What New Market Trends Mean for the Telecommunications Industry
2019 is set to be a boon for the telecommunications industry, with many new occasions for telecom providers to create new sources of revenue or enhance those they already have. The proliferation of the IoT, the democratization of AI and the first large scale rollouts of 5G tech are working together to create entirely new markets and opportunities.
Consumers are only ramping up their appetite for data in the mobile space. The amount of data heavy apps making their way into the lives of consumers are increasing. The average smart phone owner wants to keep up, and as such, begins to demand more data limits. Deloitte’s 2018 Global mobile consumer survey found that 37% of those of surveyed had an investment in unlimited data plans. This number is up 12% over 2017’s percentage of 25%.
As a result of this newfound demand, providers are offering much lower prices on unlimited plans and more variety on bundled services. In order to compete, companies are willing to take a hit on their average revenue per user. This revenue must be made up in some way – ergo the new opportunities that are being provided by the expansion of the market.
New Sources of Revenue
Many companies are looking to partnerships and consolidations in order to build out services more quickly. We see this in content and cable markets, with a high number of end users who actually prefer streaming to a cable subscription. 55% of households in America now subscribe to streaming services, with the fallout taken from pay-TV penetration. That market fell from 75% to 63% saturation year-over-year.
With more and more consumers looking to on demand services in markets like cable, the coming 5G rollout is expected to only improve the opportunities for telecom companies to improve revenues. The ability of these companies to do this is already been proven in first responder smart cities. 5G will be able to run mobile broadband, extremely low latency applications and the IoT, including connected home and connected automobile functions that are at the center of many new revenue opportunities in 2019.
Experts believe that there will be at least two other major opportunities to generate revenue for telecom companies – mPayments and mHealth. As the market for health oriented wearables expands, operators will be able to monetize many different types of services targeted at this growing audience. mPayments allows mobile operators to serve as a customer identity management platform as well as an integrator for different types of mobile payment and connecting device with applications. One study states that telecom companies may be able to improve their revenue from mobile payments by four times by 2022.
How Companies Should Plan for Growth Moving Forward
The opportunities presented above certainly offer telecom providers a massive upside. On the other hand, they will require large investments in service delivery and network infrastructure. Many experts believe that telecom companies should prioritize the creation of business efficiencies and process streamlining. For example, concerning the Internet of Things, the providers that will come out ahead will be the ones that take into account the scale of devices that many networks will add.
Thinking about monetization ahead of time is also a great investment. What will be the revenue model for the future of these specific business processes? Taking a close look at the customers and the products targeted to them is essential. Some companies may have to take on entirely new revenue and business models based on the use of new technologies.
At the same time, companies will need to consider the issues of privacy and security. These issues will only become more important in 2019, especially because end users are becoming more anxious about sharing personal data through third parties. According to Deloitte, 73% of American consumers have this concern. 69% believe that companies can more to protect personal data. However, the same 73% said that they might become more comfortable with data sharing if they were able to maintain some semblance of transparency and control over the process. There is a huge opportunity here for telecom providers to give consumers this visibility in exchange for the opportunity to advertise to them.
Companies should also look into the ongoing saga of net neutrality in 2019. Although the notion of a free and open Internet was shot down by the FCC, Washington and California are leading the charge against any significant changes in the way that business is done online. The two states have already passed laws that challenged the repeal of net neutrality, and the story has yet to be concluded.
What Will Emerge in the Telecom Sector
5G has been an ongoing theme for the past few years that 2019 will finally see through. The market is ready for an upgrade. Deloitte found that 60% of survey respondents are now looking to 5G as an “important” factor in their future lives, but there is more concrete evidence of the transition of 5G from drawing board to reality. Both the US and Chinese governments are making great strides to protect their 5G rollouts. Major telecom players around the world are announcing hardware and support for apps that require a 5G backdrop. Companies of all sizes are also demanding low latency functionality and high quality remote communications, among other innovations that only 5G can bring to the market.
With the incorporation of 5G will come the full potential of VR and AR in 2019. Both AR and VR experiences require the low latency and high bandwidth that 5G provides. These new capabilities will give telecom companies and consumers an opportunity to participate in new markets from remote healthcare, autonomous vehicles and remote classroom learning apps there is another opportunity in e-commerce, where both AR and VR can help retailers close more sales through innovative and engaging online experiences.
