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Telecom Business Review | Wednesday, June 09, 2021
Telcos and other partners can collaborate to grow revenue together.
FREMONT, CA: Enabled by 5G deployments and increasing cloud coverage, the telecom sector is entering an era of rapid invention, collaboration, and growth, all occurring within an ecosystem of partners that is constantly growing.
This march of change can be challenging to anticipate and even more difficult to plan for adequately. With wireless subscribers and corporations seeking more personalized and value-added services, telcos must change faster than customers expect. While these business models and technological developments are unanticipated, telecommunications companies have successfully navigated revolutionary eras in the past. As service providers going forward, it might be beneficial to look back to determine what lessons can be learned and how to apply them.
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The Voice and SMS Era (1998-2009)
The establishment of the GSMA changed the game. The industry charted its route forward by bringing together the world's leading operators to develop standards. This accomplishment paved the way for tremendous expansion in personal and corporate cell phone use, resulting in enormous revenues for telecommunications companies. In time, however, new entrants and intense mobile user penetration caused B2C saturation to begin. By the end of this era, the general expansion of the B2C sector began to decrease.
The Data and Video Era (2009-2019)
In this age, LTE and the spread of smartphones prepared the door for digital disruption, prompting CSPs to transition into digital service providers. The deployment of 4G also prompted enormous investments, which increased by 43 percent over the previous decade to $261 billion. Nearly two-thirds of CSPs were facing commoditization in the B2C sector by the end of 2019.
Ecosystems (2019-2029)
Collaboration in a thriving ecosystem will be the key to success in the next decade, based on prior experience. Telcos have accomplished this in the past and can do so again. This ecosystem will include many actors, including telcos, hyperscalers, ISVs, and cloud service providers. Partnerships within the ecosystem will help telecoms to optimize the value of their 5G connections by providing additional value. One example is combining new apps with connectivity (e.g., Telstra offering a weather forecast system for farmers leveraging 5G networks).
What Telcos Can Anticipate Over the Next Ten Years
Telecoms need to continue expanding into B2B markets and become ecosystem service providers if they are to succeed outside of the B2C sector. In the next five to ten years, more than half of an operator's revenue will come from business-to-business transactions, compared to the current 90 percent. However, telecommunications companies have a history of adapting and innovating, as evidenced by the ongoing improvements in network speed, security, and coverage.
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