior has changed dramatically during the pandemic and, in the post-covid era, we expect to see much more use of digital tools (such as apps, videos, website or chatbot in communications) where once we relied on a physical presence. This will change how businesses operate and serve customers. Online services will continue to drive jobs in this space.
#4: GET YOUR HEAD IN THE CLOUDS (IF IT ISN’T THERE ALREADY)
Cloud services will become a “standard” adoption model for businesses, including for telecommunications companies who traditionally prefer on-premise deployment. This prediction has probably been made every year for the past decade but the shift to the Cloud was never going to be a single, “big bang” event. The move to private or public cloud infrastructures may be gradual but we suspect, in the end, it will unavoidable.
#5: 3, 4, 5G: LOTS OF GENERATIONS CO-EXIST
5G will be the main driver for telco investments in 2022 as the industry gradually rolls out 5G SA networks. This will be driven by consumer adoption with wider 5G device availability and lower cost. Developing markets will be focused on 4G with some pockets of 5G. 3G is set to decline even further with 4G and 5G replacing it. Generally, markets won’t exceed 30% 5G (even by 2026) while 4G will be the most common connectivity.
#6: ESIM: YOU MIGHT NOT BE ABLE TO SEE THE SIM BUT YOU WILL START TO SEE IT PROLIFERATE
eSIM will continue to grow in both M2M and consumer segments as more device manufacturers implement eUICC on devices, in particular the Chinese device manufacturers who typically dominate the emerging markets.
#7: QOS: A SLICE OF GOOD FORTUNE FOR SUBSCRIBERS
Quality of Service (QoS) or Network Slicing will be present in developed markets/operators where bandwidth and latency must be guaranteed (connected car, power grid control, etc).
#8: DIFFERENT FLAVORS OF COST SAVINGS
Cost will continue to be a major factor for telcos, with operators always interested in anything which saves them money. Software Defined Networks (SDN) and Network Function Virtualization (NFV) will continue to be the direction that operators in the developed markets will pursue while, in developing markets, and for tier 2/3 operators who may not be able to afford such approaches, achieving efficiencies with their legacy systems will be the priority.
#9: IT’S ONLY A GAME. REALLY.
Online gaming is huge today with ~20% of MNOs offering gaming from the Cloud. This will only increase over the next few years. Latency is the key attribute and 5G important to that.
#10: CUSTOMER EXPERIENCE DISCOVERS ITSELF. AND GOES SEAMLESS
The penny will finally drop that Customer Experience is about…customers. There’s a long-established tradition in business that giving customers what they want is a matter of identifying architectures, developing use cases, breaking down organizational silos, and suchlike. Get your house in order and they will come. Wrong.
With regard to any and all of the above, customers don’t care. If someone has a bad customer experience, do you think they put it down to your inability to access their 360-degree profile? Has anyone ever said, ever “my CSP keeps letting me down because its internal silos are too outmoded to meet my needs in today’s fast-moving economy?” I don’t think so.
Seamless Customer Experience equalizes brands. Big brands who can’t deliver it will struggle to compete effectively against smaller organizations who can. 2022 will see truly intelligent enterprises whose end-to-end business processes support real customer experience start moving further and further ahead of the game.
#11: CONTENT TO MAKE CUSTOMERS CONTENT
In 2022, expect telcos to become more like media companies. Or expect media companies to become more like telcos. In the battle for the living room in which both parties are now engaged, take your pick. One thing’s for sure; content curation will be high on the agenda for those seeking to win market share, and telco marketing may increasingly center around major content releases. This will be fuel for those whose mission is engaging the customer.
#12: THE SERVICE-BASED TELCO HAS ARRIVED. THAT MEANS SPEED…
The was a time when the telecoms industry was built around an equipment-based revenue model. On the cusp of 2022, the shift to a services-based revenue model is nearing completion. For future success, this means that equipment-based revenue must be aligned with experience-based services. That, in turn, means that telcos must be able to identify, create, and quickly roll-out engaging new offerings with ever shorter life cycles.
#13: WELCOME TO THE AGE OF STRATEGIC DIFFERENTIATION
IoT will drive customer experience in new directions. An increasingly connected world will yield increasing volumes of data that can be used to drive better experiences. But to leverage this data and achieve results, telcos must be able to apply contextual relevance, understanding usage patterns, being able to anticipate future needs, and improve customer interactions.
That’s a lot to digest. The point, perhaps, is that the unforeseen public health events of the past twenty-four months have yielded opportunities to match their challenges and have placed a premium on creativity. Today, we’ve learned to work in different ways, in different places, with different tools, meeting different priorities. Telcos have the good fortune of sitting at the apex of many of these changes are thus in prime position to become more important than ever to our lives. For telcos who get their business models “right”, 2022 may be a good year economically at least.