The average consumer is becoming more reliant on smart phone voice assistance. This trend is only becoming more prevalent according to reports from Deloitte and other industry watchdogs. Deloitte found a 20% YoY increase in respondents who use a smart phone voice assistance app. Studies also found that once consumers opt into a voice assistance app, they eventually begin to use it more and more often.
We may see the launch of an LEO satellite with the purpose of improving online connectivity in rural areas. LEO satellites have been proven to speed up connections and reduce latency quite dramatically. Both of these capabilities are vital to connectivity and remote locations. This may help to improve online connectivity in rural schools, cruise ships and on military installations. Rural consumers who are unhappy with their current level of service may also be able to switch to satellite Internet service starting in 2019.
Finally, the telecom industry should expect the rise of blockchain in 2019. Blockchain has the ability to reduce complexity and billing systems, virtually eliminate data leakage that is associated with identity theft and automate certain types of settlements using tokens and smart contracts. Other advantages include error free P2P connectivity between tens of thousands of new IoT devices. Blockchain also has the potential to serve as the backdrop for a new, upgraded generation of access tech selection mechanisms that are created specifically for 5G networks. Companies will be able to enable local connection prices based on current demand and supply and create new models for reorganizing second and third tier traffic. If a telecom is looking to incorporate 5G more quickly, it can use blockchain to regulate and monitor the network automatically.
By all accounts, 2019 will be a great year for over-the-top (OTT) services. As mentioned before, there is a growing demand for streaming video and other forms of nonlinear media, which will place a substantial pressure on network operators looking to bring these new services into the commercial landscape.
5G is spurring the efforts of these service providers to expand into OTT solutions (or partner with OTT providers) in order to catch this growing revenue stream while building customer loyalty and offsetting pressure on prices on last mile connectivity.
Speaking of 5G, we can expect to see the results of big telecom field tests in 2019. The 5G architecture that has been developed around the world will be released commercially with 10X aggregation in order to cope with the changing landscape between 4G, 4G LTE and 5G core networks.
The research on 5G is far from over, however. Big telecom companies will continue to invest in 5G R&D, especially any developments that are rising from industries outside of traditional telecom industries of interest include transportation, energy and agribusiness, all of which are ploys to profit handsomely from 5G technology through a more advanced delivery of services and goods.
A full rollout of 5G is expected to occur in 2020. However, this may be an ambitious goal for certain infrastructures that have not yet worked out the politics behind the hardware.
A Greater Need for Security
With news of cybercrime rising in the media, savvy companies will be even more careful when moving into the new and relatively insecure realms of 5G, AI and the IoT. EfficientIP conducted a study that found 43% of telecom organizations had reported DNS based malware problems over the previous year. Business continuity was a huge issue in these cases, with 81% of those reports taking at least three days to apply the correct security patch to return to normal functionality.
Statistics like this have truthfully scared many telecom companies and network operators. Before moving into the next generation of telecommunications, these companies are realizing that they need to protect more than just their lines of data transfer. This is especially true because the networks they are using our becoming increasingly defined by software infrastructure, which is more vulnerable to ransomware and DNS based malware attacks.
2018 saw a higher percentage of network operators than ever look to roll out end to end security encryption. 2019 will continue the trend into holistic network security. We can probably expect to see encryption serve as more of a central and pervasive security technology. This trend will only be helped by the increased government intervention that is here and surely coming to protect national security interests along lines of telecom. For instance, the GDPR has been a huge catalyst for broader encryption adoption across networks. Trump’s rumored executive order barring Chinese telecom products from being used in American 5G space is another protection that many nations may fall in line with.
We will definitely see big service providers continue to consolidate and reassess the offerings they deliver to ensure a future proofed network that can accommodate the technological advancements of the future.
The innovations and trends mentioned above are probably the starting line for the telecommunications industry in 2019, not the finish line. With everybody on board around the world from service providers to third-party app developers, the sky is the limit for the industry. Look to a more accelerated incorporation of the technologies and trends above (and many others) over the course of the next few years.
Are you interested in learning more?