The IoT value chain is evolving and telecommunications operators should expand their role beyond being the connectivity provider, said Sam Wong, managing partner, Asean Markets at Ernst & Young Solutions LLP.
“5G, along with industrial IoT, provides an opportunity for telcos to create unique use cases and solutions that are industry-specific,” he said. “Establishing alliances and partnerships in the ecosystem will be important. Telcos can leverage existing relationships with enterprise and public sector clients, and develop deep understanding of sector issues and requirements to effectively develop the right solutions. Growth in enterprise business is imperative for telcos to realize their 5G vision.”
According to the latest EY report entitled “Top 10 risks in telecommunications 2020”, while different industries are at varying stages of their 5G investment journey, they all need support to realise the opportunities on offer. The risk of ineffective engagement with industry verticals and the public sector ranks seventh, and it is often due to low awareness of the benefits of 5G. Indeed, an earlier EY report stated that 80% of enterprises across verticals want 5G providers to articulate a more coherent 5G vision, underlining the need for clearer dialogue.
Wong noted that while 5G opens up many new opportunities for telcos, the industry needs to overcome several challenges before unleashing 5G’s full potential.
He added: “A key issue telcos in Southeast Asia face is the lack of monetisable use cases beyond enhanced mobile broadband, which limits the return on investment. Other challenges to tackle include business transformation, CAPEX and OPEX optimisation, and regulatory issues. Telcos will need to fundamentally evaluate their role in the context of the IoT value chain and ask how they can transform from ‘telecom service provider’ to ‘digital service providers’.”
Maintaining infrastructure resilience
While telcos have largely risen to the challenge of withstanding a surge in network demand during the COVID-19 pandemic, pressure to maintain infrastructure resilience and expand reach emerges as the most pressing sector challenge,” according to the latest EY report, which combines industry insights and consumer survey data to shortlist the most urgent threats facing today’s telcos.
With initial pandemic lockdowns across the globe triggering traffic spikes of up to 70%, EY analysis across nine countries: Italy, Canada, Romania, Spain, US, UK, Thailand, Greece and India (March 2020), telcos have successfully assumed an elevated societal role as connectivity providers.
But with 42% of UK consumers stating that telcos should focus resources on maintaining broadband quality and 32% of US consumers citing concerns about home internet reliability, speed and connection EY survey of 2,500 UK households (27 May-1 June 2020) and 3,500 US households (April 2020). since the pandemic began, telcos need to do more to sustain positive customer perception about the service they receive.
Tom Loozen, EY Global Telecommunications Leader, said: “Overall, networks have withstood a sharp increase in home working, entertainment and schooling during the pandemic and telcos have commanded favourable customer opinion as a result. However, revenues are set to decline across most product categories and telcos must not become complacent. The journey to recovery will require new thinking and competencies, shifting the customer promise from speed to reliability, so telcos can thrive in the ‘new normal.’”
Transformation agenda amid geopolitical upheaval
Meanwhile the report cited the inability to scale digitisation initiatives ranks second on the risk radar. The COVID-19 pandemic is accelerating this drive, with 78% of telcos now either re-evaluating or adapting the speed of automation and digital transformation programs. Despite this reappraisal, historical barriers remain – including inadequate skills in analytics and AI.
Failure to mitigate escalating geopolitical and competitive disruption lists ninth in the ranking and is a theme that underpins all of the top 10 risks. With network equipment supply chains increasingly being disrupted by global trade forces, there are concerns that 5G rollouts could be delayed although telcos in Southeast Asia have actually begun accelerating their launch of commercial 5G services. Thailand’s telcos was the first country to offer 5G services in May 2020, followed by Singapore’s telcos in August.
Ranked fifth are risks associated with changing imperatives in privacy, security and trust. Less than half (47%) of UK consumers feel they are in control of their online data, and reports of privacy issues relating to contact tracing apps and video call platforms have heightened concerns during the pandemic. The sector typically underestimates the link between trust and revenue growth, with nearly half (46%) of telcos perceiving cybersecurity as either compliance or crisis-driven rather than as a proactive endeavour.
“Telcos’ relationships with government are deepening, with operators playing a pivotal role in pandemic response and recovery, positioning telecoms’ status as a national strategic asset more so than ever. Making the most of this more intimate relationship will require ongoing focus,” Loozen said.
Other risks listed among the top 10 include: failure to redesign workforce purpose and inclusion (third in the ranking); failure to improve capex efficiency and network returns (fourth); poor management of investor and stakeholder expectations (sixth); inability to adapt to a changing regulatory landscape (eighth); and failure to take advantage of changing market structures (tenth).
