Updated: Jun 16
“We believe 2023 will mark an acceleration in the transformation of telcos to become “tech-cos.” This will be marked by two shifts: first, telcos will need to innovate and provide new services that elevate their relationship with customers beyond a connectivity provider. Second, telcos will need to experiment with running their network as a platform. This will provide a new way to monetise their network build-outs and spin up a new, profitable MVNO within a couple of days with as few as 10,000 subscribers.”
Vice President, Global Telco Business Unit at AWS
Communications, or telcos, have seen tremendous change in recent years. All the most recent advancements in AI, cloud-based technology, and the Internet of Things impacted it. With the launch of 5G, Internet and communication service providers may currently offer increased connection options to businesses across several industries.
The present condition of telco business operations is one of expansion and development. Deloitte claims that it has been able to adjust to the shifting circumstances of post-pandemic society. Nevertheless, Internet service providers (ISPs) and telecommunications firms must brace themselves for a challenging and stressful year ahead. This article highlights core telecom trends and hazards ISP business will face in 2023. Read on to explore the details.
What’s Happening With the Telecom Industry?
Advanced technologies are causing significant changes in telecom industry trends. Telcos are always on the edge of non-stop development. In 2021, 5.3 billion individuals, or 67% of the global population, enrolled in mobile providers. By 2025, the worldwide smartphone client base is estimated to reach 5.7 billion. The continuing epidemic has hastened the transition to digital adoption and transformation. The rapid implementation of IoT technologies has altered the business landscape in today's society. Non-innovative businesses are becoming obsolete as the significance of cutting-edge technologies such as 5G networks, IoT, IoB, Asset Management, and Big Data shape consumer behavior.
The B2B telecommunications market has also strengthened, with the conversion of its customer touchpoints, such as platforms, content, and telecom services, to digital form, resulting in a dynamic ecosystem that exemplifies the interconnection of markets and technology. They intend to implement high-performance networks to meet the demands and needs of their clients in this digital era.
5G Supports Telco Leadership
5G remains one of the most emerging telecom industry trends. The introduction and global deployment of the technology have had an impact on telecom company activity. World’s top players are going to spend $1 trillion to launch 5G by 2025. Market growth in the deployment of 5G infrastructures is being driven by several key factors, including a shift in customer preferences toward next-gen technologies and smartphones. This has led to increased spending in this area. An increasing number of smartphone users, a spike in demand for super-fast data service, and an increased requirement for managed services that provide value-added advantages are all helping the market rise.
“The year 2023 will be the year (5G) private wireless use cases and testing take hold across other industries, with retail leading the pack”
Country Practice Leader, Kyndryl
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Data Protection Is a Priority
Cybersecurity is another telecom industry trend. The telco is the backbone that enables other digital services like video streaming and email networks, which are prime targets for malicious actors. To counter this, telcos are facing intense pressure to secure their networks and eliminate possible vulnerabilities, such as through IoT architecture, uninformed users, or third-party partners. In 2023, ensuring protection against these potential threats will be a critical challenge for telecom operators.
IoT As a Driver of Telco Business Evolution
The Internet of Things (IoT) has had a transformative effect on the role of telecom service providers, revolutionizing the way people and objects interact with each other. With the implementation of IoT, telecom companies are able to remotely monitor and manage their data centers and base stations, leading to reduced downtime, streamlined operations, and increased profitability. In light of these benefits, the telecom sector is actively seeking new ways to monetize IoT solutions, positioning themselves as frontrunners in the field and offering a wider range of services beyond just network connectivity. It provides room for telecom businesses to broaden their services and tap into a diverse customer base.
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The Pivotal Challenges for Communication Service Providers in 2023
Zero Tolerance to Customer Data Leaks
Despite all the latest improvements in personal information protection, most customers want to be safe about their data usage transparency. It is a crucial concern, many individuals today feel that organizations they share their details with are not being sufficiently transparent, which is becoming a major issue. 43% of consumers find it challenging to safeguard their data effectively.
“Organizations need to explain their data practices in simple terms and make them readily available so that customers and users can understand what is going on with their data. It is not just legally required; trust depends on it.”
Outside Attacks on Cybersecurity Systems
Communication service providers should enhance their security posture by embracing a comprehensive strategy like the cyber security mesh. This approach enables them to effectively identify potential threats, implement preventive measures, and maintain resilience in the face of attacks. Unlike traditional network security methods that focus on securing a single IT boundary, the mesh adopts a modular approach, recognizing that networks don't have clear physical boundaries.
Telco for sustainable future
In 2023, the urgency for CSPs and their clients to prioritize sustainability will escalate due to the rapid increase of climate emergency and surging energy expenses. It encompasses not only internal endeavors to optimize energy efficiency in networks and data centers but also extends to facilitating customers and ecosystems in adopting sustainable practices and offering environmentally friendly services. This dedication to sustainability will serve as a distinct advantage for CSPs in the upcoming year.
Infrastructure Robustness and Accessibility
The excellence of service hinges on the durability of its infrastructure. Internet service providers face the difficulty of providing seamless network connectivity, regardless of whether the end-users are businesses or individuals. The advent of 5G, which promises high connectivity and low latency, only amplifies this challenge. As a result, ISP business must focus on developing innovative infrastructure solutions that tackle the widespread problems of low accessibility and high latency.
The Risk of Low ROI With the Adoption of 5G
The adoption of 5G technology demands substantial capital investments and added expenses for building both front-end and back-end infrastructure, including 5G SA core and fiber. According to an EY report, 70% of companies are expected to make their largest investments in 5G over the next three years. Nevertheless, a substantial investment does not guarantee a desirable financial outcome. The return on investment also depends on factors such as successful product development and diversification, as well as market development and penetration.
The Challenges of Private Investments
The debt situation is a significant concern. Vodafone has announced plans to sell approximately half of its 81.7% interest in tower business Vantage Towers. Another business, Telefónica, is looking at selling its interest in UK tower company Cornerstone. As these CSPs seek a resolution, this will not only present opportunities for private equity firms to play a more prominent role in the industry and expand their investments in 2023 but also for alternative players backed by private equity to capture a larger market share from traditional CSPs. Being owned by a private equity firm brings certain challenges. The drive for profits and the need to produce significant outcomes within a limited time will prompt CSPs to adopt a more diverse approach and reconsider their operational strategies, adopt new responsibilities, and focus on expanding their B2B sector.
The telecommunication industry is rapidly evolving, with AI, cloud computing, and IoT having a significant impact. The widespread adoption of 5G technology and IoT has changed the way telecom companies operate and has opened up new opportunities. However, there are also significant challenges emerging in 2023, including cybersecurity, data transparency, and sustainability. To tackle these challenges, companies must embrace innovative technologies and adopt a comprehensive approach to network security. They should prioritize the protection of customer data and be transparent about their data practices. As the industry continues to grow, success will depend on the ability to navigate these challenges and capitalize on the opportunities presented by new technologies.