How telcos are evolving for the age of connectivity

As global revenues for telecoms services narrow, mobile network operators are looking at a host of digital offerings for new growth
15 January 2021 | 3 Shares
  • As global revenues for telecoms services narrow, mobile network operators are looking at a host of new digital services for sustainability

Telecommunications (telecoms) operators have been feeling the squeeze as worldwide revenue growth shrinks, networking infrastructure rollouts slow down, and an uncertain economic climate means that consumers are not rushing to upgrade to the latest smartphone model with the top-of-the-line data and call minutes’ package.

At the same time, the COVID-19 pandemic has been a driving force of rapid digitalization for many sectors – most of which require reliable connectivity to be supplied by one of their local telecoms service providers.

So while it’s not all doom and gloom for telecoms, operators have also been looking into the feasibility of offering a variety of digital-first services as an expansion of their present telecommunications services.

The majority of telecoms had already been studying alternate digital businesses as they faced slowing growth in recent years, but there is little doubt that the pandemic-led digital transformation surge of 2020 has caused many a telco to look seriously at proffering digital services targeted at small and midsized enterprises (SMEs).

In the UK, SMEs account for about 31% of business turnover and about 28% of business employees, according to a UK government report. British carrier Vodafone is expecting the number of SMEs with 10-250 employees to grow from 245,000 now to about 265,000 by 2025 and is estimating a corresponding increase in IT spending of about 12% year-on-year, so it is channeling its SME-facing solutions accordingly.

It has already launched (in July 2020) the V-Hub, an online resource for SMEs in the UK, Germany, Italy, and Spain that offers on-demand guides to various aspects of running a digital business (website creation, digital marketing, remote working, cybersecurity, and so on). It has also built the Vodafone Marketplace, an online menu of tools and applications for business users.

When it comes to 5G, the new connectivity standard is opening up a wealth of new opportunities for telecoms, primarily through enabling new types of customer experience, from everything from virtual reality to the industrial IoT. Selling data alone will not be enough to drive 5G monetization, and so telecoms will need help from partners in parallel industries to help deliver these profitable new services, be it to consumers or to enterprises.

“To be able to monetize the new capabilities there are lots of different parties involved. The operators that are going to be successful are going to be those that bring together an ecosystem of partners that all provide 5G services to consumers,” explained James Kirby, the senior VP of EMEA at telecoms service provider CSG. “At CSG we are working with our partners to upgrade and enhance some of the back-end systems that are needed to support that ecosystem. If you don’t have the partner management capabilities, you aren’t going to be able to have an ecosystem.”

In South Korea, where a recent report found there is now a higher 5G market share than 4G, operators like LG Uplus are working with content and technology ecosystem partners to bundle new types of experiences that differentiate their offerings from other markets – consumer-facing opportunities like augmented reality, virtual reality, and cloud gaming.

But it is not only the consumer segment where South Korea’s operators have lessons for those in other markets. The enterprise segment is beginning to grow rapidly in the country, with the operators beginning to learn the best strategies when working with these new partners and entering new verticals.

“The enterprise 5G opportunity is there in Korea. The operators have all been very active in customer co-creation and collaboration with players in the enterprise ecosystem,” says Phil Kendall, executive director at Strategy Analytics, which compiled the Korean 5G report. “There’s been quite a good focus on using that to create turnkey 5G solutions; going to manufacturers with fully rounded 5G smart factory solutions, rather than going to them with the offer of connectivity alone.”