Telecoms Stake Out a Digital Future at the World Trade Show
The telecom industry has been battling disruption for a decade. Disruptive technologies like big data and AI have altered the way consumers interact with service providers. These disruptions are forcing incumbents to redefine their business models. This means a complete rethinking of the customer experience.
telcos must reinvent themselves
The current generation of telecom leaders faces far more profound challenges than those that came before. Their traditional value pools have been depleted and new growth horizons are becoming increasingly elusive. Meanwhile, the return on investment capital (ROI) has come ever closer to the weighted average cost of capital (WACC). Yet, in the face of this mounting pressure, telcos rose to the challenge by becoming increasingly digital, connecting people to their jobs, families, schools and healthcare.
In order to survive in the digital age, telcos must choose a business model that can adapt to these changes. In a digital economy, customer experience is increasingly important. As a result, services pricing models are gaining ground over subscription models. In addition, service platforms are becoming more prevalent across industries.
In addition to the digital economy, telcos are also investing heavily in their own infrastructure. The first half of this decade alone, telcos have spent more than a trillion dollars on 5G infrastructure, which is expected to roll out globally in the coming years.
5G deployment timelines accelerated
At the world trade show, the biggest players in 5G converged on the same platform. Europe has already deployed 5G networks, and the Middle East is pushing countries like the UAE to the top of the charts for mobile speeds. Meanwhile, China’s biggest operators have been aggressively adding new subscribers on 5G networks on a monthly basis. According to the Chinese Ministry of Industry and Information Technology, the country already has more than 700 million 5G subscribers and 1.3 million 5G base stations, which can support up to 1.3 Gbps download speeds. China Mobile, China Unicom, and China Telecom said that they will have as many as 92 million 5G subscribers by 2021.
As 5G depends on dense networks with lower power consumption, the next administration should work with Congress to remove regulatory barriers and identify instances where federal law is needed to provide uniform national rules. Many local rules and regulations are inconsistent and not always clear. Ultimately, this would be part of a larger effort to accelerate broadband deployment.
IoT devices will generate US$8 trillion in revenue
According to a new Cisco study, the Internet of Things (IoT) will generate US$8 trillion in value over the next decade. This value will be generated through improved logistics, improved asset utilization, improved employee productivity, and an improved customer experience. Cisco also expects that 50 billion devices will be connected to the Internet by 2020.
IoT devices will also help organizations reduce costs and improve services. By 2020, the global digital economy will account for 20 percent of global GDP. The potential of this market is staggering. Moreover, the IoT-connected devices will be a significant contributor to this growth, generating revenues worth US$8 trillion.
In addition, the IoT will have game-changing effects on supply chains. For example, the technology will help make warehousing operations and freight transportation more efficient. Google and Amazon are already collaborating on IoT innovation projects. Together, they plan to improve warehouse operations using near-real-time data analytics and Wi-Fi-connected devices.
Customer experience must be reimagined
The telecom industry has been struggling to deal with the disruptions and changes sweeping the digital ecosystem. These include huge investments in next-generation technology, new competitors, and changing customer behavior. In addition, they must deal with the challenge of monetizing their current infrastructure. At the same time, they must find ways to improve their customer experience.
One area where telecoms are betting big is 5G. They announced several partnerships this week that span cloud services, telecommunications gear, and software-as-a-service. For example, Qualcomm Inc. expects to partner with more than 30 carriers to bring faster 5G technology to their networks. Other telecoms that announced partnerships at this year’s Mobile World Congress include China’s Fibocom Wireless Inc., which is part of China Unicom, and Taiwan’s Chunghwa Telecom Co.
To achieve success in the new digital landscape, telecoms need to create a detailed vision for the future of their businesses. Then, they must reverse engineer the blueprint to bring that vision to life. To do that, they must take bold steps that will transform the organization. Leaders must make three or four major changes, each of which will fundamentally change the organization’s DNA. These changes will shift the performance of the organization and deliver cost efficiencies and new service models.